The Union Cabinet’s decision to increase the FDI limit in public sector refineries up for disinvestment to 100 per cent through the direct route, from the existing 49 per cent, is likely to help in divesting the government’s stake in public sector oil refiner BPCL.

“The increase in FDI limit to 100 per cent is for oil PSUs that are to be disinvested. For the rest, the FDI limit stays at 49 per cent,” a senior official confirmed.

The government, however, did not make any official announcement on this decision taken at the Cabinet meeting on Thursday, probably due to the on-going Parliament session and the sensitivity of the matter.

Also read: India’s $7 billion BPCL sale slows on pandemic, LIC IPO

The Department for Promotion of Industry and Internal Trade (DPIIT), the nodal department for policy on FDI, is likely to officially notify the change in FDI rules at a later date.

Disinvestment plan

The FDI cap of 49 per cent on oil refineries was proving to be a hitch in the government’s attempts to sell its near 53 per cent stake in BPCL, which is the country’s second-largest refiner. The planned stake-sale is part of the government’s efforts to raise ₹1.75-lakh crore from disinvestment of public sector companies and financial institutions in 2021-22.

“With the decks now cleared for FDI up to 100 per cent in oil PSUs with in-principle approval for disinvestment, it is being hoped that the sale will go through early,” another official said.

Apart from BPCL, the government is looking at strategic sale of other PSUs such as IDBI Bank, LIC, BPCL, Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd.

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