Also Read: Cabinet to take up retail FDI policy on Thursday
The CCEA also allowed 100 percent FDI in telecom, ratified higher FDI caps, cleared the higher 49 percent FDI cap in insurance via the auto route (a Bill to raise FDI cap in the sector is pending in the Rajya Sabha) and approved the new definition of control in an corporate entity.
Also Read: Government gives nod to hike FDI caps in 13 sectors
The new definition explains 'control' as the right to appoint majority directors, control management or policy decisions, control by virtue of shareholding rights, control by virtue of management rights and control through management or shareholder agreements.
Although a high-level meeting chaired by Prime Minister Manmohan Singh on July 16 had decided to relax foreign investment norms in several sectors, the proposals were formally approved by the Cabinet on Thursday, sources said. The second wave of reforms comes within 10 months of the government opening floodgates of foreign investment in sectors like multi-brand retail and civil aviation.
The Cabinet also decided to allow 49 percent FDI in single-brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB) route. In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI would be allowed up to 49 per cent under automatic route as against current routing of the investment through FIPB.
In basic and cellular services, FDI was raised to 100 percent from current 74 percent. Of this, up to 49 per cent would be allowed under automatic route and the remaining through FIPB approval. A similar dispensation would be allowed for asset-reconstruction companies and tea plantations. A FDI of up to 100 percent was allowed in courier services under automatic route. Earlier, similar amount of investment was allowed through FIPB route.
In credit information firms, 74 per cent FDI under automatic route has been been allowed. While the FDI cap in the defence sector remained unchanged at 26 percent, it was decided that higher limits of foreign investments in 'state-of-the-art' technology manufacturing would be considered by the Cabinet Committee on Security.
These decisions come in the backdrop of country's economic growth plunging to 4.8 per cent in the January-March quarter. It slumped to a decade's low of 5 percent for the 2012-13 fiscal.
(With inputs from PTI)
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