Dramatic liberalization of India's foreign direct investment regime

A government panel on 19 June has recommended a dramatic liberalization of India's foreign direct investment regime, including raising the FDI limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies. "We have given our recommendations to the finance minister. He has forwarded them to the Department of Industrial Policy & Promotion (DIPP)," department of economic affairs Secretary Arvind Mayaram, who headed the panel, told reporters on 19 June. He did not provide details of the report's contents. It has also batted for raising or doing away with FDI caps in a number of sectors, including non-scheduled air transport, ground handling at airports, satellites, private security agencies and Internet Service Providers (ISPs) to attract capital flows that are needed to finance the current account deficit and bolster the rupee. The DIPP, the administrative ministry in charge of FDI policy, will now have to implement the Mayaram Committee report. Key ministers, notably Finance Minister P Chidambaram and Commerce Minister Anand Sharma, are expected to meet in the first week of July to finalise the plan. The panel has suggested allowing foreign supermarkets to buy up to 74% in Indian retailers with prior government approval. The multi-brand retail sector was thrown open to foreign investors in September 2012 but has failed to see any investment so far. The panel has suggested 100% FDI in telecom and non-scheduled air transport and amending rules to allow complete ownership by foreign investors, including airlines, in scheduled carriers. FDI in telecom will need approval of the Foreign Investment Promotion Board (FIPB), a government panel. The committee has also favoured allowing 100% FDI in ISPs, private security agencies, satellite, ground handling operations, cable networks, direct-to-home services, mobile TV and teleports. It has also suggested lifting caps to 49% from 26% in a number of sectors and doing away with mandatory FIPB clearance in these industries. The government is actively discussing raising FDI in defence production to 49% and in telecom to 100%.