The Cabinet, scheduled to meet on Thursday, will consider proposals to liberalise foreign investment norms for key infrastructure sectors like airports, power trading and mining.
It would also discuss a proposal to allow foreign direct investment in the potable alcohol business, for which an industrial licence was required, officials told Business Standard on Wednesday.
A 16-page note prepared by the department of industrial policy and promotion has also proposed allowing resident Indians to transfer their shares to non-resident Indians through the automatic route by doing away with the need for clearances from the Foreign Investment Promotion Board.
The DIPP has proposed 100 per cent FDI in power trading, a sector which is still closed to foreign investment. Indian companies were allowed to trade in power after the enactment of the Electricity Act in 2003.
It has also proposed to do away with the mandatory divestment clause, applicable for foreign companies, in favour of Indian firms or the public in sectors like tea and business-to-business e-commerce.
According to present norms, companies listed abroad can undertake B2B e-commerce activity through 100 per cent subsidiaries. This is subject to the condition that they disinvest 26 per cent equity in the subsidiaries to the Indian public in five years. A similar rule is applicable for the tea sector.
The DIPP has also proposed raising the FDI limit for mining of diamond and precious stones from 74 per cent to 100 per cent through the automatic route. It has also proposed 100 per cent FDI for coal mining by cement and steel companies.
Present norms allow 100 per cent foreign-owned companies to set up ventures for mining of 10 major minerals and all minor minerals, except diamonds and precious stones, without seeking FIPB clearance.
The rules permit 100 per cent FDI for airports but with a rider that foreign holding beyond 74 per cent requires government approval.
A proposal to get rid of FIPB clearance for cash-and-carry wholesale trading has also been recommended.
At present, even if an FDI proposal is permitted under the automatic route, companies have to approach the FIPB to get a clearance stating 'subject to standard trading conditions' if proposals involve any kind of trading such as sales.
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