High Confidence On FDI May Slow Down Increase Prospects - April 14, 2009

High dependence on FDI may slow down India Inc''s growth prospects. Though, Collective FDI inflows increased 30% in 2007 over 2006. During January-July 2008, FDI inflows have increased more than two and a half times over the same period in 2007.

But these data speak about the period when the financial crisis was not completely active. In fact, the RBI''s recent release shows that the inflow of ECB and foreign currency convertible bonds (FCCBs) has hindered significantly in October 2008, lower 60% from Rs 283.49 crore in September to Rs 112.52 crore.

The fall in ECB is raised worries to affect the investment plans of the companies. The domestic funds alternatively also have become inadequate and gradually more dearer following rise in interest rate.

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."

Rupee Gains Four Paise - Feb 12, 2009

The Indian rupee also rebounded from its initial weakness and closed up by nearly four paise to 48.68/70 against the greenback. In the active trade at the Interbank Foreign Exchange (Forex) market, the local currency resumed sharply lower at 48.83/84 a dollar from previous close of 48.72/73. It touched a low of 48.88 per dollar. However, it recovered sharply in the later part of the day in line with the equity markets and closed at 48.68/70. The anticipation of the increased inflows of capital after the easing of foreign direct investment (FDI) norms by the government also helped the rupee recovery.

The Reserve Bank of India fixed the reference rate for the US dollar at Rs 48.82 and for the euro at Rs 63.07. The benchmark six-month forward dollar premium payable in July closed up at 50-52 paise as against 47-1/2-49-1/2 paise on Tuesday and along with this the far-forwards maturing in January closed up at 87-1/2-89-1/2 paise from 84-1/2-86-1/2 paise previously. In cross-currency trade, the rupee grew against the pound sterling and the euro while moved down further against the Japanese yen.

The dealers attributed the fall in the rupee to a firm dollar overseas against its major rivals after the US Senate passed the $838 bn economic stimulus plan. However, the fears over the effectiveness of the rescue plan weighed on the global equity markets.

FDI Flow Reduced To Trickle - Feb 9, 2009

The foreign direct investment in India was just $1 bn in November. During April-November the FDI inflows of $19.7 bn have made it amply clear that the current year''s target is far too ambitious to be achieved, given the recession in US and several other developed economies.

The FDI in October slipped to $1.4 bn after maintaining robust inflows till September - with a monthly range of $2.5-3 bn and further it slipped to $1.08 in November, according to official figures. The total FDI inflow last year was $24.5 bn. However, no such thing seems likely this year because of the difficult global economic environment. The Commerce and Industry Minister Kamal Nath seeing the straw in the winds, had himself scaled down the $35 bn target last month.

FDI May Fall Short Of Target: Survey - June 25, 2008

Global economic slowdown and spiralling inflation caused by increasing oil prices may adversely impact realisation of the foreign direct investment (FDI) target of $35 billion in the current fiscal.This is the realistic assessment of FDI inflows by of 400 CEOs who felt that the FDI target is likely to fall short by $7-8 billion. They were taking part in a survey conducted by Associated Chambers of Commerce and Industry of India (Assocham).

Adverse sentiment in the stock markets, bottlenecks on infrastructure investments, government''s inability to sign nuclear deal are some of other reasons due to which the FDI target may fall short, the survey said. The chamber has asked the government to take sufficient measures to mount pressure from various bilateral and multilateral agencies on oil producing countries to increase oil production. In fact, recently Finance Minister P. Chidambaram has appealed the oil producing countries to increase its supply to control prices. He had advocated for a price band mechanism for crude oil for producers and consumers to find a common ground. The government had set a target of $30 billion in the last fiscal, but it received about $25 billion FDIs.

