Finance ministry is planning to introduce a foreign investment policy framework that will allow at least 49% investment in all sectors, in a move to stimulate overseas interest and help lift the economy from the doldrums, the finance ministry is planning to introduce a liberal foreign investment policy framework that will allow at least 49% investment in all sectors, barring a few strategic ones.
Moreover, the ministry is also contemplating on eliminating the time-consuming government approval, required for proposal wherein 49% investment is allowed via the automatic route, to free the Indian companies from undue scrutiny.
According to this proposal, sectoral 49% cap would be covering FDI, foreign portfolio investment as also non-resident Indian investment and any investment over 49%, except when 100% has been permitted through the automatic route, will have to be approved by the Foreign Investment Promotion Board (FIPB).
Notably, this proposal could also offer a way to settle the controversial issue over FDI in multi-brand retail as scaling back FDI in the sector to 49% could be a compromise solution. Additionally, composite cap formulation could be acceptable for the insurance and pension sectors as well, where the change would have to be carried out through legislation.