New Delhi:
The government today relaxed Foreign Direct Investment or FDI guidelines for a range of industries including telecom, single brand retail and oil and gas in a bid to lure capital inflows, prop up the sliding rupee and rev up growth. (
Announcements at a glance)
In telecom, 100 per cent FDI is now permissible, a move that's expected to bring in at least 10 billion dollars.
For the key sector of insurance, the FDI cap has been increased from 26% to 49%.
In the contentious multi-brand retail sector, the cap remains at 51% as decided in September, a move that prompted the exit of Mamata Banerjee and her Trinamool Congress from the ruling UPA, forcing the government into a minority. A new hike of upto 74 per cent had been suggested by a committee headed by Economic Affairs Secretary Arvind Mayaram.
In sectors like petroleum and single-brand retails, an initiative for faster clearances means that for upto 49% FDI, projects will no longer have to first be cleared by the Foreign Investment Proposal Board or FIPB.
In defence, the cap remains at 26 per cent, though the government says it may allow higher FDI for cases that will help India acquire "state-of-the-art technology." The Cabinet Committee on Security or CCS will have to approve all such proposals.
India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.
It hit an all-time low of 61.21 per dollar last week and is down nearly 10 per cent against the dollar since May.
To stabilise the currency, the Reserve Bank of India or RBI has raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs 12,000 crore in bonds, effectively draining cash from the market.