India Emerged As The Largest Source Of Foreign Direct Investment

Among the BRIC (Brazil, Russia, India, China) countries, India emerged as the largest source of foreign direct investment for the European Union in 2007, thanks to high value takeover deals like Tata-Corus. From a mere 500 million euruos in 2006, India''s FDI to EU leapfrogged to 9.5 billion euros in 2007, way ahead of inflows from China (500 million euros), Russia (1.0 billion euros) and Brazil (1.9 billion euros), according to Eurostat data. In fact, FDI from China and Russia to the 27-nation EU declined from 2.2 billion euros and 1.5 billion euros. Besides India emerging as an important source of FDI for EU firms, it also saw big rise as a destination for European investment, much more than China and Brazil. While the EU outflows to India were 10.9 billion euros, they were only 1.8 billion euros to China and 7.1 billion euros to Brazil. However, FDI outflows to Russia were higher at 17.1 billion euros.

FIPB Clears FDI Proposals

NEW DELHI: The government has approved 18 FDI proposals totalling Rs 1,820.2 crore, including Manipal Educational Group’s plan to induct foreign investment of Rs 1,435 crore in a holding company.

The Foreign Investment Promotion Board (FIPB) also cleared Mauritius-based Indivision India Partners’ proposal to invest foreign equity worth Rs 120 crore in a company engaged in merchant banking and other NBFC activities.

A proposal of Sweden’s Volvo to invest Rs 123 crore for 8.1% stake in the proposed JV with Eicher Motors also received a green signal from the FIPB. However, another Volvo proposal has been referred to the Cabinet Committee on Economic Affairs (CCEA), as the investment involved is above Rs 600 crore.

Vodafone Essar also got an approval to convert operating company into an operating-cum-holding company to make downstream investment in a company engaged in telecom infrastructure business. However, the proposals of the realty firm DLF Limitless Developers and software giant Pepsi India were deferred by the FIPB.

DLF Limitless Developers had sought approval to issue shares in lieu of pre-incorporation expenses, while Pepsi India wanted the government to waive off the divestment condition which required it to offer a part of equity stake to Indian shareholders.

Ssis, Amcs May Get FDI Via Green Channel

NEW DELHI: The government may allow foreign investment in sectors reserved for small-scale industries and asset management companies through the automatic route. The move is aimed at boosting sports equipment — which source mainly from SMEs — before the 2010 Commonwealth Games in Delhi. At present, FDI up to 24% is allowed in sectors reserved for SSIs while 49% FDI is allowed in asset management. The proposals may be included in the yearly FDI review.

Once the proposal is cleared, FDI in the segments could be brought in without delay as the parties concerned have to only inform RBI rather than getting approval from Foreign Investment Promotion Board (FIPB). “However, the automatic approvals would be subject to sectoral caps and other stipulations,” a source in the department of industrial policy & promotion (Dipp) said. At present, 79 items are reserved for the SSI sector.

The government is in the process of removing the 24% FDI cap on companies in the SSI sector. Last year, commerce & industry minister Kamal Nath had indicated removing the FDI ceiling in the SSI sector.

Presently, small-scale units with FDI exceeding 24% lose their SSI status. Once the proposal is approved, the government would allow the companies to retain their SSI status even if they raise foreign equity beyond 24%.

According to data release by the ministry of micro medium and small-scale sector, there are 12.8 million small & medium enterprises in the country, which produce goods worth $140 billion. The SSI units export goods worth $33 billion, which is one-third of the country’s exports.

In the case of asset management companies, the government feels that allowing automatic approval in such cases would lead to growth of the financial sector and increase investing environment. However, the FDI limit will continue to remain at 49% for investments into the sector. At present, companies like Goldman Sachs, JP Morgan Chase and Morgan Stanley are operating in the country.

Govt Approves 20 FDI Proposals Of Rs 1,960 Crore

The government has given approval for 20 foreign direct investment (FDI) proposals worth Rs 1,962.05 crore, including a Rs 924-crore deal involving UTV Software Communications. The proposals, approved by the Foreign Investment Promotion Board (FIPB), also include a proposal from cement manufacturer Lafarge India for merger of Lafarge India Holding Pvt Ltd with Lafarge India Pvt Ltd.

