India to amend FDI policy for selling Govt companies |
India is considering a proposal to amend the current Foreign Director Investment (FDI) policy to make it easier for foreign investors to acquire control of government-owned Bharat Petroleum Corp. The government is keen on selling company to bridge the widening budget deficit. If the Union Cabinet clears the proposal, overseas funds would no longer need government approval to purchase a 100% stake in state-run refiners cleared in-principle for disinvestment. However, the limit will stay at 49% for firms not lined up for asset sales. As of now, FDI is restricted to 49 percent under the automatic route in petroleum refining for Public Sector Undertaking (PSU), without any disinvestment or dilution of domestic equity. The government plans to amend the FDI policy and FEMA provisions so that 100 percent FDI may be allowed through the automatic route in BPCL. India needs to find a buyer for its 53% stake in BPCL, one of two major state firms. The other big government company up for sale is Air India Ltd. The government has budgeted $23 billion from divestments in the financial year that started 1st April 2021. BPCL swung to a record profit of $1.6 billion in the three months ended 31st March 2021, from a loss of $185.7 million in the previous year.
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