The Union Cabinet on Thursday approved a proposal to allow 100 per cent foreign direct investment (FDI) in public sector refiners, expanding the scope for FDI in the privatisation of Bharat Petroleum Corporation Ltd (BPCL).
The approval by the Cabinet will enable the sale of the government’s 52.98 per cent stake in BPCL to a foreign buyer, and, at the same time, will open the door for FDI in other public sector companies in the oil sector put up for privatisation.
“FDI up to 100 per cent will be allowed under the automatic route in cases where a public sector undertaking has received in-principle approval for strategic divestment (in the oil and gas sector),” a government official told Business Standard.
According to the government’s current FDI policy, 49 per cent FDI is allowed in public sector refining and 100 per cent in the private sector.
“The current policy does not allow foreign companies to place their bids because investment over 49 per cent is not permitted under the FDI policy. This had to be changed,” the official cited above said.
The change will be implemented through an executive order, and will not need any legal amendment, the official said. Legal experts said the Department for Promotion of Industry and Internal Trade (DPIIT) would have to issue a press note in the form of an executive order.