FDI caps in different sectors could be revisited: FM
New Delhi: Foreign investment limits in different sectors where ceilings are not serving their intended purpose will be revisited, Finance Minister P Chidambaram Monday said.
"The government is looking at FDI caps to see if they are indeed serving the purpose. Otherwise, the caps could be revisited," he said at a meeting the Parliamentary Consultative Committee of the Ministry of Finance.
The agenda for the meeting was 'The Current Account Deficit- Implications and Measures to Contain the Deficit.'
While India allows 100 percent FDI in a large number of the sectors, there is a ceiling on foreign investment in sensitive segments like multi-brand retail, insurance, defence and telecom.
Government is keen on increasing foreign direct investment (FDI) ceilings to attract more inflows and finance the widening current account deficit (CAD).
Commerce and Industry Minister Anand Sharma yesterday had said he would soon move the Cabinet for raising FDI cap in telecom and defence sectors as the government wanted to revive economic growth and spur investments.
Chidambaram said the major reason for India's large CAD is that the country has huge dependence on import of certain items like oil, coal and gold.
India's CAD, which touched record high of 6.7 percent of GDP in the December 2012 quarter, is likely to be around 5 percent in the 2012-13 fiscal. As per the RBI, India can sustain CAD in the range of 2.5 percent.
Economic growth rate slipped to a decade low of 5 percent in 2012-13 and FDI inflows during the last fiscal declined by 38 percent to USD 22.42 billion in 2012-13.
Chidambaram said that despite recession in major economies, India continues to remain a desired destination for FDI and FII.