The Union Cabinet is expected to clear the proposal to bring composite cap on all kinds of foreign investments, including FDI, foreign institutional investors (FII) and other instruments in various sectors, which was announced by Finance Minister in the budget of the current fiscal. This simplification is aimed at promoting ease of doing business in India. The composite foreign investment caps will encompass all types of foreign investments. These will include foreign portfolio investment, NRI investment and depository receipts, foreign currency convertible bonds and fully and mandatorily convertible preference shares or debentures.This move would help in removing ambiguity on application of sectoral caps, conditions and approval requirements in different sectors and bring simplification in the foreign investment policy.
The Commerce and Industry Ministry has already proposed a composite foreign investment cap (FDI + FPI (FII, QFI) + NRI + FVCI) in sectors including agriculture, tea, mining, broadcasting, media, airports, retail (single brand and multi-brand), e-commerce, asset reconstruction companies, banking, commodity exchanges and insurance.
Presently, there are almost 12-13 sectors having composite cap which includes private sector banking, airlines, insurance defence and telecom. In future composite cap will provide benefit for sectors such as power and commodity exchanges, credit information companies and market infrastructure companies. While this proposal will have the biggest impact on the sectors where Foreign Investment Promotion Board nod is required for investment.