NEXT ROUNDOFREFORMSTOPUSH‘MAKEININDIA ... · last September, the sector grew...
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Road to Reform Treatment of non-repatriable investments by NRIs on par with domestic funding Hiking the proposal limit requir- ing cabinet approval to `3,000 crore from `1,200 cr currently Allowing foreign-funded com- panies that make 70% of their products in India to sell online Setting a Composite Cap for all forms of foreign investment DIPP PROPOSALS AIM TO THE NOTES RELATE TO Boost capital inflows Promote ‘Make in India’ programme Secure infrastructure funding Simplify FDI policy for investors 1 2 3 4 In the first 10 months of 2014- 15, FDI in India grew 36% to $25.5 b, according to DIPP data Higher capital inflows could help finance the current account deficit, estimated by the economic survey at 1% of GDP during 2015-16 NUMBER JUMBLE IN THE FUTURE 23 WWW.ECONOMICTIMES.COM Economy Dilasha.Seth@timesgroup.com New Delhi: The next round of for- eign direct investment reforms is aimed at boosting capital inflows, promoting the ‘Make in India’ pro- gramme and securing infrastruc- ture funding. The Department of Industrial Policy & Promotion, the nodal agency in charge of foreign invest- ment, has sought cabinet approval for four proposals, including treatment of non-repatriable in- vestments by non-resident Indi- ans on a par with domestic fund- ing and hiking the proposal limit requiring cabinet approval to . `3,000 crore from . `1,200 crore cur- rently. The other proposals relate to allowing foreign-funded compa- nies that make 70% of their prod- ucts in India to sell online and set- ting a composite cap for all forms of foreigninvestment.“Wehavefi- nalised and moved four notes to the cabinet that can be seen as the next round of FDI liberalisation in sync with the ‘Make in India’ objective and making the country an easier place to do business for investors. This will result in large capital inflows in key sectors,” a government official said. In the first 10 months of 2014-15, FDI in India grew 36% to $25.5 bil- lion, according to DIPP data. The proposal on non-repatriable NRI investment will allow Indians liv- ing overseas to invest in the coun- try without taking government approval, which is a pre-requisite in many sectors. Non-repatriable investments are those that NRIs cannot take back. “We want NRI money to flow in directly. They have a lot of money and want to invest here. We will al- low people to invest in dollars and let them earn in rupees. We want them to put money in defence, rail- ways, etc.,” the official said. The civil aviation sector already allows NRIs to invest up to 100% against an FDI cap of 74% for investment and depository re- ceipts, foreign currency convert- ible bonds and fully and mandato- rily convertible preference shares or debentures. The DIPP proposes to raise the FDI threshold to . `3,000 crore for proposals requiring cabinet ap- proval to help attract big-ticket in- vestment in the infrastructure and manufacturing sectors. In the past few months, the gov- ernment has liberalised the FDI regime in sectors such as medical devices, construction, railways, defence and insurance. Higher capital inflows could help finance the current account deficit, esti- mated by the economic survey at 1% of GDP during 2015-16. The moves may facilitate the gov- ernment’s efforts to make India an easier place to do business. India is ranked 142 in the World Bank’s latest Doing business in- dex, while the government aims to break into the top 50 in the next two years. scheduled air transport services and up to 49% for non-scheduled air carriers. Allowing foreign-funded compa- nies to sell online if they make 70% of their product range domes- tically will boost domestic brands such as Fab India. The move will benefit and en- courage Indian companies to pro- duce locally and also freely access foreign funds for expansion. To simplify the FDI regime, the government pro- poses to do away with categories and club them all under a composite cap. “The aim is to attract foreign in- vestment by clearing ambiguity in the existing FDI policy related to sectoral caps and conditionality,” said the official. The composite cap will include foreign portfolio investment, NRI NEXT ROUND OF REFORMS TO PUSH ‘MAKE IN INDIA’ DIPP Seeks Cabinet Nod for