FDI: Disinvestment obligation may go

With a view to removing an irritant for foreign investors, the government is likely to do away with rules that put an obligation, mainly on overseas oil firms, to disinvest part of their equity to Indian investors.

The Petroleum Ministry has agreed to the proposal of the Department of Industrial Policy and Promotion (DIPP) and it would be taken to the Cabinet along with the general review of the FDI policy in September.

"The obligation to disinvest has not served any great public purpose. In most of the cases, it ended up being a bureaucratic hassle for the foreign firms operating in India," a senior official said.

Read more in Financial Express

India's FDI into London second biggest

LONDON: India has become the second-biggest source of new foreign investment into London, behind only the United States, a report released on Friday said.

According to the Financial Times, a new report from Think London, the capital's foreign direct investment (FDI) agency, says that India has accounted for 16 per cent of all new foreign investment into London between 2003 and 2007.

That has helped investment into London jump to 52 billion pounds (76.1 billion euros, 103.4 billion dollars), from 38 billion pounds two years ago. The United States topped the list, with 31 per cent of new investment, while France was third with seven percent. China, Japan and Canada with six percent each followed.

"London does not have the same resonance in China, Russia or Brazil as it does in India," Think London's chief executive Michael Charlton noted. The United States still dominates total foreign investment into the capital, though, accounting for about half of it, followed by France with 12 per cent.

Read more at Economic Times

49% FDI cap for credit bureaus likely

The government is likely to cap foreign direct investment (FDI) in credit information bureaus at 49 per cent, as it prepares guidelines for entry of foreign companies in this sector.The sector has become attractive due to the booming retail financial services market.

The government has been considering either 49 per cent or 74 per cent cap, but is more inclined to go ahead with a lower cap to begin with, banking sources said.Credit information bureaus collect borrower data from banks and financial institutions, both positive and negative, for use by financial institutions subscribing to it.

Experian, which claims to be the only global credit information solutions company, is seeking to launch its subsidiary in India, with several banks including ICICI Bank having subscribed to its analytics and other services.

India already has credit bureau called Credit Information Bureau India Ltd (CIBIL), in which 62.5 per cent is owned by Indian lenders including State Bank of India, ICICI Bank, Housing Development Finance Corporation (HDFC) with 10 per cent stake each. The foreign shareholders in CIBIL include Citicorp Finance, Dun & Bradstreet and GE Strategic Investments.

CIBIL is a pure credit information bureau, whereas Experian is a provider of a range of services based on the core credit data. Experian earns only 10 per cent of its revenues globally from credit information with the balance coming from its various value-added services.

Retail credit has been growing at over 40 per cent since 2004-05 increasing its share in total advances to 25.5 per cent at the end of March 2006 from 22 per cent in March 2004. The phenomenal growth in the last three years has thrown up opportunities for companies that provide credit information and related services.

“We are waiting for the FDI rules to be framed so that we can apply for the launch of our joint venture,” said Richard Fiddis, Managing Director-Emerging Markets Development at Experian.

Experian has been waiting for the last two years to enter India as their customer in various markets wanting them to set up shop in India. “We will want more number of partners with lower shareholdings in the Indian joint venture. We will have about six to 10 banks and may be a telecom company as our partners,” Fiddis said.

Apart from borrower date from banks, Experian plans to use public sources like electoral rolls and court data for building its core database.

Cabinet clears 74% FDI in telecom

The Cabinet today approved amendments to Press Note 5 of 2005 that impose stiff monitoring needs for telecom service providers, increasing foreign direct investment from 49% to 74%.

Accordingly, remote access to networks in India will be permitted from approved locations, information and broadcasting minister P R Dasmunsi told reporters after a meeting of the Cabinet. Such access will only be allowed to equipment suppliers, manufacturers and affiliates and will not allow access for monitoring calls and content.

It will also be mandatory for operators to keep an audit trail of all remote access activities for six months, send a compliance report twice a year to the government and maintain a 'mirror image' of all remote access information for online monitoring.

Read more at Business Standard

GoM on insurance likely to meet in few days

The Group of Ministers on insurance is likely to meet in a couple of days to take up the long-pending issue of raising FDI cap in the sector to 49 per cent from the current 26 per cent, opposed vehemently by the UPA's Left allies.

"They are trying to fix time. I am told it (the meeting) will happen tomorrow or day after tomorrow," Finance Minister P Chidambaram told reporters on the sidelines of the launch of joint venture asset management business between Canara Bank and the Netherlands-based Robeco.

Since only three days are left for Parliament to go for recess, the proposed comprehensive bill on insurance sector, in case approved by the Cabinet, could come only in the second leg of the Budget session.

Read more at The Financial Express

Govt to review FDI regulation: Kamal Nath

The Government said it is looking at having an uniform Foreign Direct Investment (FDI) cap in different business segments within a sector as part of the review to streamline foreign investment regulations.

The same FDI limit in different segments within a sector would reduce the complexity and result in caps going up in different business area in sectors like media and aviation.

"We will see that...," Commerce and Industry Minister Kamal Nath said when asked whether the government plans to have a single FDI cap for an entire sector.

Nath said that the status review of the FDI policy and regulations was in progress to see how they can be streamlined.

Read more at Financial Express