The government has allowed an individual foreign investor to hold up to 15% in an exchange, up from the current 5%, according to changes announced as part of the Union budget.
“Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5% to 15% on par with domestic institutions. This will enhance global competitiveness of Indian stock exchanges and accelerate adoption of best-in-class technology and global market practices,” the budget documents read.
According to Prithvi Haldea, managing director, Prime Database, a primary market tracker, 15% is a considerable stake for a foreign investor to be strategically invested in an exchange.
“The current threshold of 5% was allowing the foreign shareholder to be just a trading investor without any strategic alliance and without a say in the operations and development of the exchange. In my view, any investor who wants to be invested strategically in an exchange should be allowed to hold even higher stake, say at 26%,” said Haldea.
“This is expected to improve the functioning of Indian stock exchanges and bring them on par with the best exchanges in the world. This will also help attract more investments in India by creating stronger links with the best foreign exchanges,” said Ashishkumar Chauhan, MD & CEO, BSE.
“NSE has always aligned with the Govt policies. In any case, the exchange is always for implementation of global best practices and technology. We will evaluate accordingly, whenever such proposals come,” said an NSE spokesperson.
The proposal was first mooted by capital markets regulator Securities and Exchange Board of India (Sebi) in 2012, but was turned down by the Bimal Jalan committee set up for amendments to Stock Exchange and Clearing Corporations (SECC) regulations.
In June 2014, Sebi once again proposed this to the ministry, arguing that the exchange space is now mature enough to handle higher participation from a single foreign investor.
In November last year, the finance ministry wrote to the market watchdog for its feedback on allowing an individual foreign shareholder to hold up to 15% in an exchange. As per an Economic Times report on 31 December, Sebi informed the ministry that there were no regulatory concerns on allowing a single foreign investor to have a higher stake in stock exchanges.
The change in rules may pave the way for foreign exchanges to increase their stake in Indian counterparts.
Singapore Exchange Ltd and Deutsche Boerse AG currently hold 4.9% each in BSE Ltd. In the NSE, the top foreign shareholders include Gagil FDI Ltd (Cyprus), GS Strategic Investments Ltd, SAIF II SE Investments Mauritius Ltd and Aranda Investments (Mauritius) Pte Ltd. They hold 5% each.
Mint reported on 26 February that the Sebi board on 12 March will take up for discussion the proposal to increase foreign shareholding in stock exchanges. With the government giving the proposal a nod, Sebi will likely finalize guidelines for the same at its board meeting.
In initiatives that are set to give a fillip to foreign direct investment, the government has proposed to open up new avenues to overseas investors as well as promised a more conducive business environment with simpler rules.
The FM has proposed to allow 100% FDI in asset reconstruction companies under the automatic route. Foreign investment up to 49% in the insurance and pension sectors, too, will not require prior government vetting while similar rules will be extended to more non-banking financial company (NBFC) activities.
The announcement is in keeping with Prime Minister Narendra Modi's agenda of pushing for minimum governance, and a continuation of reforms that took off in November last year.
In another move that is expected to entice overseas investors, they will be allowed to own 100% stake in businesses marketing food products produced in India, but with clearance from the Foreign Investment Promotion Board.
"The intent of the government is to put most items under the automatic route. Reasons: one is to reduce the time taken in getting these permissions and the second is to bring down compliances associated with FDI rules. Both help take forward the Make in India agenda," said Paresh Parekh, partner, EY.
The biggest push to Make in India is likely to come from FDI relaxation in food products marketing, opening the doors for increased investment in food processing infrastructure and creation of large scale jobs. The share of food processing in manufacturing sector GDP was 9.8% in 2012-13, and it is likely to rise significantly.
Foreign investors have lauded the move to accord them residency status, which will save them the hassle of reviving business visas every five years.
"Foreign investors should be allowed to stay in India to make in India ... this was a very simple yet long-overdue move," said a senior company executive who did not wish to be named.
The basket of eligible instruments that foreigners now have to invest in India will be expanded to include hybrid instruments. "We have yet to see the fine print ... but most steps are incremental in nature and not path-breaking," EY's Parekh added.
The Centre State Investment Agreement to ensure effective implementation of bilateral investment treaties signed by India with other countries will become an additional area for state governments to improve their investment climate.
Manish Sharma, president of the Consumer Electronics and Appliances Manufacturers Association, sees benefits to the electronics sector from the government's move.
"The government's plan to attract FDI to invest in the Make in India proposition will help provide a fillip to the electronics sector and help us enhance technology proliferation and indigenous manufacturing."
Source: The Economic Times
Rising awareness about health & fitness and changing lifestyle are driving the Indian nutraceuticals market, which is likely to cross $ 6.1 billion by 2020 from the current level of $ 2.8 billion growing at compound annual growth rate (CAGR) of about 17 percent, according to a new study jointly conducted by Assocham and RNCOS, a market research firm.
While penetration of nutraceuticals in urban India is around 22 percent, in rural it is as low as 6 percent due to lack of awareness. “For faster growth of the domestic market, both private players and government should create awareness about the health benefits of nutraceuticals among masses through campaigns, social media and television. All products, before reaching the market should go through rigorous testing and it should not be compromised at any cost. An exponential growth has been noticed the number of food testing labs in India,” said the report.
At present, India does not have any kind of regulatory guidelines for the approval or monitoring of the products under this segment. In the absence of regulations, the products take much longer to reach the market. For industry growth, it is utmost necessary to give faster approvals for eligible nutraceuticals, noted D S Rawat, secretary general, ASSOCHAM.