Four FDI Plans Dept for treating non-repatriable investments by NRIs on a par with domestic funding, hiking proposal limit requiring Cabinet nod to . `3,000 crore In the first 10 months of 2014-15, FDI in India grew 36% to $25.5b,, according to DIPP data Our Bureau New Delhi: India’s core sector shrank for the first time in 17 months in March, hurt by dismal performance of industries such steel and cement. The poor num- bers are indicative of supply-side bottlenecks that affected manu- facturing activity, even as the government tries to promote lo- cal production through a series of measures under the ‘Make in In- dia’ campaign. The eight-sector output fell 0.1% in March compared with a 1.4% expansion in the previous month, data released by the Min- istry of Commerce and Industry showed on Thursday. The per- formance, the weakest since Oc- tober 2013, is expected to be a drag on overall industrial production. The core sector index captures output in eight infrastructure in- dustries – coal, electricity, crude oil, natural gas, steel, cement, fer- tilisers, and refinery products. It has a 38% weight in the index of industrial production, making it a good lead indicator of industri- al activity. “On the whole, we cannot expect growth of more than 3% in indus- trial production in March,” said Madan Sabnavis, chief econo- mist at CARE Ratings. “The stag- nation in core sector output and contraction in merchandise trade are expected to outweigh the mild uptick in automobile production in March 2015, lead- ing us to expect a moderation in industrial growth from the three- month high 5% in February 2015,” said Aditi Nayar, senior economist at ratings firm ICRA. India’s merchandise exports contracted at the sharpest pace in six years in March at more than 21%, falling for the fourth be done by the government,” Sab- navis said. Output in four sectors – steel, ce- ment, natural gas and refinery products – contracted in March. Coal was the top performer post- ing a 6% expansion in March, but still the pace was about half the previous month’s 11.6%. Despite the Supreme Court can- celling mining licences on more than 200 captive coal blocks in last September, the sector grew 8.2% in the fiscal year, the quick- est in at least a decade. In March, fertiliser output grew by 5.2%, while electricity output expanded 1.7%. Steel and cement output fell by 4.4% and 4.2%, re- spectively. “The subdued trend for cement production partly reflects cur- tailed demand on account of sub- optimal weather conditions for construction following bouts of heavy rainfall,” said Nayar. straight month. In the fiscal year ended on March 31, core sector growth slowed to a six-year low at 3.5%. The growth was 4.2% in the pre- vious year. “If we look at the annual growth rate, there has been a significant slowdown. It is a reflection that as far as infrastructure projects are concerned, we need to see cer- tain affirmative action in terms of projects revival, which has to Core Sector at 17-month Low, Contracts 0.1% in March Poor Performance India’s core sector output contracts in March Annual growth falls to a six year low Core sector growth (%) core sector growth (%) First time since Oct 2013 Apr-14 2008-09 09-10 10-11 11-12 12-13 13-14 14-15 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 4.2 2.3 7.3 2.7 5.8 1.9 6.3 6.7 2.4 1.8 1.4 -0.1 2.8 6.6 6.6 5.0 6.5 4.2 3.5 WB Arm will Join IREDA to Boost Energy Projects NEW DELHI The International Fi- nance Corporation (IFC), the private financing arm of the World Bank, has said it would partner the Indian Renewable Energy Development Agency (IRE- DA) to provide infrastructure financing for en- ergy projects in India. India Will Meet 2020 Export Target:Joint Secy MUMBAI The government is confi- dent of pulling off the $900 billion export target for 2020 despite mis- sing it last fiscal, said a top official. “We are confident of achieving the $900 billion export target by 2020 as envisaged in the for- eign trade policy,” joint secretary (commerce) Sudhanshu Pandey told reporters on the side- lines of a CII event here. Short Takes Our Bureau New Delhi: Prime Minister Naren- dra Modi will launch three social security schemes in pension and insurance sector, initiating the gov- ernment’s drive popularly billed as ‘from Jandhan to Jansuraksha.’ In a statement, the finance ministry said that the three ambitious social security Schemes – Pradhan Mantri Suraksha Bima Yojana (PMSBY) ,Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Atal Pension Yojana (APY) – will be launched by Modi in Kolkata on May 9. “This would be a path breaking initiative to- wards providing affordable universal access to essential social security pro- tection in a convenient manner link- ed to auto-debit facility from the bank account of the subscriber,” the minis- try noted in its statement. Pradhan Mantri Suraksha Bima Yo- jana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) will provide insur- ance cover in the un- fortunate event of death by any cause or disability due to an accident, where- as the pension scheme, Atal Pension Yojana (APY), is to address old age in- come security needs. The convenient delivery mechanism of the schemes is expected to address the situation of very low coverage of life or accident insurance and old age income securi- ty products in the country. PMSBY will offer a renewable one year acci- dental death cum disability cover of . `2 lakh for partial permanent disabil- ity to all savings bank account hold- ers in the age group of 18-70 years for a premium of . `12 per annum per sub- scriber, it said. The scheme would be administered through public sector general insurance companies or oth- er general insurance companies will- ing to offer the product on similar terms on the choice of the bank con- cerned. PMJJBY on the other hand will offer a renewable one year life cover of . `2 lakh to all savings bank ac- count holders in the age group of 18-50 years, covering death due to any rea- son, for a premium of . `330 per an- num persubscriber. Modi to Launch 3 Social Security Schemes on May 9 Convenient delivery mechanism of the schemes is expected to address particular situations
Transcript of NEXT ROUNDOFREFORMSTOPUSH‘MAKEININDIA ... · last September, the sector grew...
RoadtoReform
Treatment of non-repatriableinvestments by NRIs on parwith domestic funding
Hiking the proposal limit requir-ing cabinet approval to `3,000crore from `1,200 cr currently
Allowing foreign-funded com-panies that make 70% of theirproducts in India to sell online
Setting a Composite Cap for allforms of foreign investment
DIPP PROPOSALS AIM TO
THENOTES RELATE TO
Boost capital inflowsPromote ‘Make in India’ programmeSecure infrastructure fundingSimplify FDI policy for investors
123
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In the first 10months of 2014-15, FDI in India grew36% to$25.5 b, according toDIPPdata
Higher capital inflows could helpfinance the current account deficit,estimated by the economic surveyat 1%of GDPduring 2015-16
NUMBERJUMBLE
IN THEFUTURE
23�WWW.ECONOMICTIMES.COM
Economy
NewDelhi: The next round of for-eign direct investment reforms isaimed at boosting capital inflows,promoting the ‘Make in India’ pro-gramme and securing infrastruc-ture funding.
The Department of IndustrialPolicy & Promotion, the nodalagencyinchargeof foreigninvest-ment,hassoughtcabinetapprovalfor four proposals, includingtreatment of non-repatriable in-vestments by non-resident Indi-ans on a par with domestic fund-ing and hiking the proposal limitrequiring cabinet approval to.̀ 3,000 crore from .̀ 1,200 crore cur-rently. The other proposals relatetoallowingforeign-fundedcompa-nies that make 70% of their prod-ucts in India to sell online and set-ting a composite cap for all formsof foreigninvestment.“Wehavefi-nalised and moved four notes tothe cabinet that can be seen as the
next round of FDI liberalisationin sync with the ‘Make in India’objective and making the countryan easier place to do business forinvestors. This will result in largecapital inflows in key sectors,” agovernment official said.
In the first 10 months of 2014-15,FDI in India grew 36% to $25.5 bil-lion, according to DIPP data. Theproposal on non-repatriable NRIinvestment will allow Indians liv-ing overseas to invest in the coun-try without taking governmentapproval, which is a pre-requisitein many sectors. Non-repatriableinvestments are those that NRIscannot take back.
“We want NRI money to flow indirectly. They have a lot of moneyand want to invest here. We will al-low people to invest in dollars andlet them earn in rupees. We wantthem to put money in defence, rail-ways, etc.,” the official said.
