January 31, 2008

Press Statement

The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:

CPI (M) opposes Liberalization of FDI Norms

The Union Cabinet has decided to liberalize FDI norms in several crucial sectors. The decision to raise the foreign equity cap from 26% to 49% in petroleum refining PSUs would pave the way for further disinvestment in PSUs. A condition for compulsory divestment of 26% stakes to an Indian partner in case of petroleum trading and marketing companies has also been done away with. The CPI (M) is strongly opposed to these policy moves, which seek to enhance the presence of foreign companies in the strategic petroleum and natural gas sector.  The government should reconsider this decision.

The decision to allow FDI and FII upto 49% in commodity exchanges is also unwarranted. The Government had earlier issued an Ordinance to amend the Forward Contracts Regulation Act enabling the participation of foreign players in the commodity futures market, defying the recommendation of a Parliamentary Standing Committee, which categorically opposed such a provision. The Government seems to be impervious to the opinion across the political spectrum that liberalization of commodity exchanges is not in the interest of maintaining price stability in the economy.

Allowing 100% FDI in titanium mining is another retrograde move. Rather than strengthening the public sector in the extraction of exhaustible minerals, the Government seems to be keen on privatization and opening up of the mining sector. Further liberalization of FDI norms in cargo airlines as well as ground-handling operations also need to be reviewed from the security aspect.

The National Common Minimum Programme of the UPA Government says that FDI should be encouraged in the areas of infrastructure, high technology and exports. The FDI policy review undertaken by the Union Cabinet does not reflect such an approach. The Polit Bureau is opposed to these moves and calls upon the UPA Government not to proceed further with such decisions.