M A I N   N E W S

Norms for overseas investment eased
Tribune News Service

New Delhi, January 10
In a major initiative aimed at liberalising the capital account, Finance Minister Jaswant Singh today announced a slew of measures, including general permission to retain ADR/GDR proceeds abroad for future foreign exchange requirements, removal of the existing limit of $ 20,000 for remittance under the employees stock option scheme (ESOP) and permitting remittance of proceeds up to $ 1 million to India.

Addressing a major congregation of NRIs who have converged here for the first ever “Pravasi Bharatiya Divas”, Mr Singh also announced the government’s decision to discontinue limits on trade-related loans and advances by the Export Earners Foreign Currency (EEFC) account holders, though the transactions will continue to be reportable to the RBI.

The government has also decided to permit corporates, who have set up their branches and offices abroad, to acquire immovable property overseas for their business/staff residential purposes.

Besides, permission will also be granted to listed Indian companies to invest abroad in companies listed in recognised overseas stock exchanges, having at least 10 per cent shareholding in a company listed on a recognised stock exchange in India.

“Such investments should not exceed 25 per cent of the Indian company’s net worth as on the date of the last audited balance sheet”, Mr Singh clarified.

Further, mutual funds are being permitted to invest abroad in companies which are listed on overseas stock exchanges, and which have at least 10 per cent shareholding in a company listed on a recognised stock exchange in India.

“The overall cap for investment abroad by mutual funds is, hereby, raised to $ 1 billion”, the Finance Minister said.

Apart from companies, individuals are also being permitted to invest abroad in companies which are listed on overseas stock exchanges and which have at least 10 per cent shareholding in a company listed on a recognised stock exchange in India.

“However, some investment limits are being fixed for individuals”, the Finance Minister pointed out.

Today’s announcements were only the beginning of a major reforms regime that the government was planning to unveil in the near future.

The government will announce within a month’s time a comprehensive policy on the issue of privatisation of airports and the open skies policy. A policy similar to the one on national highways will be announced by the government for ports and airports within the next 12 to 18 months.

Urging the overseas Indian community to participate in the “excitement” that was at present being witnessed in India, Mr Singh visualised Asia as the major hub of industrial activity during the coming years with India and China leading the growth rate.

“With major productivity gains, India will become a major industrial base within the next seven to 10 years”, Mr Singh said.

Expressing concern that the share of the international trade in Indian’s GNP, he said the Commerce Minister will soon take steps to address the issue.

Paying rich tributes to the success of the Indian IT industry, he said “while India missed the first industrial revolution, it led the digital revolution”.