The civil aviation sector alreadyallows NRIs to invest up to 100%against an FDI cap of 74% for
investment and depository re-ceipts, foreign currency convert-ible bonds and fully and mandato-rily convertible preference sharesor debentures.
The DIPP proposes to raise theFDI threshold to .̀ 3,000 crore forproposals requiring cabinet ap-proval to help attract big-ticket in-vestment in the infrastructureand manufacturing sectors.
In the past few months, the gov-ernment has liberalised the FDIregime in sectors such as medicaldevices, construction, railways,defence and insurance. Highercapital inflows could help financethe current account deficit, esti-mated by the economic survey at1% of GDP during 2015-16.
The moves may facilitate the gov-ernment’seffortstomakeIndiaaneasier place to do business.
India is ranked 142 in the WorldBank’s latest Doing business in-dex, while the government aims tobreak into the top 50 in the nexttwo years.
scheduled air transport servicesand up to 49% for non-scheduledair carriers.
Allowing foreign-funded compa-nies to sell online if they make70%of theirproductrangedomes-tically will boost domestic brandssuch as Fab India. The move will
benefit and en-courage Indiancompanies to pro-duce locally andalso freely accessforeign funds forexpansion.
To simplify theFDI regime, thegovernment pro-poses to do away
with categories and club them allunder a composite cap.
“The aim is to attract foreign in-vestmentbyclearingambiguityinthe existing FDI policy related tosectoral caps and conditionality,”said the official.
The composite cap will includeforeign portfolio investment, NRI
NEXT ROUND OF REFORMS TO PUSH ‘MAKE IN INDIA’
DIPP Seeks Cabinet Nod for Four FDI PlansDept for treating non-repatriable investments byNRIs on a parwith domestic funding, hiking proposal limit requiring Cabinet nod to .̀ 3,000 crore
In the first10monthsof2014-15, FDIin Indiagrew36%to$25.5b,,according toDIPPdata
Our Bureau
New Delhi: India’s core sectorshrank for the first time in 17months in March, hurt by dismalperformance of industries suchsteel and cement. The poor num-bersareindicativeof supply-sidebottlenecks that affected manu-facturing activity, even as thegovernment tries to promote lo-calproductionthroughaseriesofmeasures under the ‘Make in In-dia’ campaign.
The eight-sector output fell0.1% in March compared with a1.4% expansion in the previousmonth, data released by the Min-istry of Commerce and Industryshowed on Thursday. The per-formance, the weakest since Oc-tober2013,isexpectedtobeadragon overall industrial production.
The core sector index capturesoutput in eight infrastructure in-
dustries – coal, electricity, crudeoil,naturalgas,steel,cement,fer-tilisers, and refinery products. Ithas a 38% weight in the index ofindustrial production, making ita good lead indicator of industri-al activity.
“Onthewhole,wecannotexpectgrowthof morethan3%inindus-trial production in March,” saidMadan Sabnavis, chief econo-mist at CARE Ratings. “The stag-nation in core sector output and
contraction in merchandisetrade are expected to outweighthe mild uptick in automobileproduction in March 2015, lead-ing us to expect a moderation inindustrialgrowthfromthethree-month high 5% in February2015,” said Aditi Nayar, senioreconomist at ratings firm ICRA.
India’s merchandise exportscontracted at the sharpest pacein six years in March at morethan 21%, falling for the fourth
be done by the government,” Sab-navis said.
Outputinfoursectors–steel,ce-ment, natural gas and refineryproducts – contracted in March.Coal was the top performer post-ing a 6% expansion in March, butstill the pace was about half theprevious month’s 11.6%.
Despite the Supreme Court can-celling mining licences on morethan 200 captive coal blocks inlast September, the sector grew8.2% in the fiscal year, the quick-est in at least a decade.
In March, fertiliser output grewby 5.2%, while electricity outputexpanded 1.7%. Steel and cementoutput fell by 4.4% and 4.2%, re-spectively.
