| External
Commercial Borrowings between US $50m & $100m
need RBI approval |
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| Rising
foreign exchange reserves and ample liquidity in
local markets are believed to be the reasons, behind
the latest move by the government and the RBI, in
making an RBI approval mandatory for ECBs in the
US $50 mln - $100 mln band. For loans above US $
100 mln, they need to approach the finance ministry.
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Our Say |
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| It
thus precludes any use of the
automatic route for raising foreign
commercial borrowings above US
$ 50 mln. The government has been
discouraging all ECB proposals
aggregating US $100 mln or above,
saying that issuers should look
at accessing funds from the domestic
market, given the fall in interest
rates. Over the last six months,
the largest ECBs raised by Indian
companies were in the US $50-$100
mln band, with overall mobilization
estimated at over US $1bln.
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| Government
set to redefine FDI norms for retail trade
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| An
exercise is underway at the level of the committee
of secretaries to redefine some aspects of retail
trading, to consider whether the norms need to be
revised for boosting FDI, according to senior government
officials. |
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Our Say |
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| Having
already allowed overseas investors
to sell equipment bulk or institutional
in the domestic market on a cash
and carry wholesale trading basis;
and recognizing the fact that
trading practices change swiftly,
the government’s move might
well give the desired fillip to
the retail segment that has an
estimated market potential of
US$ 40 bln and a growth rate pegged
at 20%. |
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| In
the current investment regime, no foreign investment
is allowed in domestic retail trading. This is based
on the perception that opening up of retail trading
for FDI investment could impact local traders and
lead to job losses. However, manufacturing companies
are allowed to carry out wholesale trading of high
value items purely to institutional customers or
wholesale distributors on a cash and carry basis.
Given the substantial investment required, some
of these high value items are not stocked by local
distributors. Some of the big names operate through
franchises to a limited extent. |
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