India eyes further easing FDI caps in growth push

India may further ease foreign direct investment caps to spur greater inflow of funds from abroad and promote growth in its sharply slowing economy, the finance minister said on Monday. The Congress-led government last September reduced limits on FDI in various sectors from retail to aviation as part of a series of economic reforms. "Many (more) caps can be removed or certainly relaxed.... Some of these caps are completely irrelevant," Finance Minister P. Chidambaram said, according to the Press Trust of India. "We need to clear some of the cobwebs accumulated in India and go out and woo specific business houses," he said, without specifying in which areas FDI caps could be eased. There are various sectors in which FDI is capped at below 100 per cent, from telecommunications to banking. But changes to the investment limits are hugely politically sensitive, with opposition parties charging that the government is selling out to foreign interests by allowing more overseas involvement. Chidambaram, who holds an MBA from Harvard and who was renamed finance minister last year, helped drive through last September's reforms and has been seeking to liberalise foreign investment to boost economic growth. India's economy is projected to grow by just five per cent in the current fiscal year to March 31, its lowest pace in a decade. Chidambaram is said to head "the probable list" as a prime ministerial candidate in general elections due next year if Congress party heir-apparent Rahul Gandhi declines to seek the post, according to Indian media. In his recent budget, Chidambaram highlighted the need to attract more foreign funds to finance India's ballooning current account deficit, the widest measure of trade. The current account deficit stood at 5.4 per cent of gross domestic product (GDP) in the quarter to September, or a record US$22.3 billion, and is expected to be as high as five per cent of GDP for this financial year ending March 31, 2013. Separately, at a meeting with public sector banks on Monday, Chidambaram pushed them to examine how they could better fund large infrastructure projects to ease bottlenecks in the economy that are stalling economic growth. He particularly singled out projects in sectors such as coal, oil and gas, whose output is needed to fuel the large economy.