“The subdued trend for cementproduction partly reflects cur-tailed demand on account of sub-optimal weather conditions forconstruction following bouts ofheavy rainfall,” said Nayar.
straight month.In the fiscal year ended on
March 31, core sector growthslowed to a six-year low at 3.5%.The growth was 4.2% in the pre-vious year.
“If we look at the annual growthrate, there has been a significantslowdown. It is a reflection thatas far as infrastructure projectsareconcerned,weneedtoseecer-tain affirmative action in termsof projects revival, which has to
Core Sector at 17-month Low, Contracts 0.1% inMarchPoor PerformanceIndia’s core sector output contracts in March
Annual growth falls toa sixyear low
Core sector growth (%)
core sector growth (%)
First time since Oct 2013
Apr-14 2008-09 09-10 10-11 11-12 12-13 13-14 14-15May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
4.2
2.3
7.3
2.7
5.8
1.9
6.3 6.7
2.4 1.8 1.4 -0.1
2.8
6.6 6.6
5.0
6.5
4.23.5
�WBArmwill Join IREDAtoBoostEnergyProjects
NEWDELHI The International Fi-
nanceCorporation (IFC), theprivate
financingarmof theWorldBank,
has said itwouldpartner the Indian
RenewableEnergyDevelopmentAgency (IRE-
DA) toprovide infrastructure financing for en-
ergyprojects in India.
� IndiaWillMeet2020ExportTarget:JointSecy
MUMBAI Thegovernment is confi-
dentof pullingoff the$900billion
export target for2020despitemis-
sing it last fiscal, said a topofficial.
“Weare confident of achieving the$900billion
export target by2020asenvisaged in the for-
eign tradepolicy,” joint secretary (commerce)
SudhanshuPandey told reporters on the side-
linesof aCII eventhere.
Short Takes
Our Bureau
NewDelhi: PrimeMinisterNaren-dra Modi will launch three socialsecurity schemes in pension andinsurancesector,initiatingthegov-ernment’s drive popularly billed as‘from Jandhan to Jansuraksha.’
In a statement, the finance ministrysaid that the three ambitious socialsecurity Schemes – Pradhan MantriSuraksha Bima Yojana (PMSBY),Pradhan Mantri Jeevan Jyoti BimaYojana (PMJJBY) and Atal PensionYojana (APY) – will be launched byModi in Kolkata on May 9. “Thiswouldbeapathbreakinginitiativeto-wardsprovidingaffordableuniversalaccesstoessentialsocialsecuritypro-tection in a convenient manner link-edtoauto-debitfacilityfromthebankaccountof thesubscriber,”theminis-trynotedinitsstatement.
Pradhan MantriSuraksha Bima Yo-jana (PMSBY) andPradhan MantriJeevan Jyoti BimaYojana (PMJJBY)will provide insur-ancecoverintheun-fortunate event ofdeath by any causeor disability due toan accident, where-
as the pension scheme, Atal PensionYojana(APY),istoaddressoldagein-comesecurityneeds.Theconvenientdelivery mechanism of the schemesisexpectedtoaddressthesituationofvery low coverage of life or accidentinsuranceandoldageincomesecuri-ty products in the country. PMSBYwill offer a renewable one year acci-dental death cum disability cover of.̀ 2lakhforpartialpermanentdisabil-ity to all savings bank account hold-ers in the age group of 18-70 years forapremiumof .̀ 12perannumpersub-scriber, it said. The scheme would beadministered through public sectorgeneral insurance companies or oth-ergeneral insurancecompanieswill-ing to offer the product on similarterms on the choice of the bank con-cerned. PMJJBY on the other handwill offer a renewable one year lifecoverof .̀2lakhtoallsavingsbankac-countholdersintheagegroupof18-50years, covering death due to any rea-son, for a premium of .̀ 330 per an-num per subscriber.
Modi toLaunch3Social SecuritySchemesonMay9
Convenientdeliverymechanismof theschemes isexpected toaddressparticularsituations
