India Does Not Allow FDI - Feb 13, 2009

The government on Feb 12 said the FDI policy changes will not allow back door entry for foreign investment into the retail sector or circumventing the rules.

In multi-brand retail, India does not allow FDI but permits up to 51 per cent in single brand retail and 100 per cent in cash and carry wholesale trading. Though there is a ban on FDI in the big multi-brand retail stores, there is no restriction on companies like the Reliance and Tatas to access the foreign equity market through American and the global depository receipts.

In line with this, there is also no bar on the Indian companies who are retail sector, accessing the money from private equity players. With the FDI policy changes, the indirect foreign equity in an Indian investing company would not be counted as foreign stake allowing the caps (direct and indirect) to be circumvented.

However, Nath described "At this point of time when there is a tightening in the global capital market we have to ensure that India becomes a good investment destination."

India Central Bank Cuts Rates - Oct 21, 2008

India''s central bank unexpectedly cut short-term lending rates on Oct 20 in response to continued pressure from the global financial crisis. The Reserve Bank of India has cut the so-called repo rate by 100 basis points to 8% to stabilise India''s finances.This is the first cut in more than four years and comes ahead of a scheduled policy review on Friday.

The change will come into effect immediately. Banks worldwide have cut interest rates in a bid to boost their economies. The repo rate is the discount rate at which the central bank lends money to commercial banks to infuse liquidity into the market. The stock market jumped as much as 5.6% on the news but then fell back to close up 2.5%. On Friday it fell to its lowest close since June 2006.