Oil and petroleum industry
The government may allow 100 per cent foreign direct investment in oil and petroleum marketing companies.
This follows a review of the FDI norms by the nodal body for policy making in foreign investment — the Department of Industrial Promotion and Policy (DIPP).
At present, if a foreign company sets up an oil marketing company, it is required to divest 26 per cent in favour of an Indian partner within a period of five years. This holds good for oil refining companies as well.
Sources close to the development said that there were many applications from foreign companies to market oil and petroleum. The government, according to them, was thinking of allowing 100 per cent FDI on a case to case basis. However, both the Foreign Investment Promotion Board (FIPB) and the DIPP have taken a joint policy decision to allow 100 per cent FDI in oil marketing companies.
“The move is welcome from both the industry and consumer perspectives. In the current situation, oil marketing may not be attractive for private and foreign players in India, considering the regulated nature of business and the huge losses on subsidies suffered by oil marketing companies”, said an industry analyst.
“Competition is already there in the field and entry of multinational companies are unlikely to make much difference to the performance of public sector oil companies,” said a senior official with a PSU oil major.
In India, oil marketing is dominated by public sector oil companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). Shell and Caltex had ventured into oil marketing in India, but merged those businesses with BPCL and HPCL, respectively, said industry sources.
Meanwhile, the scope of foreign investment in the aviation sector may also increase. According to sources, some more areas such as training, maintenance and repairs will be made eligible for FDI within the broad category of aviation.
source: business-standard
This follows a review of the FDI norms by the nodal body for policy making in foreign investment — the Department of Industrial Promotion and Policy (DIPP).
At present, if a foreign company sets up an oil marketing company, it is required to divest 26 per cent in favour of an Indian partner within a period of five years. This holds good for oil refining companies as well.
Sources close to the development said that there were many applications from foreign companies to market oil and petroleum. The government, according to them, was thinking of allowing 100 per cent FDI on a case to case basis. However, both the Foreign Investment Promotion Board (FIPB) and the DIPP have taken a joint policy decision to allow 100 per cent FDI in oil marketing companies.
“The move is welcome from both the industry and consumer perspectives. In the current situation, oil marketing may not be attractive for private and foreign players in India, considering the regulated nature of business and the huge losses on subsidies suffered by oil marketing companies”, said an industry analyst.
“Competition is already there in the field and entry of multinational companies are unlikely to make much difference to the performance of public sector oil companies,” said a senior official with a PSU oil major.
In India, oil marketing is dominated by public sector oil companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). Shell and Caltex had ventured into oil marketing in India, but merged those businesses with BPCL and HPCL, respectively, said industry sources.
Meanwhile, the scope of foreign investment in the aviation sector may also increase. According to sources, some more areas such as training, maintenance and repairs will be made eligible for FDI within the broad category of aviation.
source: business-standard
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