Liberalisation of FDI norms won`t dilute sectoral cap: Govt

New Delhi, Feb 18 (PTI) Government of India Wednesday
categorically stated that the recent liberalisation of 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 Industry Ashwani Kumar said
replying to supplementaries during Question Hour in Rajya
Sabha, upper house of the Indian Parliament here.

Investment made by a domestic company in which foreign
firms might hold a small stake but the majority 51 per cent
shareholding and managing control is with Indians, will not be
treated as foreign direct investment (FDI) for the purpose to
calculating the sectoral cap.

This liberalisation 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 per cent 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 United Progressive Alliance (UPA)
came into power, received USD 2.5 billion in FDI. "We hope to
get USD 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 per cent 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 per cent 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 per cent 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. PTI