New FDI norms notified for various sectors

New Delhi: Clearing the decks for a liberalised Foreign Direct Investment regime, the Government today notified the new foreign investment norms for various sectors including public sector oil refineries, mining of titanium bearing minerals and commodity exchanges, even as it remained silent on construction development projects.

While Press Notes were issued for six sectors including civil aviation, credit information companies, the real estate industry may be disappointed as contrary to expectations there was no explicit clarification in case of construction development projects, that investment by registered FIIs under the portfolio Investment Scheme would be distinct from FDI, and be outside the purview of Press Note 2 (2005), which includes conditions such as three-year lock-in. The much-needed clarification on FDI and FII norms would have increased the inflow of capital for construction development projects, a real estate analyst said.

Cabinet meeting:

Although a press release issued after the January 30 meeting of the Cabinet had indicated that such a clarification would be issued, the list of notification today did not include construction development.

“We have gone by the minutes of the Cabinet meeting and the item pertaining to investment by FII was not considered by it,” a senior official said.

According to the guidelines issued by the Department of Industrial Policy and Promotion, FDI up to 100 per cent would be allowed both for setting up and in established industrial parks under the automatic route.

The official press note stated that the Industrial Parks should comprise a minimum of 10 units with no single unit occupying more than 50 per cent of the allocated area.

The Government also notified allowing FDI in credit information companies. FDI and FII would be allowed up to 49 per cent with prior approval of the Government and regulatory clearance from RBI. The Government has also issued a formal notification for raising foreign direct investment limit in public sector refineries to 49 per cent.

It also notified that up to 49 per cent foreign investments would be allowed in the case of commodity exchanges.