The government on Thursday approved liberalisation of FDI norms in a dozen sectors, including 100 percent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy.
Although a high-level meeting chaired by Prime Minister Manmohan Singh on July 16 had decided to relax foreign investment norms in several sectors, the proposals were formally approved by the Cabinet today, sources said.
The second wave of reforms comes within 10 months of the government opening floodgates of foreign investment in sectors like multi-brand retail and civil aviation.
In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26 percent to 49 percent under automatic route under which companies investing do not require prior government approval. A Bill to raise FDI cap in the sector is pending in the Rajya Sabha.
It was also decided to allow 49 percent FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB) route.
In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI would be allowed up to 49 percent under automatic route as against current routing of the investment through FIPB.
In basic and cellular services, FDI was raised to 100 percent from current 74 percent. Of this, up to 49 percent would be allowed under automatic route and the remaining through FIPB approval.
A similar dispensation would be allowed for asset reconstruction companies and tea plantations.
FDI of up to 100 percent was allowed in courier services under automatic route. Earlier, similar amount of investment was allowed through FIPB route.
In credit information firms, 74 percent FDI under automatic route has been been allowed.
While the FDI cap in defence sector remained unchanged at 26 percent, it was decided that higher limits of foreign investments in 'state-of-the-art' technology manufacturing would be considered by the Cabinet Committee on Security.
These decisions come in the backdrop of country's economic growth plunging to 4.8 percent in the January-March quarter. It slumped to a decade's low of 5 percent for the 2012-13 fiscal.