With the Budget talking about a new principle for classifying foreign investment, there could be a change in the Foreign Direct Investment (FDI) limits for various sectors.A senior Finance Ministry official admitted there were some issues with the policy guidelines on sectoral limits. For example, the Consolidated FDI Policy (effective from April 10, 2012) talks about a 26 per cent FDI cap/equity for the Defence industry. But there is no mention of FII investment. Various tenders invited by the Defence Ministry, however, refer to both FDI and FII limit in the applicant company. “This creates confusion and needs to be sorted out,” the official added.

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