The government has given up plans to increase foreign direct investment ceilings in controversial sectors.

It has decided instead to focus on overhauling procedural bottlenecks in the way of overseas investments.

According to government officials, higher FDI in sectors like telecom, civil aviation, broadcasting and insurance will have to wait a while for the administrative ministries to restate their positions.

The Cabinet had asked the department of industrial policy and promotion to approach it afresh with sector-wise proposals and fresh comments from the respective ministries.

Sources in the department said the present FDI regime was liberal enough and there was no need to hike limits any further.

"We have allowed sufficient foreign equity to flow into the various sectors. Foreign companies will invest in India only if it makes business sense," a senior government official explained.

Government officials added that there could be some movement on the FDI front in sectors like petroleum and real estate (integrated townships) where the administrative ministries did not pose any specific hurdles and supported the recommendations of the N K Singh committee.

The first report on reforming investment approval and implementation procedures for public and private sector projects submitted by a committee headed by the department's secretary, V Govindarajan, has already been notified.

The panel had recommended an industrial investment facilitation board to follow up approvals by various agencies.

Projects facing excessive delay were proposed to be referred to a group of ministers for early resolution.

In addition, the Foreign Investment Implementation Authority will address problems faced by foreign investors in regard to delay in implementation.

It had also recommended a single-window mechanism at the state level by putting in place a legislative framework.

The Cabinet, which last discussed the FDI issue on April 22, did not approve any proposal to increase caps on all sectors. It had directed the department to bring before it separate proposals on each of the sectors.

The government officials, however, said none of the administrative ministries that had blocked the proposals earlier had relented. Even ministers with pro-reform credentials had back-tracked, they pointed out.

The new turn

• Focus now on procedural bottlenecks.
• Dept of industrial policy & promotion to approach Cabinet with fresh sector-wise proposals.
• Departmental sources say present FDI regime liberal enough.