Govt relaxed foreign direct investment (FDI) rules on Tuesday in a broad swathe of industries including telecoms, single brand retail and oil and gas in a bid to lure capital inflows, prop up a sliding currency and rev up growth.
In a meeting of senior cabinet ministers, Prime Minister Manmohan Singh cleared plans to allow 100 percent FDI in telecoms, Commerce and Industry Minister Anand Sharma told reporters.
The move will allow companies such as Vodafone Group Plc , Telenor ASA and Sistema to operate in the country without requiring an Indian partner. Foreign investors are currently allowed to hold a maximum 74 percent in local phone carriers.
Sharma added that the government will have to approve any FDI proposal beyond 26 percent in the defence production sector, on condition it involves state-of-the-art technology.
India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.
It hit an all-time low of 61.21 per dollar last week and is down nearly 10 percent against the dollar since May.
To stabilise the currency, RBI on Monday night raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs 120 billion ($2.03 billion) in bonds, effectively draining cash from the market.
In telecom, 100 per cent FDI is now permissible, a move that's expected to bring in at least 10 billion dollars.
For the key sector of insurance, the FDI cap has been increased from 26% to 49%.
In the contentious multi-brand retail sector, the cap remains at 51 per cent as decided in September, a move that prompted the exit of Mamata Banerjee and her Trinamool Congress from the ruling UPA, forcing the government into a minority. A new hike of upto 74 per cent had been suggested by a committee headed by Economic Affairs Secretary Arvind Mayaram.
In sectors like petroleum and single-brand retails, an initiative for faster clearances means that for upto 49% FDI, projects will no longer have to first be cleared by the Foreign Investment Proposal Board or FIPB.
In defence, the cap remains at 26 per cent, though the government says it may allow higher FDI for cases that will help India acquire "state-of-the-art technology." The Cabinet Committee on Security or CCS will have to approve all such proposals.
India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.
It hit an all-time low of 61.21 per dollar last week and is down nearly 10 per cent against the dollar since May.
To stabilise the currency, the Reserve Bank of India or RBI has raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs. 12,000 crore in bonds, effectively draining cash from the market.
In a meeting of senior cabinet ministers, Prime Minister Manmohan Singh cleared plans to allow 100 percent FDI in telecoms, Commerce and Industry Minister Anand Sharma told reporters.
The move will allow companies such as Vodafone Group Plc , Telenor ASA and Sistema to operate in the country without requiring an Indian partner. Foreign investors are currently allowed to hold a maximum 74 percent in local phone carriers.
Sharma added that the government will have to approve any FDI proposal beyond 26 percent in the defence production sector, on condition it involves state-of-the-art technology.
India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.
It hit an all-time low of 61.21 per dollar last week and is down nearly 10 percent against the dollar since May.
To stabilise the currency, RBI on Monday night raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs 120 billion ($2.03 billion) in bonds, effectively draining cash from the market.
In telecom, 100 per cent FDI is now permissible, a move that's expected to bring in at least 10 billion dollars.
For the key sector of insurance, the FDI cap has been increased from 26% to 49%.
In the contentious multi-brand retail sector, the cap remains at 51 per cent as decided in September, a move that prompted the exit of Mamata Banerjee and her Trinamool Congress from the ruling UPA, forcing the government into a minority. A new hike of upto 74 per cent had been suggested by a committee headed by Economic Affairs Secretary Arvind Mayaram.
In sectors like petroleum and single-brand retails, an initiative for faster clearances means that for upto 49% FDI, projects will no longer have to first be cleared by the Foreign Investment Proposal Board or FIPB.
In defence, the cap remains at 26 per cent, though the government says it may allow higher FDI for cases that will help India acquire "state-of-the-art technology." The Cabinet Committee on Security or CCS will have to approve all such proposals.
India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.
It hit an all-time low of 61.21 per dollar last week and is down nearly 10 per cent against the dollar since May.
To stabilise the currency, the Reserve Bank of India or RBI has raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs. 12,000 crore in bonds, effectively draining cash from the market.
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