Free-market: FDI cap hiked in telecom, aviation, insurance
Thursday, 08 July 2004, 19:30 IST
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NEW DELHI: In a major step towards free-market reforms, the government Thursday raised foreign direct investment (FDI) limits in the fast-growing sectors of telecom, civil aviation and insurance. Presenting the general budget for fiscal 2004-05 in parliament, Finance Minister P. Chidambaram said the government had decided to raise the FDI cap in the telecom sector from 49 percent to 74 percent, from 40 percent to 49 percent in the civil aviation sector and from 26 percent to 49 percent in the insurance sector. "There is an urgent need for infusing huge amounts of capital in these sectors," said Chidambaram. "Foreign direct investment has the potential to add a competitive edge, especially in the industrial sector. The issue of hiking FDI in the Indian telecom sector to 74 percent has been hanging fire for the last few months with some agencies opposing this on grounds of national security. The proposal, which had reached the closure stage in January, was taken off the agenda on the plea that it needed detailed consideration. Gartner Inc., one of the world's leading IT and telecom market research firms, says India must relax investment controls significantly to take advantage of global capital markets. Indian mobile telecom service providers like Bharti Tele-Ventures and Hutchison will be the main beneficiaries of the sharp hike in FDI limits. "This is a positive decision and I think very soon we will see many foreign investors coming into India's telecom sector," said Rajan Bharti Mittal, joint managing director of Bharti Tele-Ventures. The Indian industry also welcomed the hike in the FDI cap in the insurance sector, saying companies would get a major boost.
Source: IANS
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