| Big
push for foreign investment |
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The NK Singh-led steering committee
on foreign direct investment has recommended removal
of FDI caps in several key sectors and a substantial
increase in a few others. The 120-page report has
outlined a 10-point agenda including enactment of
a foreign investment promotion law and overhaul of
the existing strategy for attracting FDI.
Following are some of the key recommendations-
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Increasing the sectoral cap
on civil aviation from 40 per cent to 49 per cent,
on basic and mobile telecom services from 49 per
cent to 74 per cent, on broadcasting direct-to-home
services from 20 per cent to 49 per cent, on insurance
from 26 per cent to 49 per cent and plantations
from nil to 49 per cent.
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Allowing equity participation
by foreign airlines.
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Removing the existing cap and
allowing 100 per cent FDI in private banks and
investing companies, real estate including complexes
and individual houses and buildings, advertising,
trading, radio paging, airports, total bandwidth
companies, oil and gas pipelines, gateways, coal
washery and mining and quarrying of diamond and
precious stones.
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Possibility of further opening
up of FDI in media by recommending that FDI equity
limits in individual companies in the field of
current affairs and news programmes could be replaced
by limits to the aggregate market share (25 per
cent to 49 per cent) that can accrue to foreign
controlled news companies taken together.
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Relaxation of FDI norms for
the defence industry especially with respect to
restrictions on the production of civilian goods
used by the defence forces. Further, it has noted
that FDI with high level of foreign equity and
management control is preferable over continued
imports in defence equipment production.
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Enactment of a foreign investment
promotion law to be administered by the department
of industrial policy and promotion as against
the present administration of the Foreign Exchange
Management Act by the directorate of enforcement.
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Possibility of states considering
enactment of a SEZ law covering industrial, labour,
environmental and other issues. It has suggested
elimination of price controls, investment restrictions
and exemption from minimum alternate tax, dividend
tax and income tax on export profits for SEZs.
Customs, excise and service tax laws can be modified
so that all transactions within the SEZ are exempt.
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Recommendation to empower the
Foreign Investment Promotion Board to give initial
Central government registration and approvals.
The Foreign Investment Implementation Authority
can be empowered to enable it fix the time frame
for investment related approvals both at the state
and central levels.
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Our Say |
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| Focussing
on the promotional aspects rather than
on regulation will send a strong signal
to investors as India has become one of
Asia’s hottest investment destinations
with forex reserves swelling to over US
$ 100 billion. The government must take
steps to provide better information about
policy, regulations, procedures, etc.
The Finance Ministry is already examining
the possibility of having a universal
green channel for all foreign direct investments
into the country, except for a short negative
list.
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