To facilitate corporatisation of Department of Telecom Services and the recently-created Department of Telecom Operations, the Cabinet also approved the proposal for incorporating "Bharat Sanchar Nigam Limited" as a public limited company under the Companies Act.

The authorised share and paid-up capital of the Nigam, to be launched on October 1, will be Rs 10,000 crore and Rs 5000 crore respectively, with each share having a value of Rs 10.

The Cabinet also approved the proposal to allow open sale of rice up to 30 lakh tonnes during the current year in states where there is no or negligible procurement of rice. A transparent mechanism would be adopted for fixing the prices by the high-level committee of Food Corporation of India (FCI).

The decision has been taken with a view to creating storage space for kharif operations and reducing carrying costs of the FCI.

Under the further liberalised policy, FDI up to 100 per cent will be permitted through the automatic route for all manufacturing activities in SEZs except for the following activities:

Arms and ammunition, explosives and allied items of defence equipment, defence aircraft and war ships, atomic substances, narcotics and psychotropic substances, hazarduous chemicals, distillation and brewing of alcoholic drinks and cigarettes/cigars and manufactured tobacco substitutes.

In the telecom sector, FDI up to 100 per cent has been permitted through the automatic route in the following activities, subject to licensing and other requirements:

ISPs not providing gateways (both for satellite and submarine cables), infrastructure providers providing dark fibre (IP Category I), electronic mail and voice mail.

In respect of remaining services, including basic, cellular, GMPCS, VSAT, PMPRTS, long distance (both domestic and international) and other value-added services, foreign equity cap of 49 per cent will contine as at present.

By another decision, payment of two per cent royalty for exports and one per cent for domestic sales will be permitted under the automatic route on use of trade marks and brand names of the foreign collaborator without technology transfer. Proposals for payment beyond these percentages would be considered individually.

Payment of royalty of eight per cent on exports and five per cent on domestic sales by wholly-owned subsidiaries to offshore parent companies will be permitted under the automatic route without any restriction on the duration of royalty payments.

Offshore venture capital funds and companies will be permitted to invest in domestic venture capital undertakings as well as other companies through the automatic route, subject only to Sebi regulations. All such investments would be subject to sectoral caps applicable to specific sectors.

The Cabinet also approved restructuring of the Income-Tax Department for increased productivity and effectiveness and creation of posts of chief commissioners and commissioners within the reduced total manpower strength.

The decision is expected to increase revenue collections, improve service to tax payers and better career prospects of officers.

By another decision to provide relief to officers stagnating in the Indian Economic Service (IES), the Cabinet approved creation, encadrement or upgradation of four posts at the additional secretary level and 14 posts at the joint secretary level.

The provision of granting selection grade (non-functional) at the rate of 30 per cent of senior duty posts in the service has also been extended for another three years with effect from July 25, 1999. All posts encadred into the IES have also been centralised with the cadre controlling authority.

Responding to persistent demand of shopkeepers of certain markets under the control of Directorate of Estates, located in Delhi, the Cabinet has approved the proposal to transfer ownership rights of shops to them on lease hold basis subject to certain terms and conditions.

Out of the 12 markets concerned, eight are located in Ramakrishna Puram and the rest in Srinivaspuri, Andrews Ganj, Nanakpura and Lancer Road.