Govt liberates FDI norms; announces negative list

NEW DELHI, FEB 1: The government on Tuesday decided to free the Foreign Direct Investment (FDI) in all areas except a small negative list as part of measures to attract the targeted 10 billion dollar overseas investment annually.

Announcing the decision taken by the Union Cabinet, Parliamentary Affairs Minister Pramod Mahjan said that the negative list including industries requiring industrial licence would be further pruned after a review exercise by a high-powered group of ministers.

Barring the negative list, all FDI would be through automatic route without going through foreign investment promotion board, Mahajan said, adding the move was aimed at making FDI regime more transparent and attractive.

The areas which still required government clearances for FDI included SSIs where foreign equity participation was already 24 per cent, where the investor has an existing joint venture (jv) in the country and proposal relating to acquisition of shares of domestic companies.

Proposals falling outside theexisting FDI policy and investment ceilings would require clearances as part of the negative list which also bars automatic investment in items requiring industrial licence under industries development and regulation act and those which require locational clearances. At present, sectors like alcohol, cigarettes, industrial explosives, pharmaceuticals, hazardous chemicals and defence aerospace and electronics would need industrial licencing. Mahajan said the new automatic route would help the government achieve its target of 10 billion dollar FDI annually against the present inflow of about four billion dollars.

Commerce and Industry Minister Murasoli Maran had announced on the day he took over that the government would come out with a negative FDI list to make the foreign investment regime more transparent. The cabinet has also approved the revised sector specific guidelines for foreign investment and foreign technology collaborations.