GOVT. OF INDIA ACCELERATING MANY FDI APPROVALS

By: Bharat Ratna 

• Govt. of India approved 13 FDI proposals worth of Rs.1525 crores

• FDI majors are Steel major Arcelor Mittal and Cyprus-based Golboot Holdings

• Finance Ministry cleared proposals based on the recommendations of FIPB

Since the launch of Economic Reforms by Dr. Manmohan Singh, the then Finance Minister of Mr. Narasimha Rao government in 1991 - FDI has been touted as the magic wand that will transform "under-developed" India into an advanced nation with a "modern" infrastructure. Every government that has followed has dutifully talked of taking steps to encourage and expand FDI.

Foreign Direct Investment (FDI) plays an important role in the long-term economic development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. FDI also has an important role in enhancing exports. FDI is a developmental tool. The policy of the Government of India is to strive to maximize the developmental impact and spin-offs of FDI. While the Government encourages, and indeed, welcomes FDI in all the sectors where it is permitted, we are especially looking for large FDI inflows in the development of infrastructure, technological upgradation of Indian industry through ‘greenfield’ investments in manufacturing, and in projects having the potential for creating employment opportunities on a large scale. India invited investments in setting up Special Economic Zones and establishing manufacturing units therein.

INDIA’s SRENGTHS – Top three motivating factors for FDI investors entry in to India are-

1. Market Size
2. Highly skilled manpower
3. Low cost of infrastructure and operation

• Investors of FDI have rated India’s attractiveness as an export platform as

• ‘medium to high’.

• India’s attractiveness as an ‘off- shoring’ destination has been rated as ‘high’ by the FDI Investors.

• FDI investors have rated India as a highly attractive destination in terms of availability of skilled IT/BPO workforce.

Thrust Sectors for FDI are IT & related services, Chemical and chemical products, Rubber and plastic products, Electrical machinery and apparatus, Consumer Goods, Motor Vehicles & Vehicle Equipments and Machinery and Machine Tools.

Maharashtra, Karnataka, Andhara Pradesh, Tamil Nadu and and Gujarat are the major states attracting large share of FDI in India.

On 13 June 2008, Government of India approved 13 FDI proposals worth of Rs 1,524.70 crore including Steel major Arcelor Mittal and Cyprus-based Golboot Holdings

Finance Ministry statement said that Finance Minister P Chidambaram has approved 13 proposals of Foreign Direct Investment (FDI) amounting to Rs 1,524.70 crores based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on June 4, 2008.

The global steel major Arcelor Mittal has proposed to make downstream investment to convert operating company in India into operating-cum-holding company.

Cyprus-based Golboot Holdings has also proposed to induct Rs 700 crore by subscribing unsecured and compulsorily convertible debentures subject to approval from its Indian partners.Mahindra and Mahindra had already informed las month to the BSE that it would raise funds at 9.25 per cent per annum by issuing over 93 lakh unsecured fully and compulsorily convertible debentures (FCDs). Its face value was Rs 745 each aggregating Rs 700 crore to Golboot Holding Ltd, an entity controlled by Goldman Sachs. The FCDs would be converted into equity shares after 18 months. After this investment, Golboot Holdings Ltd would own 3.68 per cent of post issue paid up equity share capital of the company.