New FDI norms unlikely to affect Hutch deal

NEW DELHI: The Revised foreign direct investment (FDI) norms that could impact several crucial sectors like telecom, real estate, banking and retail may finally be out by July. Commerce minister Kamal Nath on Monday said a host of pending issues like direct and indirect holdings and beneficial ownership would be addressed in the revised guidelines.

The minister added that the changes made in FDI regulations would have prospective effect. Elaborating on the FDI policy review, the minister said all revisions in regulations were likely to be effective from the date of announcement, as the government doesn’t like to impose changes with retrospective effect.

“There has to be credibility in whatever decision the government has taken,” he said. This means that the Vodafone-Hutch deal, which led the foreign investment promotion board to ask for a review of shareholding issues, would not be affected.

The annual review, which normally follows the Budget presentation, has been delayed this time as inputs from the ministries have not yet been received. The process of consultation between the various ministries on foreign investments is in progress and is expected to be completed soon.

Asked about foreign trade, the minister said that India had conveyed to the US that a breakthrough in the ongoing World Trade Organisation (WTO) talks had to be seen in light of a break-through in the services talks. “The breakthrough cannot be only in industrial products and agriculture. The Agreement on services has to be part of the package,” he said.

The minister was responding to a query on the action taken by India against letters written by two US senators to Indian IT companies questioning them on a possible misuse of H-1B visas. Mr Nath said that the issue was much wider and involves movement of people like contractual service providers and independent professionals.