Sharma: Weighing options
New Delhi, Jan. 1: The government plans to ease foreign direct investment in sectors such as railways, construction and defence to bolster investor confidence in the economy, which has shown green shoots of recovery.
“The government will continue its endeavour to liberalise the FDI policy further in the coming weeks to ensure that India retains its leadership position for attracting foreign investments,” commerce minister Anand Sharma said.
Sources indicated that the government planned to liberalise foreign investment in railways, construction and defence in the coming weeks.
Last year, the government had relaxed foreign direct investment norms in telecom, defence, PSU oil refineries, commodity bourses, power exchanges and stock exchanges.
“I expect that with greater foreign investment and technology collaborations, Indian manufacturing will also move up the value chain and acquire greater competitiveness globally,” Sharma added.
Foreign investment in railways will be limited to the laying of tracks for last mile connectivity. However, FDI will not be allowed in train operations and safety.
The government plans to allow foreign investment in “suburban corridor, high speed train systems and dedicated freight line projects implemented in the PPP mode”, an official said.
It has also suggested widening the definition of “infrastructure” by including railway lines.
According to the proposal, foreign companies will be allowed to pick up a 100 per cent stake in the special purpose vehicle that will construct and maintain lines connecting ports, mines and industrial hubs with the existing network.
“It will be first-to-last mile connectivity between ports and things such as coal mines to the existing railway freight stations,” the official said. At present, FDI is not allowed in railways, except the mass rapid transport system.
Moves are afoot to relax the norms for the purchase of agricultural land for realty projects. Rules allow developers to raise money overseas and invest it in the construction and development of property, but they are not permitted to buy agricultural land. The rules are aimed at preventing speculative buying at arbitrary rates from poor farmers.
Further, FDI norms in defence will be revisited to hike the investment limit through the FIPB route to 49 per cent from 26 per cent even as domestic industry is lobbying that the foreign inflow should include technology transfer.