New Delhi: In big-ticket reforms push, the government on Tuesday decided to hike foreign direct investment (FDI) in 13 sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy.
However, the high-level meeting chaired by Prime Minister Manmohan Singh did not take a view on raising FDI limits in sectors like civil aviation, airport, media, multi-brand retail and brownfield (existing firms) pharmaceuticals. The FDI cap for civil aviation was, however, left unchanged at 49 per cent.
In the contentious insurance sector, the government has decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval. A Bill to raise FDI cap in the sector is pending in the Rajya Sabha.
"While the FDI cap in defence sector remained unchanged at 26 per cent, higher limits of foreign investments in 'state-of-the-art' technology manufacturing will be considered by the Cabinet Committee on Security," Commerce and Industry Minister Anand Sharma said.
"Consensus on raising FDI limits in some sectors and relaxing the route in others was arrived at a meeting Prime Minister Manmohan Singh took with his key ministers," Sharma said. "We have seen 25 per cent higher FDI this quarter," Sharma added.
The government has allow 49 per cent FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB).
In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI will be allowed up to 49 per cent under automatic route as against current routing of the investment through FIPB.
The decision comes days after Finance Minister P Chidambaram and Commerce and Industry Minister Anand Sharma's visit to the US to woo foreign investments. These crucial economic decisions were taken at a meeting held by Prime Minister Manmohan Singh with 11 of his senior Cabinet ministers in New Delhi.
Sharma said the decision on multi-brand will also be taken later. All these decisions were taken by "consensus" during the meeting in which Ministers of Defence, Finance, Petroleum, Food and Consumer Affairs, Power and Home were present, he said, adding it will bolster investment, employment and growth.
"A Cabinet note will be moved immediately and the next meeting of the Cabinet will take up all these decisions," the Minister said.
The decisions taken on Tuesday were based on recommendations of Mayaram Committee which had suggested relaxing investment caps in about 20 sectors, but the meeting approved only in 13.
The government is firefighting to steady the economy - with the slipping rupee, falling industrial output and rising inflation. All ministers heading economic and infrastructural ministries were present at the meeting.
With Additional Inputs From PTI