The government is set to raise the foreign direct investment cap in retail, petroleum and aviation, besides open up commodity exchanges to foreign investment next month. According to sources in the department of industrial policy and promotion, a comprehensive overhaul of the FDI regime will be undertaken in March and placed before the Cabinet. The agriculture ministry’s decision on FDI in commodity exchanges would also be included in the Cabinet note.In the petroleum sector, the government is likely to relax the condition that 26 per cent of foreign equity be divested in favour of domestic entities in five years. In aviation, 100 per cent FDI is likely to be allowed in all non-airline operations like ground handling, airport maintenance, overhaul and repair. Any increase from the present 51 per cent FDI in single-brand retail would benefit retailers intending to set up multi-brand retail outlets. The government has already said it was considering fully opening up multi-brand retail in areas like stationery, sports goods and electronics to foreign investment. The government is also expected to liberalise FDI in asset reconstruction companies, currently capped at 49 per cent. The cap on voting rights in private banks may also be reviewed.
