India’s hike in caps with liberalizing routes will stimulate foreign direct investment (FDI) inflows into the country thereby contributing to growth of investment, incomes and employment, an official at the Embassy of India in Riyadh said.

This follows the FDI norms relaxed in a number of key sectors, including petroleum and natural gas, in which Saudi Arabia has expertise, as well as defense production and single brand retail approved by the Indian federal.

In the key petroleum and natural gas refining sector, the existing FDI cap of 49 percent through the Foreign Investment Promotion Board (FIPB) has been changed to the automatic route, which means no FIPB approval will be required henceforth, thus eliminating bureaucratic hurdles for foreign investors now.

The Indian government has raised the caps on FDI in various sectors and moved it into the automatic route to avoid bureaucratic hurdles for foreign investors.

The hike in caps with liberalizing routes will stimulate FDI inflows into the country thereby contributing to growth of investment, incomes and employment.

In the defense production 100 percent FDI cap will be allowed for cases that will help India acquire state-of-the-art technology, the spokesperson added.

FDI in single brand retail trading has also been reviewed to take the automatic route with a 49 percent cap. FDI in telecoms sector has also been raised to 49 percent as approved by inter-ministerial body Telecom Commission, the official said.

In the insurance sector, now 49 percent FDI will be allowed under the automatic route to woo foreign companies ending bureaucratic hurdles for them.

FDI cap in the stock exchange, commodity exchange and power exchange will now be 49 percent through their automatic route instead of the FIPB route earlier, he said adding that the FDI cap has been hiked to 100 percent from 74 percent in asset reconstruction companies. Of this up to 49 percent will be under automatic route and above 49 percent through FIPB.

FDI cap in credit information companies has been raised to 74 percent from 49 percent, whereas it has been increased to 100 percent through the automatic route allowed in courier services.

In the backdrop of the fairly modest FDI inflows over the last year and lack of growth in gross domestic capital formation, FDI ceilings and entry routes have been liberalized for these sectors with a view to stimulating FDI inflows into the country thereby contributing to growth of investment, incomes and employment.