With the group of ministers looking into foreign investment unlikely to meet before February 28, Finance Minister Jaswant Singh will be constrained not to announce higher sector caps in the Budget for 2003-04. He might, however, lay a map for a more liberal foreign investment regime.
The aviation, information, small industries, biotechnology, coal, mining and telecommunications ministries have attached riders to the recommendations of a committee headed by Planning Commission Member NK Singh, which sought raising or eliminating ceilings on foreign investment in these and other sectors.
The proposals will have to be cleared by the ministerial group and as well as the Cabinet committee on economic affairs before sector caps can be altered.
Officials in the department of industrial policy and promotion, the nodal ministry for foreign direct investment which coordinates the meetings of the ministerial group, said no meeting had been scheduled.
The group, headed by Finance Minister Jaswant Singh and comprising six other Cabinet ministers, was scheduled to meet last Friday, but the meeting was put off because four of the members were unable to attend.
This leaves only two days for a meeting, which appears unlikely with the Railway Budget being presented on Wednesday and the Economic Survey on Thursday.
"We do not expect a meeting can take place at a day's notice," an industry ministry official said. He pointed out that the agenda for the meeting was in place and it was now up to the ministers to give dates and make themselves available on the day.
"Yet there is no doubt that the Budget will have a chapter on foreign direct investment, though brief, indicating a map for further liberalisation.
"The role of the Foreign Investment Promotion Board will be defined, and the government will propose to lift the caps in sectors like telecommunications, banking and insurance.
In other sectors, the ministries have raised objections to the NK Singh committee's recommendations. But where the finance ministry is the administrative ministry, like banking and insurance, the proposals are likely to be cleared," the official said.
In telecommunications, the ministry has said the foreign investment ceiling may be increased from 49 per cent to 74 per cent, but management control should remain with Indian partners.
This will not find favour with foreign investors. The ministry of civil aviation has rejected the proposal to allow foreign airlines to pick stakes in local ones.