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FDI Cap Raised To 100% In Telecom, Asset Reconstruction

JULY 17, 2013

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To give a boost to the sagging economy, the government has hiked the foreign direct investment (FDI) limits in several sectors and also allowed 100 % FDI in telecom, asset reconstruction companies and credit information companies.


It follows the government allowing FDI in multi-brand retail and civil aviation. Round 2 of reforms retains the Defence sector cap at 26 %. The level can be raised for proposals involving advanced technology but it would need approval by the Cabinet Committee on Security.



The Cabinet also decided to allow FDI through the automatic route in petroleum and natural gas, commodity bourses, and power exchanges, while retaining the 49 % cap. In basic cellular services, the FDI cap has been hiked to 100 %. While 49 % investment can be made through the automatic route, the Foreign Investment Promotion Board approval is needed for higher stakes. New players, such as AT&T, may also find the sector attractive now.



The widening current account deficit and the falling rupee have prompted the Government to look for ways to attract more FDI.


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