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Rediff.com  » Business » FDI review to deal with indirect holdings too: Nath

FDI review to deal with indirect holdings too: Nath

May 21, 2007 17:59 IST
The government will next month review the foreign direct Investment policy to lay down norms for preventing companies from breaching the sectoral limits, Commerce and Industry Minister Kamal Nath said on Monday.

The review would deal with all aspects of direct and indirect holdings and beneficial ownership to lay down a clear-cut criteria for identifying them, Nath said on the sidelines of a Confederation of Indian Industry meeting.

He said whatever view emerges it would be applicable from a future date. "Government does not like to do things retrospectively," Nath said, adding the review would be over in next six-eight weeks.

This means that Vodafone-Hutch deal, which sparked off the review, would not be subject to scrutiny on this count.

The annual review, which normally follows the Budget presentation, has been delayed this time as inputs from the ministries have not yet been received.

"The process of consultation between various ministries on FDI is in progress and is expected to be completed soon.

The changes in FDI regime after the review would be announced early next month," a source said.

The government is likely to allow foreign investors to pick stake in commodity exchanges and change norms and caps for aviation, petroleum and retail, sources said.

In the review, the government could also liberalise FDI norms in asset reconstruction companies, where the limit currently stands at 49 per cent subject to approval by the Foreign Investment Promotion Board.
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