New Delhi: The Congress-led UPA government on Wednesday categorically stated that the recent liberalization of foreign direct investment (FDI) norms will not result in backdoor dilution of sectoral foreign investment caps as management control will continue to be with Indians.
“There is no question of backdoor dilution of sectoral cap,” minister of state for industries Ashwani Kumar said replying to supplementaries during Question Hour in Rajya Sabha here.
Investment made by a domestic company in which foreign firms might hold a small stake but the majority 51% shareholding and managing control is with Indians, will not be treated as FDI for the purpose to calculating the sectoral cap.
This liberalization would ensure that “domestic companies were not unreasonably fore-closed for participating” in various sectors, he said.
Caps on foreign investment in certain sectors, he said, had been put to ensure that majority 51% stake and management control in the company is with Indians. “We have ensured that control of the company will remain in Indian hands,” he added.
Management control, majority of board of directors and majority of stake in the company will continue to be with Indians, he said.
Asked about the impact of global economic slowdown on India, Kumar said: “We are not totally insulated... (but) since Indian economy is driven by domestic consumption and demand, the impact will be relatively less.”
India in 2004, when UPA came into power, received $2.5 billion in FDI. “We hope to get $30 billion in FDI commitments this year,” he said.
Despite the global economic meltdown, India still offers best destination in terms of return on FDI, he said.
With 7% economic growth rate and reasonable rate of returns, “India continues to be a most favourable destination for FDI,” he said adding this was a result of calibrated efforts to liberalise FDI regime.
He said foreign investment in news and current affairs continues to be capped at 26% and last month’s decision of the Foreign Investment Promotion Board (FIPB) was only to permit Dow Jones of US to print a facsimile edition, which is supposed not to publish Indian news and content.
Since the sectoral cap of 26% remains, there was no case to apprehend foreign ideas influencing culture and ethos of the country, he added.
The minister said 49 proposals pertaining to various sectors were still pending with FIPB for want of requisite information.