Tribune News ServiceNew Delhi, January 15
The Centre today took a host of politically sensitive economic decisions aimed at taking the national economy from protectionist mould to liberal mode. The Union Cabinet decided to substantially raise the existing foreign direct investment (FDI) ceilings in petroleum and banking sectors.
The floodgates have been opened for foreign investment in the strategically important oil exploration sector with the government deciding to allow 100 per cent FDI for unincorporated and incorporated joint ventures under the automatic route.
Under the existing norms, the FDI ceiling for unincorporated joint ventures it was 60 per cent, while that for the incorporated joint ventures was 51 per cent. Both these categories were subject to clearance by the Foreign Investment Promotion Board (FIPB). For small-field bids, the foreign equity limits are already 100 per cent. Now, these have been put on the automatic route in place of the existing FIPB route.
Similarly, for oil and gas pipeline, the government has decided to allow 100 per cent FDI by removing the existing ceiling of 51 per cent.
However, a decision on increasing the FDI limit for telecom companies from 49 per cent to 74 has been deferred.
It has also been decided to allow 100 per cent FDI on the automatic route in oil refineries of private companies and the existing 26 per cent cap has been removed.
For public sector oil refineries, however, the existing cap of 26 per cent will remain.
For petroleum products marketing, the existing cap of 74 per cent has been removed and 100 per cent FDI allowed under the automatic route, this will be subject to the existing sectoral policy and regulatory framework in the oil marketing sector.
Several important decisions have also been taken as regards the banking sector with an aim to increase the flow of foreign funds in the sector.
The existing FDI limit of 49 per cent has been raised to 74 per cent. The FDI component will include ADR/GDRs, private placement, IPO and acquisitions of shares from existing shareholders.
The Cabinet also hiked the maintenance allowance rates under the Centrally-sponsored scheme of post-matric scholarship for Scheduled Caste students during the 10th Five Year Plan (2002-07).
It also removed all restrictions with respect to frequency and size of aircraft for outbound charters and allowed Indian passport holders to travel on inbound charters.
