New Delhi, April 23: The Cabinet today decided to defer a decision on the controversial issue of raising foreign direct investment caps in aviation, telecom, petroleum, non-news print media and infrastructure sectors.
A group of ministers had cleared the proposals a few days before the budget and the Cabinet was expected to rubber stamp the decision. However, there were notes of dissent and voices of concern within the Cabinet over security issues linked to permitting higher foreign investment in crucial sectors like telecom and aviation.
Cabinet spokeswoman, parliamentary affairs minister Sushma Swaraj, told reporters, “We deferred the issue. There was no discussion on it.”
It was known that several ministers were gearing up to voice concern over the proposals which will allow up to 100 per cent FDI through the automatic route in oil refining, 100 per cent in airports and other physical infrastructure, up to 74 per cent in telecom and 49 per cent in airlines.
The civil aviation ministry was unhappy with moves to allow up to 100 per cent investment in airports through the automatic route, preferring the current policy of routing 100 per cent investments through the FIPB and for some mega-investment proposals.
On investment in domestic carriers, the ministry would have liked to come to a compromise where total foreign investment could be raised to 49 per cent from a current 40 per cent.
Within this overall cap, it wants foreign airlines to be allowed to hold less than 26 per cent. Currently, they are not allowed to hold any stake.
The defence ministry also had doubts about the advisability of allowing up to 74 per cent control in the telecom sector and 100 per cent in the oil sector to foreign players.
The ministry feels that control over these two vital sectors cannot be ceded without appropriate checks. It would prefer to approve proposals on a case by case basis.