![](/images/np5.jpg)
Investment below 10% likely to get FDI tag in move to encourage inflows
The government may allow foreign investment of less than 10% in a company to be treated as foreign direct investment (FDI), albeit with a few conditions, reports Kirtika Suneja in New Delhi.
A discussion paper, based on inter-ministerial consultations, that seeks to redefine FDI and foreign institutional investment (FII) notes that "investors with a long-term view can invest below 10% even under the FDI route subject to the condition that the stake will be raised to 10% or more in a prescribed period." The idea is to make it easier for foreign firms to invest, thereby attracting stable foreign direct flows.
FDI is allowed in various sectors subject to caps; for instance, in the telecom space, there is no cap on FDI while in multi-brand retail, it is restricted to 51%. The rules for approval, whether the automatic route or via the FIPB route, is varying from sector to sector.
(Source: the Financial Express)
FIBP clear 6 Brownfield Pharma FDI proposals
A consensus seems to have emerged within the government over FDI in brownfield pharma with the Foreign Investment Promotion Board (FIPB) clearing six FDI proposals worth Rs. 855-crore in its meeting on Monday.
The FIPB, headed by Arvind Mayaram, secretary, department of economic affairs, approved all six pharma investments proposals which came under its consideration. These included a Rs. 349-crore offer by German healthcare group Fresenius Kabi (Singapore) to acquire the entire public shareholding of Fresenius Kabi Oncology (formerly Dabur Pharma) through a voluntary delisting offer.
Earlier, the influential department of industrial policy and promotion (DIPP) had asked FIPB that such proposals be put in abeyance for fear of an adverse impact on the domestic industry. However, DIPP recently diluted its stance in favour of approving brownfield FDI proposals if the target Indian company's domestic market share is below a threshold. The government is currently in the process of finalizing a comprehensive FDI policy for the pharma sector.
(Source: the Financial Express)
RBI also needs to look at growth
Finance Minister P Chidambaram on Monday said the current account deficit (CAD) in 2013-14 would be around the same level as last year's $88 billion, but stressed that financing it won't be a problem.
The current account deficit reached a record level last year primarily due to the surge in gold and oil import bills. Chidambaram endorsed the measures taken by the RBI recently to stabilize the rupee, but said the government's mandate to promote growth could at times be in conflict with that of RBI. "The central bank's mandate should not be limited just to price stability, but also promote growth and generate employment," he said.
He added that banks had enough funds to meet the credit demands and the onus of coming up with large investment projects rests with the industry. "I have spoken to banks and have been assured that the credit demands will be met. Demands are picking up in agricultural, retail and real estate sector and it is up to the industry to come up with investment projects."
(Source: the Financial Express, the Economic Times, Business Standard)
PM and India Inc discuss sovereign bond
At a meeting of the Prime Minister's Council on Trade and Industry on Monday, business leaders raised the issue of tax disputes, saying these affected the morale. The government is yet to sort a tax dispute with Nokia relating to payments to the parent company for software, and a row with Shell on transfer pricing.
The government has already raised customs duty on gold from 6% to 8%. Budget 2013-14 had raised customs duty on high-end motor vehicles from 75% to 100%, on motorcycles with engine capacity of at least 800cc from 60% to 75% and on yachts and similar vessels from 10% to 25%. Besides, an official statement listed a sovereign bond and reciprocal swap lines as a point of discussion between the prime minister and industry leaders. Naina Lal Kidwai said suggestions were made on a sovereign and non-resident Indian (NRI) bond issue. Bringing the offshore rupee market on-shore was also discussed.
According to an official who attended the meeting said India Inc termed current account deficit (CAD) the economy's primary concern. To narrow CAD, the prime minister wanted the industry to cut imports of oil, coal and gold. Industry leaders, on their part, wanted the prime minister to raise software exports by raising the issue of visa restrictions with the US. Software exports, a part of invisibles, help offset trade deficit. The business community asked the prime minister to devise a mechanism to provide moratoriums on loans to delayed projects.
(Source: Business Standard)
Jet-Etihad deal taxies past FIPB runaway
The Foreign Investment Promotion Board (FIPB) on Monday gave its conditional approval to Jet Airways' proposal to sell a 24% stake to Abu Dhabi-based Etihad Airways for Rs. 2,058 crore.
A senior civil aviation ministry official said: "All concerns raised by authorities over effective control of Jet Airways have been addressed in the revised proposal. Etihad would now have two directors on the 12-member board. The role of all committees would be advisory in nature. Board resolutions will be passed by a simple majority, leaving control in the hands of the Indian promoter."
The approval from FIPB has, however, come attached with certain riders. First, the Naresh-Goyal-promoted airline will have to seek prior approval from the government for making any changes in the shareholders' agreement (SHA). Also, any arbitration will have to be under the Indian law, and not English as proposed in the revised SHA given by Jet-Etihad to FIPB.
(Source: the Financial Express, Business Standard)
Economic Section
Royal Thai Embassy