The government is preparing a vital policy agenda to attract foreign investment to bring up the value of the rupee after record outflows forced the Indian currency to depreciate around 20 per cent against the dollar.

The government intends to go ahead with its big-ticket FDI reform — allowing foreign investment in retail — after the Uttar Pradesh elections. For relaxing foreign investment norms in airlines and defence, the government could work towards building a consensus once the current session of Parliament is over.

Sources said the government did not want to be discouraged by controversies over retail FDI but at the same time, it was against forcing the issue till its own ally, the Trinamul Congress, was convinced. Commerce minister Anand Sharma is expected to start a dialogue with with Trinamul chief Mamata Banerjee to explain how the move can benefit farmers.



The move to bring in FDI in retail could also be dovetailed with attempts to get farmer co-operatives to enter the sector as an alternative retail stream, which could be an answer to the fear that multinationals might build up huge buying power to dictate purchase prices.

Mamata Banerjee’s party has also raised concerns over FDI in pension, said finance ministry officials, which the government would try to address.

The government is also considering relaxing merger and acquisition norms in telecom that could trigger fresh investments by domestic as well as global firms.

The industry ministry had sought a 74 per cent FDI limit, which was rejected by the defence ministry. Industrialists had been lobbying for a 49 per cent cap, while industry associations had called for a case-by-case approach within the 49 per cent threshold.