Single cap for FDI, FII on the cards

After much debate on the cap on foreign direct investment (FDI) and foreign institutional investors (FII), the Indian government is most likely to impose a composite limit on both, across all sectors.

The real estate industry would face the brunt of this policy change,
as would asset reconstruction companies and direct-to-home broadcasters.

These industries currently have varying limits on FDI , and the equity
component would have to be revised by companies to comply with
the new policy.

The composite cap would enable the government to monitor foreign
investment in real estate and avert infringement of regulations.

The National Security Advisor maintains that a close watch on
capital inflows from FIIs was imperative to safeguard national
interests.

The debate on sectoral caps on FIIs and FDI came up when the
Reserve Bank of India (RBI) had permitted FIIs to pick up stocks
in airline companies over and above the FDI limit of 49% through
the secondary market.

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Photo: Street scene, Kalighat, Kolkata 02 by Bernard Gagnon, licensed under CC BY-SA 3.0, via Wikimedia Commons.