In July 2008, 42 proposals involving FDI worth Rs.1,682 crore were added to India's FDI register, as the Union Finance Ministry accorded its approvals on them, in two installments.

The first set of FDI proposals, 28 in number, were cleared on 04 July 2008. The largest proposal approved was of Parryware Roca for a value of Rs.742 crore. Roca, the Spanish holding company intends to increase its holding in its Indian company from 50 to 100 per cent, and convert the operating company to operating-cum-holding company, furthering its downstream investment plans.

The other prominent proposal to receive government approvals was of Eldeco Infrastructure & Properties. The company has planned to infuse Rs.195.7 crore as FDI into its Indian subsidiary and alter its status from an operating company into an operating-cum-holding company. The Ministry also cleared the application of Multiscreen Media to bring in Rs.158 crore of FDI, through issue of equity shares to NRIs and residents, was given the nod.

On 15 July 2008 the Finance Ministry cleared the remaining 12 proposals involving FDI worth Rs.354 crore. Of this lot, the largest proposal was that of Coastal Projects, Hyderabad, which intends to convert its Indian subsidiary into an operatingcum- holding company at a value of Rs.160 crore. Unicon Financial Intermediaries was granted approval to increase the equity stake of its holding company with an infusion of Rs.120 crore. Rio Tinto Exploration's proposal for deletion of condition in lieu of para 3 of Press Note 7 of 2008, initially stipulated by FIPB, was also approved.

Eighteen proposals were deferred during the month, on recommendations of FIPB. These 18 proposals include - Hindi newspaper group Amar Ujala, plans to amalgamate two of its companies; Transcend Infrastructure's proposal to increase FDI beyond 49 per cent in a communication and broadcasting tower venture. Other proposals deferred were by G4S Corporate Services India, Winsome Propbuild, New Delhi, G P Realtors, Geld Consultancy Services, JT International Mauritius, EZY Infosoft, Chandigarh, Elken International and JSW Infrastructure, Mumbai.

While the FDI application of Freedom Opthaimic was rejected in July 2008 for reasons not disclosed, Hughes Communication (India) was advised to apply afresh, as per new policy guidelines in the Telecom sector.

It was reported that two large foreign companies have reportedly approached FIPB, to acquire FDI clearances. Rio Tinto, the world's largest aluminium producer, proposes to set up a 15 mln tpa activated aluminium plant in Gujarat. Japan Tobacco International proposes to raise its equity holding in its Indian company - JTI India, from 50 per cent to 74 per cent. Though 100 per cent FDI is allowed in the Tobacco industry, FIPB has, in the past, rejected such proposals from international companies like Philip Morris, Rothmans and British American Tobacco, owing to the pressure from domestic tobacco companies.

Other Developments

It was reported that the Union Ministry of Home Affairs has readied a set of FDI policy guidelines for Cabinet approvals. The draft guidelines discuss the definition of sensitive areas. The Ministry opines that any project falling within 50 km of international borders, should be considered as a sensitive project. However, the Industry Ministry has suggested the minimum distance to be increased from 50 km to 150 km.

Further, the Home Ministry has its point of view to adopt instead of country-specific bans on FDI, a case-by-case ban system, and in the case of foreign employees deployed on projects, such workers should first apply for work permit and later for a visa.

In its letter to the Finance Ministry, the RBI has questioned the recent SEBI decision to allow global Real Estate Mutual Funds (REMF) to invest in Real Estate sector. The Central Bank has argued that allowing REMF to invest in Real Estate sector would mean indirect flow of FDI into this sector. Though 100 per cent FDI is allowed in the Real Estate sector, RBI feels that SEBI's step amounted to violation of the spirit of the FDI conditions.