DPIIT notifies 100% FDI in insurance intermediaries under automatic route

Source: Business Standard, Feb 25, 2020

New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) on Tuesday notified the government’s decision to allow 100 per cent foreign direct investment (FDI) in insurance intermediaries.

Intermediary services include insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrators, surveyors and loss assessors.

The FDI policy earlier allowed 49 per cent foreign investment in the insurance sector, which includes insurance intermediaries.

In its press note, the DPIIT said 100 per cent FDI is allowed in insurance intermediaries under automatic approval route. Read the rest of this entry »

Moody’s cuts India growth projection to 5.4 per cent for 2020

Source: The Economic Times, Feb 18, 2020

NEW DELHI: Ratings agency Moody’s on Monday slashed its 2020 growth projection for India to 5.4% from 6.6% forecast earlier on the back of slower recovery, citing largely domestic factors and cautioning that global economy will be adversely impacted by the novel coronavirus (Covid-19) outbreak.

It also revised downward the GDP growth forecast for China to 5.2% in 2020, warning severe downside risks to the global economy if the coronavirus grows to pandemic proportions. India is forecast to grow 5.8% in 2021 against 6.7% estimated earlier, while China is pegged slightly lower at 5.7% in 2021. Read the rest of this entry »

India considers closer scrutiny of FDI in sectors crucial to national security

Source: LiveMint.com, Feb 18, 2020

India is considering closer scrutiny of foreign direct investment in sectors crucial to national security, a top government official said, the latest nation looking to tighten oversight amid growing unease about China’s acquisition of tech assets.

 

The industries department is in talks with the ministries looking at finance and internal security, and any changes would include transactions under the so-called automatic route, Industry Secretary Guruprasad Mohapatra said in a recent interview in New Delhi. Under current rules, the Reserve Bank of India seeks some disclosures from companies applying to invest. Read the rest of this entry »

Foreign capital outgo exceeds FDI inflows in the mining sector

Source: Business Standard, Jan 30, 2019

Bhubaneswar: The flight of foreign capital in mining sector has outweighed the inbound FDI (Foreign Direct Investment) flows.

Though FDI is permitted in the mining sector since February 2000, its flow has been intermittent over the last few years. From $592 million in 2010-11, FDI in mining has subsided by more than half to $247 million at the end of 2018-19.

Predicating its findings on FDI inflow figures of the Reserve Bank of India (RBI) and outflow data collated by Cassels & Graydon LLP and EY, the Federation of Indian Mineral Industries (Fimi) in its study titled ‘Indian Mining: A Synopsis’ noted that Indian capital in mining is moving out of the country to foreign locations, creating employment opportunities and socio-economic development there. By contrast, the domestic mining sector is languishing with substantive job losses precipitated by intermittent closure of mines. Production has also got a jolt due to shutdown of mines in the key producing states of Odisha, Karnataka and Goa. For instance, Goa, a producer of baser grade, inferior quality iron ore witnessed the complete shutdown of 88 mines after a Supreme Court order in February 2018.

On a comparative plane, outgo of domestic capital trumps the incoming FDI many times over. Between 2010 and 2014, the country received $889 million of FDI inflows in mining.

Against this figure, the capital outgo in the comparable period stood at $3200 million with 22 deals struck in Australia, Indonesia and Africa. The same lopsided trend was seen in calendar 2015 as FDI inflow of $129 million paled into insignificance compared to the capital outflow of $721 million with 25 global deals clinched.

India is losing out on FDI investments due to frequent bans on mining and implementation of Acts and Rules that have proved to be counterproductive to investments.

“The overall ecosystem has proved to be repulsive to foreign investors who have exited India. It has also pushed the country out of the league of mining destinations of the world.

The situation is manifest in India’s ranking in Mining Attractiveness at the Fraser Institute’s Annual Survey of mining companies based on policy perception and mineral potential”, said an industry source.

India ranked 73 amongst 109 countries or mining jurisdictions surveyed by Canada-based Fraser Institute in calendar 2015. The ranking slumped to 97 in the list of 109 countries in 2016. India dropped out of the survey in 2017 and 2018.

Steep taxes on mining have robbed India of its competitive advantage. Mining continues to be the most taxed industry anywhere in the world with a cocktail of levies like royalty, Goods & Service Tax (GST) and contributions by mine lessees to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET). The Effective Tax Rate (ETR) on mining in the country ranges from 54-58 per cent. This is far steeper than Mongolia (31.3 per cent), Chile (37.6 per cent), Australia (39.7 per cent), South Africa (39.7 per cent) and Namibia (44.2 per cent).

