India clears 16 proposals of FDI

Move a strong positive signal to business community.

By R. Chandrasekaran

CHENNAI: As part of efforts to boost foreign direct investments, the Indian government has given its nod for 16 FDI proposals. The decision follows a recommendation by the Foreign Investment Promotion Board (FIPB) headed by Arvind Mayaram, who is also the economic affairs secretary, to clear the 16 proposals, when it met on May 10. The total value of these proposals is around Rs.16.47 billion.

The board deferred decisions on nine proposals, including decision on a proposal from Punj Lloyd, which was due to lack of security clearance.

The other proposals that were deferred included Sterlite Networks Ltd’s plan to cut down the quantum of FDI, and IL&FS Securities Services’ amalgamation of an Indian company.

There was no opinion about two proposals — one from the U.S.-based Jawahar Palaniappan and the other from Kolkatta-based Akzo Nobel. The FIPB said the two proposals were outside the ambit of the board.

The FIPB also gave green signal for the Rs. 9.62 billion acquisition of Vijay Television by foreign promoters. The board also gave its nod for the Korea Western Power Co. to invest Rs. 2.7 billion in an Indian company.

Among other major proposals to get clearance was Darjeeling Organic Tea Estates’ request to hike foreign equity participation that is valued around Rs. 1.05 billion.

The FDI clearance came at a time India is in terrible need of foreign currency to narrow the current account deficit or balance of payment position, which is one of the reasons the Reserve Bank of India decided to leave key policy rates unchanged, despite the economy reaching a decade low.

While these proposals are not likely to bring in the foreign currency immediately, the government’s approval assumes significance since it can claim to have processed these proposals quickly and gave its opinion without holding on to it indefinitely. This would certainly send a strong signal to the government’s intention to the business community, which has voiced concerns about delay in clearing the proposals.

On May 30, the Federation of Indian Chambers of Commerce and Industry disclosed that more than 50 big project proposals worth $52 billion were pending before the government for approval.

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