The cabinet had in January raised FDI in oil refineries promoted by public sector companies from 26 per cent to 49 per cent, but a formal notification to this effect was issued only today.

The Department of Industrial Policy & Promotion 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”.

Divesting norms

Besides, the condition of compulsory divestment of up to 26 per cent by foreign companies commencing trading and marketing of petroleum products has been deleted.

Government had allowed 100 per cent FDI in actual trading and marketing of petroleum products with a condition that 26 per cent foreign equity would be divested in favour of Indian partner/public within five years.

The biggest beneficiary of the decision would be BG Group of the UK that had been resisting divestment of its stake in Mahanagar Gas Ltd, the company which retails CNG to automobiles in Mumbai.