The Hindu : 100 p.c. FDI allowed

Online edition of India's National Newspaper
Wednesday, Jun 26, 2002

Business

Business

100 p.c. FDI allowed

By Our Special Correspondent

NEW DELHI June 25. The Union Cabinet today decided to allow foreign direct investment (FDI) up to 100 per cent in the tea sector, including tea plantations, in a bid to boost the industry which had recently been plagued with the problem of falling prices.

The FDI would, however, not be allowed unconditionally. Prior approval of the Central Government would be required before a foreign company invests in the industry.

Also, the foreign firm would have to disinvest 26 per cent of the equity in favour of an Indian partner or an Indian citizen within five years. In addition, the approval of the State Government concerned would be needed in case of any change in land use.

Announcing the decision, the Union Minister and Cabinet spokesperson, Pramod Mahajan, said the move was designed to help modernise the industry and rejuvenate the tea plantation sector and make the tea manufacturing industry more competitive in the world market.

India is one of the major tea producing countries accounting for 27.7 per cent of the global tea production. Tea is exported to over 80 countries and India accounted for about 15 per cent of the world tea trade.

The Cabinet also approved accession of the country to the International Convention on Limitation of Liability for Maritime Claims. In the absence of the approval, the Indian Shipping Industry was subject to unlimited claims which entails high insurance costs.

Besides, the Cabinet decided to relax the norms and bring about changes in the criteria for allocation of funds for drinking water projects under the Accelerated Rural Water Supply Programme.

While the quantity of water prescribed under the norms would be increased from 40 litres to 55 litres per capita per day, the distance of water source from a habitation would be reduced to 0.5 km in plains and 50 m elevation in hilly areas, from the present 1.6 km and 100 m respectively.

As regards the criteria for allocation of funds, the weightage for non-covered and partially covered villages would be increased to 15 per cent from the present 10 per cent and that for quality affected habitations to 10 per cent from five per cent.

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