FDI in insurance, telecom not to wait for GoM nod

NEW DELHI: The industry ministry will prepare a cabinet note to hike the foreign investment limit in telecom, insurance and civil aviation and to allow foreign airlines to invest in domestic airlines, without waiting for formal endorsement by the Group of Ministers (GoM) on FDI. Today's meeting between Union commerce and industry minister Murasoli Maran, finance minister Jaswant Singh and member, planning commission, NK Singh discussed the report on FDI prepared by the NK Singh Committee and decided that the GoM on FDI would seek the views of the concerned administrative ministries except in the case of telecom, civil aviation and insurance. The NK Singh report has recommended a 49% cap for FDI in domestic airlines and the insurance sector, and removal of the disqualification against foreign airlines. The committee has recommended hiking the investment limit for the telecom sector to 74%. The existing caps on FDI in the telecom and insurance sector are at 49% and 26%, respectively (FIIs investments included). Forty per cent FDI is allowed in domestic airlines but not directly or indirectly by foreign airlines. Hundred percent NRI/OCB investments, however, are permitted.The remaining proposals of Singh's report will be discussed at a meeting of the GoM on FDI, tentatively scheduled for September 18. A road map for the treatment of Singh's recommendations was laid down at today's meeting, top government officials said. The GoM is headed by the finance minister. Emerging from Jaswant Singh's chamber after the meeting, Mr Maran told reporters that the Cabinet note will be prepared by the industry ministry as it was the administrative department for FDI. Comments from the administrative ministries are also likely to be invited on the proposals before they are taken to the Cabinet. The meeting of the Cabinet is likely to take place after the prime minister returns from his foreign trip. Top government officials told ET that the decision to take the three proposals directly the Cabinet has been taken in pursuance to the informal decision taken last week by the Cabinet Committee on Disinvestment (CCD). Jaswant Singh is reported to have supported the decision to ease the FDI limit for the insurance sector at the meeting. They said that the government wants to send out the message that the liberalisation of the FDI policy is on a fast track and that no time is to be wasted discussing the issue at the GoM level.Maran said that the easing of the insurance cap will take some time as it would require legislative changes. He ruled out the promulgation of an ordinance. The officials, however, said that the finance ministry will amend the Insurance Act, 1938 if the Cabinet's clears the industry ministry's proposal. He said that the changes to the FDI policy will be formulated in a manner best suited to employment generation and political consensus. Officials also said since opposition from the civil aviation ministry was expected on the proposal on allowing foreign airlines to invest in domestic airlines, taking it straight to the Cabinet meant that the Prime Minister could step in to resolve the conflict.The proposal to liberalise the cap on FDI in telecom to 74% from the existing level of 49% is unlikely to face any resistance from the department of telecom as the telecom minister Pramod Mahajan, who is also a member of the GoM on FDI, has already said that he supports the proposal.

FDI in insurance, telecom not to wait for GoM nod

The industry ministry will prepare a cabinet note to hike the foreign investment limit in telecom, insurance and civil aviation and to allow foreign airlines to invest in domestic airlines, without waiting for formal endorsement by the Group of Mi...

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