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

4

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

Dilasha.Seth@timesgroup.com

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

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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