The Union Minister
of Finance and Company Affairs, Shri Jaswant Singh has announced
a series of measures to facilitate greater participation by Non
Resident Indians in the economic growth of the country. Speaking
on the occasion of the Pravasi Bharatiya Divas celebrations in
New Delhi, today, the Minister announced the following relaxations
on capital account transactions for a period of six months beginning
from January 10, 2003.
- Removal of the existing limit
of US $ 20,000 for remittance under the Employees Stock Options
Programme (ESOP) Scheme.
- Discontinuation of limits on trade-related
loans and advances by Export Earners Foreign Currency (EEFC)
account holders, though the transactions will continue to be
reportable to RBI.
- General permission to retain ADR/GDR
proceeds abroad for future forex requirements.
- Permission to corporates, who
have set up their branches and offices abroad, to acquire immovable
property overseas for their business/staff residential purposes.
- Permission to listed Indian companies
to invest abroad in companies listed in recognized overseas
stock exchanges, and having at least 10 percent shareholding
in a company listed on a recognized stock exchange in India,
on January 1, of the year of investment. Such investments should
not exceed 25 percent of the Indian company’s net worth as on
the date of the last audited balance sheet.
- Mutual funds are being permitted
to invest abroad in companies which are listed on overseas stock
exchanges, and which have at least 10 percent shareholding in
a company listed on a recognized stock exchange in India on
January 1 of the year of investment. The overall cap for investment
abroad by mutual funds is raised to US $ 1 billion.
- 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 percent shareholding in a company listed on a recognized
stock exchange in India on January 1 of the year of investment.
However, no investment limits are being fixed for individuals.
- With regard to transfer of assets
in India, remittance of proceeds up to US $ 1 million is being
permitted.
The Minister expressed
the hope that with the active support and cooperation of NRIs,
India would be able to raise the levels of prosperity and progress
and usher in sustained high growth with macro economic stability.
Outlining the path
for achieving higher and faster growth rates, the Minster said
that we have to consider ways and means for putting in more funds
in core sectors such as roads, ports, railways, communication
etc. He also underlined the need to unlock the potential of agriculture
particularly in terms of diversification and agri exports. He
said that efforts must be intensified to sharpen the cutting edge
of these ‘sunrise’ industries through greater innovations in the
areas of processing, packaging, marketing and development of brand
equity in line with international best practices.
The Minister said
that it was proposed to set up a high level committee for strengthening
regulatory and penal provisions for the corporate sector to promote
best corporate governance practices by liberalizing corporate
laws for greater business freedom and reducing compliance cost.
The Minister also pointed out that certain measures had already
been taken to facilitate business growth such as the Amendment
of the Companies Act (1956) to promote mobilization of funds by
issue of Indian Depository Receipts, which will also help non-residents
to raise funds in India against securities of foreign companies.
He said that foreign companies today can start functioning in
India through a fast-track registration system without having
to go through the whole process of incorporating a company. The
Minister further said that the Companies (Second Amendment) Bill,
2002, which is currently in Parliament, incorporates international
best practices and intends to set up a ! national company law
tribunal.
