| |
Foreign Direct Investment |
|
In July 2007, the Union Ministry of Finance cleared 27 FDI proposals in two
installments. On 04 July 2007, the ministry cleared 10 proposals worth
Rs.2,339 crore. The Rs.1,894 crore FDI proposal of the Mauritius based
company, Morgan Stanley Mauritius Company Ltd., was the largest proposal
that was allowed. The company plans to invest in the equities of two Indian
companies - Morgan Stanley India Securities Pvt. Ltd. and Morgan Stanley
Investment Management Pvt Ltd. The second largest proposal to be cleared was
that of Rakindo Developers Pvt. Ltd., a Chennai based company. The company
plans to bring in Rs.407 crore and invest it in construction development activities.
| FDI Inflows |
|
Total |
| |
(Rs. Crore) |
Us $ bln |
| 2001 |
16,778 |
3.728 |
| 2002 |
18,196 |
3.791 |
| 2003 |
11,617 |
2.526 |
| 2004 |
17,267 |
3.754 |
| 2005 |
19,299 |
4.361 |
| 2006 |
50,357 |
11.119 |
| 2007(Jan-Mar) |
28,492 |
6.456 |
In the second installment on 19 July 2007, the ministry approved 17 proposals
envisaging foreign direct investment (FDI) to the tune of Rs.609 crore. One
amongst the 17 proposals, was that of Sweden-based Quinn Hotels, to form a 100
per cent subsidiary in India with a capital of Rs.313.22 crore for investments in
construction development activities and in companies engaged in hotel
development activities.
Saudi Economic & Development Company’s proposal was; to set up a holding
company at a cost of Rs.46 crore for making downstream investment in FDI
compliant activities. Flemingo Duty Free Shop's plans for infusion of foreign
equity worth Rs.80 crore by Walker Investments to set up duty free shops at
airports and seaports were the other proposals to receive the finance ministry's
green signal in the second meeting.
Shape of Things to Come
|
- The Union government may soon allow foreign direct investment (FDI) from Bangladesh, on a selective basis and after security checks; with a view to giving a boost to the bilateral economic relations. India currently prohibits FDI from Pakistan and Bangladesh for security considerations.
The National Security Council under the Prime Minister's Office (PMO) has recommended that a 'catch-all' umbrella legislation should be enacted to check security threats from certain categories of FDI. The council wants the government to enact a law modelled on the Exon-Florio Act of the US, which arms the US government with powers to block acquisition of any American company by a foreign investor, if necessary.
Enacted in 1988, the Exon-Florio Act provides powers to the Committee of Foreign Investment in the US to prohibit takeover of any American company if it poses a threat to the country's security. China also enacted a law last year to block foreign investments harming national security.
Earlier, the defence ministry had raised strong objections over giving clearances to FDI in special economic zones from "countries of concern and unfriendly entities".
- The Union government is considering modifications in the FDI norms for non-banking finance companies (NBFCs), to check unbridled acquisitions by foreign banks. Earlier, the RBI had raised the issue with the government, stating that foreign banks buying majority stakes in non-deposit-taking NBFCs (NBFC-ND) would provide room for regulatory arbitrage.
- The Reserve Bank of India has rejected proposals to relax external commercial borrowing (ECB) and FDI norms for infrastructure financing companies, as well as, to enhance foreign institutional investment in debt papers. Earlier, the Deepak Parekh Committee on Infrastructure Financing, which submitted its report in May to Finance Minister P Chidambaram, has recommended that infrastructure holding companies should not be subject to NBFC guidelines and should be allowed to raise FDI and ECB through automatic route.
|
|