Foreign Exchange Management (Non-debt Instruments) Rules 2019

Subject – Economy

Context – BPCL sale: Centre allows 100% foreign investment

Concept –

The Finance Ministry has added a new provision to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 to facilitate strategic disinvestment of Bharat Petroleum Corporation Limited (BPCL).
Foreign investment up to 100 per cent under the automatic route is allowed in case an ‘in-principle’ approval for strategic disinvestment of a PSU has been granted by the government
This new provision is in addition to the existing one that prescribes FDI up to 49 per cent in petroleum refining PSUs, without any disinvestment or dilution of domestic equity.
- The FDI cap of 49 per cent in oil refineries was proving to be a hitch in the government’s attempts to sell its near 53 per cent stake in BPCL, which is the country’s second-largest refiner.
The planned stake-sale is part of the government’s effort to raise ₹1.75-lakh crore from disinvestment of public sector companies and financial institutions in 2021-22.

To know about Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules 2021, please click here.

To know about Strategic Disinvestments, please click here.