New FDI regime to open up commodity exchanges, aviation and ARCs

02 Feb 2007

1

Mumbai: The government is likely to allow foreign investors to pick stake in commodity exchanges and make changes in regulations and investment limits in aviation, petroleum and retailing in an overhaul of the country's foreign direct investment (FDI) regime next month.

The cabinet will take up a comprehensive proposal on fine-tuning the existing FDI regime across diverse sectors in March, official sources said.

The cabinet proposal is likely to recommend FDI in commodity exchanges as the agriculture ministry is expected to firm up its views by then.

It would also include liberalisation of FDI in asset reconstruction companies (ARCs) where the present limit stands at 49 per cent. The Foreign Investment Promotion Board is expected to approve such a proposal.

In banking sector, the proposal would recommend a review of the cap on voting rights of foreign investors.

In the petroleum sector, the proposal would also include a dilution of the condition that 26 per cent of the equity must be divested in favour of Indian entities in five years.

In aviation, the proposal would seek to segregate different air traffic services. The government will define what constitutes these services and set different FDI rules and limits for them.

The review of the FDI regime will be taken up in the light of the experiences of the last one-year, sources added.

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