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Security screen for FDI likely
P Vaidyanathan Iyer & Sidhartha in New Delhi |
April 22, 2003 13:40 IST
The government is planning to insert a security filter for all foreign investment applications.
The need for a comprehensive mechanism of security clearance will be discussed by the Cabinet on Wednesday along with proposals to increase the foreign direct investment ceilings in petroleum, telecommunications, aviation and scientific and technical journals.
The group of ministers on foreign investment headed by Finance Minister Jaswant Singh has proposed a separate and comprehensive mechanism for security clearances and for enforcing security requirements irrespective of the equity structure.
This would be in addition to sector-specific security norms to be notified by the Secretariat for Industrial Assistance under the commerce and industry ministry, government officials said.
All FDI proposals will thus be screened even if a company intends to pick up a stake in an Indian venture which is below the prescribed limit in the particular sector.
The group of ministers' recommendation takes forward an initial proposal of the external affairs ministry to restrict investment from countries hostile to India's national interests.
The proposal put forward by the department of industrial policy and promotion has overruled the civil aviation ministry's opposition to permit foreign airlines to acquire a stake in domestic carriers.
In allowing 49 per cent FDI in domestic airlines, the department has gone by the recommendations of the N K Singh committee on FDI.
In physical infrastructure and related facilities in airports, the proposal favours 100 per cent FDI.
The DIPP proposal for basic and mobile telephony favours increasing the composite foreign equity participation through all channels -- FDI, foreign portfolio investment, foreign venture capital investment, and investment by non-resident Indians and overseas corporate bodies -- to 74 per cent from 49 per cent.
The department has, however, decided to retain the 74 per cent FDI cap on bandwidth, gateway and radio paging.
The N K Singh committee had suggested doing away with the limits and opening up the sectors fully for foreign investors. The DIPP proposal in services like Internet, e-mail and voice mail favours 100 per cent FDI through the automatic route.
A proposal to allow 100 per cent FDI in scientific and technical magazines, periodicals and journals will also be considered by the Cabinet.
The DIPP has also proposed 100 per cent FDI through the automatic route in public sector oil companies and through the FIPB route in companies producing natural gas, as well as oil exploration in small and medium fields.
FDI proposals
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