New Delhi: Unfazed by criticism over allowing “backdoor” entry to foreign investment in sectors like retail, the government on Friday ruled out review of the new foreign direct investment (FDI) policy that keeps indirect FDI out of sectoral caps.
“There is no question of review. If something is not understood, there will be clarification... Anybody who has doubt can get clarification,” commerce and industry minister Kamal Nath told reporters on the sidelines of an India-New Zealand bilateral meet here.
On the eve of the current session of Parliament, the Cabinet Committee on Economic Affairs approved some far- reaching changes in the FDI guidelines.
As per the new norms, foreign investment in a company, “owned and controlled” by an Indian, would not be counted as FDI. This means, a minority FDI in a domestic firm would not be taken into account when it makes investment into a subsidiary firm that in turn has a joint venture with a foreign company.
By implication, FDI component in the parent domestic firm would not be subject to the sectoral caps, thus giving leeway to overseas firms in sectors like telecom. The policy does not prohibit FDI into retail either. At present, FDI in multibrand retail is not permitted.
The Left parties have blamed the government for allowing “backdoor entry” to FDI into sectors kept outside the overseas investment.