Considering relaxing FDI cap in various sectors: P Chidambaram

Considering relaxing FDI cap in various sectors: P Chidambaram New Delhi: Continuing the reform push, the government is considering further liberalising foreign investment cap in various sectors, Finance Minister P Chidambaram said on Monday.

"Many caps can be removed or certainly relaxed ... Some of these caps are completely irrelevant in terms of the changed situation," he said.

The government had in September last year liberalised Foreign Direct Investment (FDI) norms for various sectors, including retail and aviation.

"We need to clear some of the cobwebs accumulated in India and go out and woo specific business houses," he said.

Currently, there are various sectors where FDI limit is below 100 percent. While in multi-brand retail it is 51 percent, in telecom and banking it is 74 percent.

While the Cabinet has approved hiking FDI limit in insurance and pension sector to 49 percent, a bill to that effect is pending in Parliament.

Further, in commodity exchanges, asset reconstruction companies, credit information companies and private security agencies, up to 49 percent FDI is allowed.

In his Budget, Chidambaram had highlighted the need to attract foreign funds to finance the rising current account deficit (CAD), which is the difference between the inflow and outflow of foreign currency, which is at USD 75 billion.

CAD was 4.6 percent of GDP in April-September 2012 and is estimated to be as high as 5 percent for the year ending March 31, 2013.

Besides, the government has taken several steps to attract foreign funds in the country by liberalising the external commercial borrowing (ECBs) norms.

It has also announced steps to come up with accepted definition of FDI and portfolio investment where a foreign investor with more than 10 percent stake would be treated as FDI.

PTI