India to OK More Foreign Investment
May. 09, 2001
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NEW DELHI, India (AP) _ India's Cabinet said Thursday it will relax curbs on foreign investment, raising the amounts that can be invested in its telecommunications and banking sectors.
The country will also lift completely barriers against foreign investment in its transportation sectors, including airports and subways, as well as pharmaceutical and tourism industries.
Under the new measures, foreign investors can take up to a 74-percent stake in telecommunications industry, from 49 percent previously, said Pramod Mahajan, the parliamentary affairs minister.
Foreign banks will be able invest as much as 49 percent in joint ventures with Indian financial companies, subject to guidelines set by the Reserve Bank of India, the country's central bank, Mahajan said.
Foreign investment in joint financial ventures were previously limited to 20 percent.
The announcement coincided with the government's decision Wednesday to allow the military to buy all equipment from private contractors, undoing a nearly 50-year ban on private investment in defense. The new plan puts no restrictions on domestic companies, but caps purchases from foreign companies at 26 percent.
India has made drastic changes in its economic policy since 1991, when the government started dismantling socialist-era controls on the economy.
Most key sectors of the economy have been thrown open to private investment.