UTV Software Communications'' proposals would raise Rs 923.94 crore through sale of equity in UTV Software and warrants of UTV Global. Additionally, the FIPB has sanctioned Italy-based marqee brand Giorgio Armani''s proposal to set up JV with 51% foreign equity to undertake single brand retail trading of the "Armani" branded products. Conversely, the FIPB has postponed its decision on eight FDI proposals, including that of Singapore-based Delight Investments offer to invest in a Hindi-language newspaper group.

The board has recommended a proposal by Essar Power and Axis Pvt Equity to the Cabinet Committee on Economic Affairs. PSA India Pte Ltd, Singapore''s proposal for induction of foreign equity up to 49 per cent for Rs 240 crore by way of preferential allotment of compulsorily convertible preferential shares has also been approved. The FDI proposal of Mauritius-based GS Strategic Investment Ltd to induct foreign equity up to 20% in a company engaged in commodity broking.

India Witnesses $20.13 Billion FDI Inflow

India got $20.13 billion as Foreign Direct Investment (FDI) between April-February 2007-08, almost 70 per cent higher compared to the year-ago period. This is the highest FDI equity in the country during any year. FDI inflows in February 2008 stood at $5.67 billion, up 712 per cent over February 2007. The inflows in the month of February have exceeded the inflows got in any single year since 1991, barring last year 2006-07," the release added.

Govt Notifies Increase In FDI Limits

New Delhi: Giving effect to the Cabinet decision on relaxing FDI policy, the government on Wednesday issued six notifications raising foreign investment limits in sectors including civil aviation, petroleum refinery and commodity exchanges. The other sectors for which the FDI norms have been relaxed are industrial parks, credit information companies and titanium mining.

The press notes have been issued by the Department of Industrial Policy and Promotion following the decision of the Union Cabinet in January to remove restrictions on foreign investment in various sectors. The government has raised FDI limit in public sector refineries and commodity exchanges to 49 per cent. FDI up to 100 per cent would also be allowed in mineral separation of titanium-bearing minerals and ores, its value- addition and integrated activities subject to prior government approval.

In the civil aviation sector, the press note said 100 per cent FDI would be allowed under the automatic route for greenfield projects, while in existing projects, FDI up to 100 per cent would be allowed with prior government approval. As regards commodity exchanges, the foreign institutional investors (FII) would be allowed to attain a stake of up to 3 per cent while foreign investors can take up to 26 per cent.

India Should Increase FDI Limit In Defence: UK

NEW DELHI: Britain on Friday suggested that India should raise its Foreign Direct Investment (FDI) limit in defence sector up to 49 per cent.

The suggestion came from Creon Butler, Deputy British High Commissioner who was speaking at a seminar organised by a industry body CII.

At present, New Delhi allows only 26 per cent FDI in the defence sector. Echoing such demands from the European industry, the British diplomat said in the years to come the defence sector in India is expected to see significant jump.

India plans to make its defence offset policy open, transparent and less rigid and ensure bigger participation of private players in defence equipment business.

Defence Production Secretary Pradeep Kumar said, "This symposium will provide the UK a platform to understand our Foreign Direct Investment (FDI) policy in the defence sector."

India has gradually liberalised its defence trade by allowing 100 per cent private investment by domestic companies and increasing the number of licences granted to private players. Our defence equipment companies are competitive and global biggies are outsourcing their work to Indian firms," said Kumar.

Kumar expressed confidence that this symposium will provide us an opportunity to understand the eastern and the western perspectives on defence, explore joint ventures and further strengthen India-UK ties.

