Credai requests relaxing of ECB norms
In order to allow maximum foreign investments in India, plans are on to liberalise FDI norms and relax existing regulations. The Foreign Investment Promotion Board (FIPB) sanctioned 72 proposals worth Rs.2,344.21 crore in the period from October to November 2008 in two intervals, further giving an impetus to this plan of action.
The Finance Ministry sanctioned 40 proposals on 24 October 2008, of which, the largest proposal worth Rs.400 crore was of ILFS-ORIX Trust Company, to invest from Foreign Offshore fund by issuing units of the Trust. Asset Reconstruction Co India was given the go ahead to bring in FDI worth Rs.272.68 crore for induction of a new collaborator.
On 28 November 2008, the Finance Ministry cleared an additional 32 proposals involving FDI worth Rs.845.70 crore. Of these, the largest proposal was from Oriental Structural Engineers for the transfer of shares worth Rs.450 crore to set up a holding company. Other prominent proposals that got a go ahead from the FIPB were Reid & Tailor’s Rs.108.33 crore proposal to allot and issue equity shares warrants, Dr. Oetker India’s proposal worth Rs.110.40 crore for conversion of operating company into an operating cum holding company to make further downstream investments.
Eleven proposals were reported to have been deferred during November 2008, on recommendations of FIPB. These proposals included one from JT International Mauritius to increase foreign shareholding from 50 per cent to 74 per cent and another by ZF Frienrichsafen AG to set up a new JV company for manufacturing and marketing rubber and rubber-to-metal parts for Automotive industry, Agriculture and Construction Machinery, Railway and Construction application.
Altogether seven proposals were reported as rejected. Two were RISH PTE Cook Island’s post-facto approval for the FDI already brought under automatic route and Nagarjuna Construction Co’s offer to make amendments in two clauses of the FC approval letter.
Suzlon Energy’s Rs.1,800 crore proposal has been recommended for CCEA consideration, as the investment involved is above Rs.600 crore. The proposal involved converting the operating company into an operating cum holding company to make downstream investment for carrying out activities of production and manufacture of wind turbine generators and generating sets.
Ansal Properties & Infrastructure and Jaipur Mahua Tollway’s proposals were reported to have been withdrawn from the Agenda.
Other Developments:
Confederation of Real Estate Developers’ Associations of India (Credai) has formally requested the Union government to relax FDI and external commercial borrowing (ECB) norms and to frame a policy for rescheduling terms for the construction loans, to facilitate the roll-over of existing debt. If the policy gets its way, then it will boost the investment in affordable housing. The norms currently allow 100 per cent FDI in construction projects including housing, commercial premises and resorts subject to conditions minimum capitalisation, and area for development. Credai wants that the limits of 50,000 sq mtrs or 25 acre, be relaxed for this sector.
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