Stage set for 49% FDI in refineries

The government has issued a formal notification to raise the foreign direct investment (FDI) limit in public sector refineries to 49 per cent.
In January, the cabinet had raised FDI in public sector oil refineries to 49 per cent from 26 per cent, but a formal notification was issued only today.
The department of industrial policy and promotion (DIPP) issued a press note saying, “It has been decided to allow FDI up to 49 per cent, with prior approval of Foreign Investment Promotion Board, in petroleum refining by PSUs without involving any divestment or dilution of domestic equity in the existing PSUs.”
Besides, the condition of compulsory divestment of up to 26 per cent by foreign companies involved in trading and marketing of petroleum products has been deleted.
The government has allowed 100 per cent FDI in the trading and marketing of petroleum products with a condition that 26 per cent foreign equity be divested in favour of an Indian partner or the Indian public within five years.
The biggest beneficiary of the decision will be the BG group of the UK, which had been resisting divestment of its stake in Mahanagar Gas Ltd.

Civil aviation
FDI limits in the domestic civil aviation sector have also been raised.
According to the guidelines, 100 per cent FDI would be allowed under the automatic route for greenfield projects, while in existing projects, FDI up to 100 per cent would be allowed with prior government approval for FDI beyond 74 per cent.
No foreign airlines will be allowed to participate in the equity of an air transport undertaking engaged in operating scheduled, non-scheduled and chartered airlines. However, they will be allowed to participate in the equity of companies operating cargo airlines, helicopter and seaplane services.

Commodity exchange
Investment by registered foreign institutional investors in commodity exchanges, under the portfolio investment scheme and the FDI scheme will be limited to 23 per cent and 26 per cent, respectively.
“With a view to infuse globally acceptable best practices, modern management skills and latest technology, it has been decided to allow foreign investment in commodity exchanges,” the DIPP said in a statement.