Govt Clears 25 FDI Proposals Worth Rs 5,585 Cr

The government on Feb 13 approved 25 foreign direct investment proposals worth Rs 5,584.82 crore in various sectors, including a Rs 1,950-crore investment plan of Bycell Communications for starting mobile telephony in the country.The proposals approved by Finance Minister P Chidambaram also include a Rs 1,460-crore plan of J M Financial Trustee for induction of foreign equity by subscribing to private placement of units.

The Indian company is engaged in FDI compliant construction development projects, an official release said.Earlier, the Department of Telecom had withheld Letters of Intent to Bycell for launching mobile services in five circles. The investment plan of the company, which had applied for licences in Assam, Orissa, Bihar, North East and West Bengal circles in January 2006, also envisages raising of paid up capital.

Among other major proposals, Mumbai-based Dumeric Holdings Pvt Ltd''s Rs 400-crore proposal to convert status of operating company into operating cum holding company for making further downstream investments was also cleared.

Another proposal of same amount that was cleared was of KVK Energy & Infrastructure Pvt Ltd for induction of foreign equity in a company by way of subscription to fresh equity shares, fully convertible debentures or preference shares.

Coke’s Rs 200-Crore FDI Plan Referred To CCEA

NEW DELHI: A proposal from American giant Coca-Cola’s Indian subsidiary to invest an additional Rs 200 crore ($52 million) in local operations has been referred to the Cabinet Committee on Economic Affairs (CCEA).

The proposal was cleared by Foreign Investment Promotion Board (FIPB) recently and has been referred to CCEA after approval from finance minister P Chidambaram. The additional capital infusion into Hindustan Coca-Cola Holdings (HCCH) is also being accompanied by increase in authorised capital of the Indian arm to Rs 4,500 crore as compared to Rs 2,700 crore.

The hike in authorised capital of HCCH would happen by March this year, the company has informed the FIPB. HCCH already has approval for bringing in foreign direct investment of $947 million. Once the current application is cleared, Coke’s investment in India would cross the $1-billion mark. The initial FDI clearance for Coke’s Indian operations was cleared by the CCEA since the amount exceeded Rs 600 crore. Therefore, the FIPB has recommended that the plea for bringing in another Rs 200 crore should be referred to the Cabinet panel.

HCCH has already brought in the additional FDI through ‘advance’ toward share capital. As a result, its share capital has increased to Rs 3,838 crore. According to RBI rules, shares against advance have to be issued within 180 days of receiving the advance money. Therefore, the company has committed that it would enlarge its authorised capital and issue shares against advance before the end of March.

The CCEA is expected to take up the Coca-Cola plea soon and no complications are foreseen in clearance, government sources said. HCCH plans to use the additional FDI to infuse funds into its subsidiary Hindustan Coca Cola Beverages (HCCB). The company has already submitted a board resolution to back its plan for expanding its capital base and infusing fresh FDI. HCCH’s plea for enhancing its FDI approval was supported by both finance and food processing ministries, officials said.

Maharashtra Attracts FDI Worth Around Rs 19,632 Cr In 3yrs

LATUR: Making rapid strides in industrialisation, Maharashtra has attracted Rs 19,632 crore Foreign Direct Investment during the last three years.

"This is the highest FDI in the country amounting to Rs 70,750 crore since 1991," Chief Minister Vilasrao Deshmukh said.

Deshmukh said the state has secured approval to highest number of 119 SEZs in the country and pointed out that the new industrial policy was aimed at providing conducive environment for investment.

"We are determined to provide world class infrastructure to boost investment in the state," he said. 245 IT parks and 33 public IT parks were being developed and there was a proposal for having an integrated Delhi-Mumbai Industrial Corridor, Deshmukh added.

With agriculture being the main prop for the state's economy, the state's production of cotton and soya has registered an all-time high, he said.

Asked about the huge outstanding loan of Rs 7,500 crore of farmers in various cooperative banks, the chief minister said he would favour full waiver.

Deshmukh said he would discuss the state's plan size with the Planning Commission soon and seek a ten per cent increase so that his government could lay more emphasis on irrigation, power and the social sector.