“FSSAI should come up with properly framed guidelines related to manufacturing, storage, packaging & labelling, distribution, sales, claims and imports. This will bring clarity to the industry stakeholders and they can invest into the industry with no fear of counterfeiting,” said Rawat.
The study has also suggested that the government should provide special incentives and subsidies to emerging companies for the growth of the industry. The funding will help companies to use improved process technology and come up with quality nutraceuticals.
“Financial support will also help Indian talent to innovate cost effective nutraceuticals. The products available in the market are majorly targeted to upper-middle class leaving a vast potential. To catch the masses, nutraceuticals for all should be the target concept,” added the report.
Although the Indian nutraceuticals market is growing is at rapid pace, it only accounts for around 1.5 percent of the global market, which is expected to cross $ 262.9 billion by 2020 from the current level of $ 182.6 billion growing at compound annual growth rate (CAGR) of about 8 percent, noted the ASSOCHAM-RNCOS study.
US has the largest market for nutraceuticals, followed by Asia-Pacific and European Union. Functional food is the fastest growing segment in the US nutraceuticals market. Germany, France, UK and Italy are the major markets in the European Union for nutraceuticals. Japan (14 percent) is the major consumer of nutraceuticals in Asia-Pacific, followed by China (10 percent).
Source: Business Standard
The Indian government on Monday proposed to allow 100% foreign direct investment (FDI) in the marketing of food products made in Asia’s third-largest economy.
“Hundred per cent FDI will be allowed through FIPB (Foreign Investment Promotion Board) route in marketing of food products produced and manufactured in India,” finance minister Arun Jaitley said in his budget speech on Monday.
Retail industry executives and experts struggled to make sense of the proposal and some wondered if it could eventually let foreign chains set up food stores in India.
“Hundred per cent FDI in marketing of food produced in India may be a way to partly open retail for foreign retailers especially relating to fresh produce. However, fine print will need to be seen on how ‘marketing’ is defined,” said Amarjeet Singh, partner at consultancy firm KPMG India.
The move will benefit farmers, give a fillip to the food processing industry and create vast employment opportunities, Jaitley said.
“It is still not clear whether this will be permitted for retail marketing or only wholesale marketing,” said Dhanraj Bhagat, Partner, Grant Thornton India Llp. “We will need to study the fine print before concluding on the same. In the event that this applies to retail marketing, then it could be a prelude to opening of multi-brand retail marketing, beginning with the food sector.”
The proposal could also help those foreign players who are planning to come to India to produce themselves but want to test the market first, said Anil Talreja, partner at Deloitte India.
Future Group promoter Kishore Biyani said he found the proposal hard to grasp but guessed that “marketing” probably implied retailing of such products. “Today, 100% FDI is allowed in food processing. So marketing has to be linked to retail,” Biyani said by phone.
FDI in multi-brand retail has been a hot-button political issue and has seen ruling governments in the past sparring with opposition parties over opening up of the retail sector, a move seen as a threat to both small traders and domestic retailers.
To be sure, the current FDI policy in retail allows multi-brand retailers to invest only 51% while opening retail stores in the country. However, 100% FDI is allowed in wholesale cash and carry retail. American multi-brand retailer Wal-Mart Stores Inc. welcomed the proposal.
The move is “very progressive and will help in reducing wastage, helping farm diversification and encourage industry to produce locally within the country,” said Krish Iyer, president and chief executive of Walmart India.
Wal-Mart currently operates wholesale stores in India.
Union minister for food processing Harsimrat Kaur Badal has been batting in favour of 100% FDI in retailing of processed food items that are indigenously sourced.
“My party has reservations. Our intention (on FDI proposals in Budget) is to let foreign companies buy products from our farmers, process it and sell it domestic or international market, it will help farmers,” a PTI report said, citing the finance minister’s comments during an interview with Doordarshan later on Monday.
The Haryana government today inked an agreement with Indo-UK Healthcare Private Limited to establish medical institutions in the state with proposed investment of Rs 1,000 crore.
This project is expected to generate employment for 3,000 persons.
A pact to this effect was signed here today by Principal Secretary, Industries and Commerce, Devender Singh, on behalf of the Haryana government, and Managing Director and Group Chief Executive Officer, Indo-UK Healthcare Private Limited, Ajay Gupta.
Under this agreement, the Haryana government would facilitate Indo-UK Healthcare Private Limited to obtain necessary permissions, registrations, approvals and clearances for the project from the departments concerned in order to ensure the establishment of the project in a time-bound manner.
This would be done as per the existing policies and rules and regulations of the state government. The project is likely to commence in 2017.
Speaking on the occasion, Haryana Chief Minister Manohar Lal Khattar said during his tour to the United Kingdom, Prime Minister Narendra Modi and his UK counterpart David Cameron had reached an agreement for expansion of medical services in India with investment of one billion pounds into the Indian healthcare system.
This agreement was signed in the same series. Haryana is one of the six states which have signed MoUs with Indo-UK Healthcare Private Limited, he added.
Reiterating the state government's commitment towards providing better healthcare services, Khattar said presently, there are nine medical colleges in the state.
He added that the government aims to open a medical college in each district. Apart from this, the establishment of a branch of the All India Institute of Medical Sciences (AIIMS) in the state is currently under process.
While a medical university is presently functioning in the state, another one is being established in Karnal and an Ayurvedic University would soon be opened in Kurukshetra, he added.
Recruitment of doctors is being carried out in the state to fill up the requirement for doctors as fixed by the World Health Organisation, Khattar said.
Source: The Economic Times