Panel wants 100% FDI in banking, housing

The NK Singh committee on FDI has favoured enhancing FDI limits to 100% in critical sectors of private banking, real estate (housing), petroleum refining, oil marketing, diamond mining, petroleum exploration, coal washery, airports, radio paging, advertising and trade.
Barring FDI in plantations and real estate (housing), the committee has supported all proposals to be on the automatic route.
The sectors where the committee has tinkered with FDI sectoral cap include airlines where the ceiling has gone up from 40% to 49%, covering foreign airlines too.
This means that the proposal seeks to allow foreign airlines to pick up equity in domestic carriers. In insurance, the ceiling is proposed to be enhanced from 26% to 49%.
Even as the fate of privatisation of oil PSUs, HPCL and BPCL, stands in limbo, the N K Singh Committee on FDI today said virtual monopoly of public sector in oil marketing should be broken by allowing foreign companies through 100% FDI.
For the sectors which are currently under the banned list of FDI, the committee has proposed a 49% FDI cap for plantations and full FDI in real estate.
However, the panel has decided to continue with ban on FDI in retail as it was labour intensive and disorganised on account of which it is "not thought desirable to lift the ban".
Planning Commission member N K Singh submitted his report, which outlines strategies to take FDI to $8bn per annum, to Prime Minister Atal Bihari Vajpayee today. The group of ministers on foreign investment will consider the early processing and recommendations of the report, according to a press release on the PM''s remarks.
The committee has strongly advocated removal of both entry and exit barriers to FDI. While FIPB''s role in the entry of FDI has been diminished to a great extent, the committee has also called for removal of cumbersome policies that block exit based on sale of shares by foreigner to another foreigner, sale from NRI to a resident Indian, share swap and restrictive clauses like 25% ceiling on premium on publicly listed share price.
All these exit modes are either governed by FIPB sectoral caps or require special permission from RBI and other agencies.
The committee has favoured empowering FIPB to give initial Central-level registrations and approvals where possible and to speed up the process of project implementation. It has also proposed change in government rules to empower the Foreign Investment Implementation Authority to hasten the processing of policy approvals.
The committee also noted that while privatisation and disinvestment of large enterprises have played an important role in FDI flows in many emerging markets, the disinvestment and privatisation in India so far has not succeeded in eliciting any significant FDI flows.
To perk up India as a hot destination for FDI, the committee has proposed the reorientation of the Foreign Investment Promotion Council as the main arm of the government for promoting foreign investment.
On the legal side, the committee has suggested the enactment of a Foreign Investment Promotion Law and has urged states to draft a special investment law that clears hurdles in the way of FDI.
The committee has particularly zeroed in on special economic zones as the most competitive destination for export-related FDI. The committee has also favoured fixing FDI targets at the desegregated level so that accountability can be fixed on individual ministries/departments on achieving them.