Easier FDI norms coming for ‘most favoured nations’

Source: The Hindu Business Line, Jan 26, 2019

New Delhi: The government is mulling a new investment law that will categorise nations into ‘most favoured’ and ‘not pro-India’ besides emphasising contract enforcement and fast-track dispute resolution.

A new Bill is likely to be introduced in the Budget session of Parliament that is scheduled to begin on January 31.

Officials told BusinessLine that the “draft of the Bill, which is being vetted by the Law Ministry, will be placed before the Cabinet for approval for introduction in Parliament.” The Bill might even get a mention in the Budget speech. Efforts will be made to get it passed during the Budget session itself. Read the rest of this entry »

India attracted $49 billion FDI in 2019, among top 10 recipients of overseas investment: UNCTAD

Source: The Economic Times, Jan 20, 2019

New Delhi: The United Nations Conference on Trade and Development (UNCTAD) on Monday said that India was among the top 10 recipients of Foreign Direct Investment (FDI) in 2019, attracting $49 billion in inflows, a 16% increase from the previous year, driving the FDI growth in South Asia. The majority went into services industries, including information technology.

UNCTAD, in its Global Investment Trend Monitor report said that the global foreign direct investment remained flat in 2019 at $1.39 trillion, a 1% decline from a revised $1.41 trillion in 2018.

“South Asia recorded a 10% increase in FDI to $60 billion. The growth was driven by India, with a 16% increase in inflows to an estimated $49 billion. The majority went into services industries, including information technology,” it said.

Inflows into Bangladesh and Pakistan declined by 6% and 20%, respectively, to $3.4 billion and $1.9 billion.

“This is against the backdrop of weaker macroeconomic performance and policy uncertainty for investors, including trade tensions,” it said.

According to the report, flows of FDI to developing economies remained unchanged at an estimated $695 billion.
It also showed that FDI rose 16% in Latin America and the Caribbean and 3% in Africa.

As per the multilateral agency, FDI flows to developed countries remained at a historically low level, decreasing by a further 6% per cent to an estimated $643 billion.

FDI to the European Union fell 15% to $305 billion while flows to the United States-the largest recipient of FDI- remained stable at $251 billion.

China, the second largest recipient, saw zero-growth in FDI inflows. Its FDI inflows in 2018 were $139 billion and $140 billion in 2019. The FDI in the UK was down 6%
as Brexit unfolded.

Slow M&A activity
The report showed that cross-border M&As declined 40% in 2019 to $490 billion – the lowest level since 2014.

The fall in global cross-border M&As sales was deepest in the services sector which declined 56% to $207 billion, followed by a 19% fall in manufacturing to $249 billion and a 14% decrease in primary sector to $34 billion.

The decline in M&A values was driven also by a lower number of mega deals. In 2019, there were 30 mega deals above $5 billion compared to 39 in 2018.

Read the rest of this entry »

Odisha’s FDI equity inflows surge 330% to $43 million in H1FY20

Source: Business Standard, Jan 08, 2019

Bhubaneswar: Odisha’s Foreign Direct Investment (FD) equity inflows have soared 330 per cent during H1 or April-September period of FY20. FDI inflows into the state rose from $10 million to $43 million.

Odisha ranks next only to Kerala & Lakshwadeep in terms of registering growth in inbound FDIs where the FDI growth stood at 406 per cent year-on-year, said a study by CARE Ratings, quoting figures from the Department for Promotion of Industry & Internal Trade (DPIIT).

In terms of growth, the FDI equity inflows increased in Kerala, Odisha and North Eastern states while Andhra Pradesh, West Bengal, Chandigarh (including Punjab, Haryana and Himachal Pradesh), Rajasthan, Madhya Pradesh, Goa and Uttar Pradesh declined in H1 FY20 when compared with the corresponding period last year.

In H1 FY20, Maharashtra, Delhi, Karnataka and Gujarat accounted for more than 70 per cent of the total FDI equity inflows. Delhi had the highest share of 27 per cent in the total FDI equity inflows amounting to $7.2 billion in H1 FY20 and these inflows were 27 per cent higher than the $5.6 billion equity inflows in H1 FY19.

In the first half of FY20, Karnataka surpassed Maharashtra in terms of FDI equity inflows. Maharashtra’s share in the total FDI equity inflows declined from 23 per cent in H1 FY19 to 14 per cent in H1 FY20 and the total equity inflows declined by 32 per cent on the y-o-y basis to $3.6 billion in H1 FY20.

On the other hand, Karnataka’s share increased from 11 per cent in H1 FY19 to 18 per cent in H1 FY20, having grown by substantial 82 per cent in H1 FY20.

Read the rest of this entry »