India to change foreign investment policy

India to change foreign investment policy

By agencies   |   Thursday, 17 November 2005, 08:00 Hrs
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NEW DELHI: The Indian government has proposed to bring in major changes to ease its policy on foreign direct investment, Commerce Minister Kamal Nath said Thursday.

The changes were likely to focus on easing procedures and raising caps currently applicable on foreign investment in some sectors, Nath said.

This proposal will kick start the long stalled program of economic reforms, Nath said adding that the government will allow 100 percent foreign holdings in a range of sectors, including airport construction, oil & gas infrastructure and cash & carry wholesale trading.

Nath said the cabinet would also discuss on whether or not to allow FDI in the exploration and mining of coal, lignite and diamonds, and in the cultivation of important plantation crops such as coffee, tea and rubber.

India attracted $5.5 billion in FDI in 2004-05, an increase of 18 percent, which is less than a tenth of the inflows into China. The government estimates that $150 billion needs to be invested in upgrading the country’s infrastructure over the next 10 years.

If the new rules are approved, they will also allow foreign investment to come in by the so-called “automatic route”, circumventing a cumbersome approvals process overseen by the Ministry of Finance’s Foreign Investment Promotion Board.

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