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Cabinet likely to review FDI limits

India's Cabinet which meets later on Wednesday is expected to review equity caps on foreign direct investment in several key sectors in a bid to attract larger inflows, a senior government official said.

The Cabinet is expected to approve the recommendations of a ministerial panel set up to review the cap on some sectors, the official who did not wish to be identified said.

The move to increase the FDI limits is aimed at boosting foreign investment flows to India and achieve the government's target of attracting $10 billion annually, the official said.

He said the panel had recommended that 100 per cent foreign direct investment be allowed in the pharmaceuticals sector without the condition that investors offload a portion in the domestic market.

Currently, the government allows up to 74 per cent foreign investment in pharmaceuticals.

The official said the group had also recommended that 100 per cent Indian private sector investment be allowed in the defence sector with a foreign investment limit of 26 per cent.

Currently, the government does not allow foreign investment in the defence sector.

The group has suggested that a limit of 49 per cent be set for foreign direct investment in the banking sector subject to Reserve Bank of India guidelines.

The government currently allows 20 per cent foreign investment in the banking sector.

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