A comprehensive proposal to review the foreign investment norms will soon be taken up by the Cabinet for approval, seeking to raise the investment cap to 49 per cent in commodity exchanges and PSU oil refineries.

“The Department of Industrial Promotion and Policy is preparing a note in this regard, which will be soon sent to Cabinet for clearance,” official sources told PTI.

The note is likely to peg foreign investment cap in commodity exchanges to 49 per cent with limit on FDI at 26 per cent and FIIs at 23 per cent, similar to the ceiling in stock exchanges, the sources added.

But an individual entity is likely to be allowed to pick only up to five per cent in commodity exchanges, they said. This means foreign investors like New York Mercantile Stock Exchange will be allowed to buy up to five per cent stake in bourses like Multi Commodity Exchange and NCDEX.

The sources also said that those foreign investors which already have more than five per cent in commodity exchanges would be given some time to bring down their stake to five per cent. 

Goldman Sachs picked up seven per cent equity in NCDEX for $23.1 million  from ICICI Bank in July last year.
They added once the government gave clearance to FDI limit in commodity exchanges, the Reserve Bank might issue guidelines for allowing foreign investors to pick up stake in the country’s commodity exchanges.

Oil sector

In oil refinery sector, the Petroleum Ministry has already moved the Cabinet for allowing 49 per cent FDI in state-run Hindustan Petroleum’s Bhatinda refinery, where  L N Mittal plans to buy the stake.

The sources said the two notes by DIPP and Petroleum Ministry could be merged to seek overall Cabinet permission for raising FDI limit in PSU oil refineries, so that Mittal’s proposal could be cleared.

The DIPP note is also likely to clearly define FDI cap in areas like flying institutions and maintenance and repair services in the civil aviation sector, the sources said.

Currently, FDI cap in entire aviation sector is 49 per cent, barring greenfield airports where it is 100 per cent. However, no specific mention is made for flying institutions and maintenance and repair services.