The Indian government has scrapped a number of restrictions on direct foreign investment in an attempt to boost economic growth and the rupee.
The steps to further open India’s economy to foreign investment are the latest in the series of reforms since Indian prime minister Manmohan Singh reappointed progressive politician Palaniappan Chidambaram as finance minister a year ago.
The decision to ease restrictions on direct foreign investment was made during a meeting yesterday evening between prime minister Manmohan Singh and senior cabinet ministers, according to commerce minister Anand Sharma.
The move will see the current limit of 74 per cent on foreign holdings in mobile telephone operators scrapped. Foreign companies with minority domestic partners, including Britain’s Vodafone and Norway’s Telenor would be able to take 100 per cent control of their Indian operations under the new relaxed rules.
Exisitng curbs in a range of other sectors stretching from insurance to tea plantations will also be relaxed or scrapped altogether.
Sharma also said the government plans to ease restrictions on outside investment for “multi-brand” retailing such as supermarkets and department stores. He added: “That will happen very soon.”
Current caps on foreign investment will remain in place in other sectors including oil refining, commodity exchanges and “single-brand” retailing. However a greater proportion will be allowed as part of the “automatic route” instead of requiring official approval.