The government plans to change its foreign direct investment (FDI) rules to allow 100 per cent ownership of state-owned refineries by global players through the automatic route. The move by the government is seen to make the sale-bound Bharat Petroleum Corporation Limited (BPCL) more attractive to bidders.

According to the existing policy, up to 49 per cent FDI is permissible through the automatic route in the petroleum refining PSUs, without any disinvestment or dilution of domestic equity in them. However, the policy allows for 100 per cent FDI through the automatic route in petroleum refining in the private sector.

Official sources said “... 100% FDI is already permissible in private sector refining. As BPCL is getting privatised by the government, the same should apply to it as well. DPIIT (Department for Promotion of Industry and Internal Trade) will soon clarify this".

The sources said several rounds of discussions have taken place among Dipam (Department of Investment and Public Asset Management), Department of Economic Affairs and DPIT (Department for Promotion of Industry and Trade), and they have all agreed on the proposal to issue the clarification.

The Centre has approved the sale of its entire 52.98 per cent shareholding in BPCL, along with the transfer of management control to a strategic buyer.

The expression of interest (EoI) was issued on March 7, 2020.