Foreign direct investments into India are set for a more liberal regime whereby companies will require only an FIPB approval for investments up to Rs 1,000 crore. Clearance from Cabinet Committee of Economic Affairs (CCEA) will be mandatory only for investments above Rs 1,000 crore. At present, any investment proposal above Rs 600 crore requires an approval from the CCEA over and above the FIPB nod. The FIPB clears FDI proposals below Rs 600 crore and the finance minister approves it. The relaxation in rules will also help existing foreign companies who can now pump in additional investments in their Indian operations or outfits without seeking a government approval as long as it is within the Rs 1,000 crore limit.

Once the new rules kick in, companies such as beverages giant Coca Cola need not go to CCEA for every investment they want to make. Press Note 7 of 1999 had made it mandatory for any foreign company that was to invest more than Rs 600 crore to go to the then Cabinet Committee on Foreign Investment. Subsequently, the responsibility was transferred to the CCEA.The finance ministry has written to the Department of Industrial Policy and Promotion about reviewing the Press Note. The proposal is likely to be take up when the DIPP carries out the next FDI policy review, sources told ET.

The DIPP is still working on the norms related to indirect foreign holding in sectors where there are FDI caps. Sources said the limit that was set when the country was just opening its doors to foreign investment now needed to be increased. Moreover, the fact that these investment proposals have to be vetted by the CCEA not only makes the process longer, but also burdens the agenda of the committee that has to ponder on larger economic policy issues. They said the FIPB approval requirement for companies which come in after the CCEA clearance also was unnecessary, as in some cases the amounts are as low as Rs 50 crore.

In 2007-08, the country received FDI of $24.5 billion as against $15.58 billion in 2006-07, showing a growth of about 56%. In 2005-06, the growth was even sharper at 184%, up from $5.5 billion in 2004-05. Mauritius, the US, UK and Singapore are the biggest investors in the country. In terms of sectors that attracted the highest amount of foreign investment in the last financial year, financial and non-financial services topped the list. This was followed by computer hardware and software, housing and real estate, telecom and construction.

Source: The Economic Times

Acknowledging India’s burgeoning economy, Italian super-bikes maker Ducati Motor Holding announced its entry into the Indian market with its high-end motorcycles priced in the range of Rs 15-50 lakh. “India is no longer an emerging country. It is a reality worldwide. We feel it is the right time to enter the Indian market,” the company’s CEO, Mr Gabriele Del Torchio, said at the launch. The company plans to sell 50 units in the first year through its dealerships in Delhi, Mumbai, Bangalore, Chennai and Hyderabad.

Partnership
Ducati is entering the Indian market through partnership with Precision Motor India Pvt Ltd, which would import its bikes. Mr Torchio also indicated sourcing of engine components from India. “We have already been sourcing engine parts and other components since the last four years. Our purchasing team would be visiting India shortly after which we are looking to increasing the volume of our components imported from the local market here.”The company sources components worth €250 million globally, out of which currently components for less than €5 million is being sourced out of India.

Commenting on India’s technological competence to produce such high-powered bikes and if the company would consider manufacturing here, Mr Cristiano Silei, Director Commercial, said, “We feel India has the technology. And in the future, it could be a possibility.”

Source: The Economic Times

With the booming stock market remaining volatile in the recent times, more and more investors are seeking mutual fund (MF) route to invest in the market. This can be seen from the number of investor folios rising faster than the growth in asset under management (AUM) of the MF industry. For the financial year ended March 31, 2008, the number of investor folios of the MFs stood at 4.37 crore, which was at 2.79 crore as on January 31,’07. This represents growth of almost 57%. During the same period, the AUM of the Indian MFs increased 54%, from Rs 3.29 lakh crore to Rs 5.05 Lakh crore.

As per the latest data available with Sebi with respect to different categories of MF investors and their share in total AUM, the share of individual investors has remained more or less static at 42.35% (against 43% as on March 2006), while that of NRI Investors stood at 5.34% (previous 5%) as on January 2007. While the share of foreign institutional investors and Corporate investors has undergone some significant change during the same period. The share of FIIs in MFs AUM has increased from 1% to 2.37%, while that of corporate has come down to 49.94% from 51%.

These figures are expected to see major changes once the regulator is able to collate the numbers for the year ended March 31, 2008. Dhirendra Kumar, director, Value Research Online, said, “This is a positive sign for the MF Industry in the country and very important for the growth of the industry. The boom in the MF sector can be attributed to the boom of equity markets in the year 2007. Last year’s bullish run in the share market is one of the important part of success of New Fund Offering due to which large numbers of investors were attracted to invest in it.”

The rise of MF industry in India can also be seen by the number of distributors, which stands at 72,108, excluding 107 banks, till March’08 compared to around 54,000 in January’07. Sebi has recently cleared a proposal to allow asset management companies to launch real estate mutual funds which will be entering the market soon and will require special set of people to market the same. As a result, by the end of the year number of distributors may increase.

Source: The Financial Express