Zee Media Bureau
New Delhi: The Union Cabinet on Wednesday approved liberalisation of FDI in railways infrastructure and defence sectors.
The government had earlier proposed to hike the foreign direct investment (FDI) ceiling in the sensitive defence sector to 49 percent from 26 percent, ensuring control in Indian hands, for boosting domestic industry of a country, which imports up to 70 percent of its military hardware.
Besides, the Department of Industrial Policy and Promotion (DIPP) has also proposed permitting 100 percent FDI in areas such as high-speed train systems, suburban corridors and dedicated freight line projects implemented under PPP mode.
The FDI liberalisation in the sector would help in modernisation and expansion of the Railways.
According to estimates, the sector is facing a cash-crunch of around Rs 26,000 crore. However, FDI is not proposed to be allowed in train operations and safety.
At present, there is a complete restriction on any kind of FDI in the Railways sector except mass rapid transport systems. The move will also help in development of its infrastructure for industrial purposes.
In November last year, the proposal of the DIPP to relax FDI norms in the sector was discussed at the Cabinet meeting but was deferred due to concerns being raised by the Urban Development Ministry on few norms.
The DIPP has proposed easy conditions for exit for developers before the three-year lock-in period and a change in the current requirement of having a minimum built-up area for FDI in construction development projects.
The government has also suggested a uniform minimum capitalisation of USD 5 million for both wholly-owned subsidiaries (WOS) and joint ventures with Indian partners in the construction sector.
At present, the capitalisation requirement for WOS is USD 10 million.
