Formal talks begin; Commerce Ministry’s final report likely by July 6-7
The Government has kicked-off the process of reviewing foreign direct investment (FDI) caps in various sectors.
The process began on Monday with formal consultations between Finance Minister P. Chidambaram, and Commerce and Industries Minister Anand Sharma.
“Whatever steps are required, whether it is further reforms or opening up (FDI in different sectors), we will take an early view on it,” Sharma told reporters after the over 90-minute meeting with Chidambaram. He refused to divulge the details of Monday’s discussions.
The exercise of reviewing FDI caps is based on the suggestion given by a Government-appointed panel headed by Arvind Mayaram (Secretary in the Department of Economic Affairs). The committee has recommended three caps – 49 per cent, 74 per cent and 100 per cent – against the present system 26, 49, 74 and 100 per cent.
It also suggested raising limits in sectors such as defence, multi-brand retail, print media, news channels, stock exchanges among others.
On June 25, Chidambaram had said that revised FDI caps for various sectors would be in place by the second or third week of July.
Later in the day, the Secretary in the Department of Industrial Policy and Promotions (DIPP), Saurabh Chandra, initiated discussions on one-to-one basis with Secretaries of 15 Ministries, such as Defence, Telecom, Information and Broadcasting, Petroleum, Power and Space.
The meeting with other Ministries will take place on Tuesday.
“After these meetings, each Minister will send their views in writing to the Commerce and Industries Minister. A final report is expected to be ready by July 6 or 7,” Chandra said. He said the Ministries’ views will keep in mind the Home Ministry’s apprehension on revising FDI caps in various sectors.
Based on the deliberations of these meetings, Chidambaram and Sharma will discuss the issue with the Prime Minister. However, the final decision will be taken by the Cabinet.
The Mayaram committee has said that considering the adoption of the principle of ownership and control, the revised definition of which is being proposed by DIPP, there should be only three categories of activities.
First, where foreign ownership and control cannot be allowed, 49 per cent FDI will be permitted with the definition of control.
Second, in sectors or activities where ownership and control (Indian or foreign) is not material, FDI will be 100 per cent on automated routes.
The third category will be one where though foreign ownership and control is permitted, a degree of Indian participation or oversight is also considered necessary.
In these 74 per cent FDI with FIPB (Foreign Investment Promotion Board) oversight has been recommended.