To attract more FDI in the services sector, the Union government is reportedly planning to liberalise the FDI rules for FM radio broadcasters and DTH service providers. The Department of Industrial Policy and Promotion (DIPP) has proposed that FDI cap for FM broadcasters be raised to 24 per cent from the current 20 per cent and to 74 per cent from the existing cap of 49 per cent in the case of DTH service providers. It has also proposed simpler FDI rules for Internet Service Providers (ISPs).
DIPP has also proposed that FDI regime for ISPs without gateways be simplified. Currently, 100 per cent FDI is allowed, but FIPB approval is needed beyond 49 per cent. However, ISPs have to divest 26 per cent of their equity in favour of Indian public if they are listed overseas. The proposal seeks to raise foreign investment limit to 74 per cent, with prior FIPB approval beyond 49 per cent. This will remove the distinction between ISPs with and without gateways.
FIPB Clearance
In June 2009, the Finance Ministry on recommendations of the Foreign Investment Promotion Board (FIPB) ratified 44 FDI proposals worth Rs 648.8 crore in two tranches.
On 22 May 2009, 21 FDI proposals worth Rs 563.90 crore were cleared by the Finance Ministry. Prominent among the proposals was Dubai based Damas LLc's Rs 180 crore investment plan to set up a JV company with 51 per cent equity participation to undertake the business of single brand retail trading in partnership with Gitanjali Lifestyles.
HP India Holdings' Rs 125 crore proposal to set up a JV company to undertake developing, owning and operating hotels in various cities and markets in India was given a go-ahead.
In the food processing sector, Groupe Danone SA's (France) proposal to invest in the areas of food, beverages, biscuits, cereals, dairy, baby food and medical nutrition sector in India was also given a green signal by the FIPB. In early 2009, the France based company had taken an exit from Britannia.
Again, on 19 June 2009, the ministry gave its accord to 23 FDI proposals worth Rs 84.90 crore. The largest among these proposals was of Germany-based BASF SE's Rs 63 crore proposal to acquire equity shares by way of an "Open Offer" in an Indian company to undertake manufacturing and trading of speciality chemicals and in commoditised products.
Untitled Document
FDI Inflows: 2008-09 |
Month |
Rs. Crore |
US $ (mln) |
Apr-08 |
15,005 |
3,749 |
May-08 |
16,563 |
3,932 |
Jun-08 |
10,244 |
2,392 |
Jul-08 |
9,627 |
2,247 |
Aug-08 |
9,995 |
2,328 |
Sep-08 |
11,676 |
2,562 |
Oct-08 |
7,284 |
1,497 |
Nov-08 |
5,305 |
1,083 |
Dec-08 |
6,626 |
1,362 |
Jan-09 |
13,347 |
2,733 |
Feb-09 |
7,223 |
1,466 |
Mar-09 |
10,023 |
1,957 |
2008-09 |
122,918 |
27,309 |
2007-08 |
98,664 |
24,579 |
Source : DIPP
In all, the government deferred 27 proposals, including United Breweries plan for raising Rs 708 crore by issuing fully convertible equity warrants and Unitech Wireless' (Tamil Nadu) proposal to increase the foreign shareholding up to 74 per cent. Others companies whose proposals were deferred are Powermax Communications, Zee Entertainment Enterprise, KVK Energy & Infrastructure etc.
In June 2009, the Finance Ministry rejected nine proposals including G4S Corporate Services' to convert the existing status of its operating company into foreign owned Indian Holding Company to make downstream investment and Matrix Enport Holding's proposal to allot and issue shares to the Indian companies or their respective affiliates fully paid up equity shares and /or compulsorily convertible preference shares and to invest in other companies engaged in such business falling under the same sector. Morgan Stanley's, Tata Teleservices', Bharti Telemedia's proposal to amend FC approval were also discarded.
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