The government is giving final shape to the broad contours of a new foreign direct investment (FDI) policy regime that is expected to be unveiled shortly. Commerce and Industry Minister Kamal Nath told reporters that the government expects the new FDI policy to be unveiled over the "next six to eight weeks".
Nath said that the government would undertake a review of shareholding patterns and clearly thrash out the definitions of conceptually contentious issues such as "indirect and direct shareholding" in companies.
The move comes in the wake of the complex shareholding structure of Hutchison-Essar, which was bought over by British telecom behemoth Vodafone involving a value of $11.1 billion.
Reports suggest that the Foreign Investment Promotion Board (FIPB) has asked the Department of Industrial Policy and Promotion (DIPP) to review FDI norms and clearly define direct and indirect shareholding in a company to ensure that sectoral FDI caps are not violated through complex shareholding structures.
With an FDI target of $30 billion for the current financial year, the imperative to re-define parameters is being felt in the government, Union Commerce and Industry Ministry officials told Hindustan Times.
The issues that are likely to attract the attention of policymakers include liberalisation of regulations relating to cargo handling at airports, permitting FDI in commodities exchange and simplification of procedures as well as relaxation of guidelines on foreign investment in the retailing of petroleum products.
Nath said that a strong rupee was hurting India's exports, and also came out strongly in favour of opening up the services sector to enable further movement in the talks in the World Trade Organisation (WTO). The issue gained significance after a letter written by two members of the US Senate Judiciary Committee to some prominent Indian IT companies, including TCS, Infosys and Wipro.
"Services are an important component of the breakthrough in the current WTO negotiations," said Nath.
Nath also said that India and Mexico have decided to explore the possibility of entering into a Preferential Trade Agreement (PTA) to improve bilateral trade.