'Discussions on infra sector FDI policy underway'

Finance Minister Pranab Mukherjee on Friday said the government is considering further liberalisation of the country's foreign direct investment policy for attracting investment in the infrastructure sector.

"Discussions are underway to also liberalise the FDI policy (for infrastructure sector)," Mukherjee said at an IIF event here.

Highlighting the importance of development of the infrastructure sector in the country, the Finance Minister said the FII investment limits in corporate bonds have been liberalised and special vehicles in the form of notified infrastructure debt funds with certain tax concessions have been announced for the development of this critical sector.

These majors would improve the flow of resources to the infrastructure sector, he said.

The infrastructure sector requires an investment of a whopping USD 1 trillion in the 12th Plan, beginning next year (2012-17).

During the Budget speech last month, Mukherjee had said, "To enhance the flow of funds to the infrastructure sector, the FII limit for investment in corporate bonds, with residual maturity of over five years issued by companies in infrastructure sector, is being raised by an additional limit of $20 billion, taking the limit to $25 billion."

This will raise the total limit available to the FIIs for investment in corporate bonds to $40 billion, he had said.

"Infrastructure is critical for our development. For 2011-12, an allocation of over Rs 2,14,000 crore (Rs 2,140 billion)  is being made for this sector, which is 23.3 per cent higher than the current year. This amounts to 48.5 per cent of the Gross Budgetary Support to plan expenditure," he had said.