New Delhi: Indian companies will be allowed to raise inexpensive foreign currency resources by promising overseas investors an equity stake in a group company listed in India.
The development, Foreign Currency Exchangeable Bond Scheme (FCEB), is expected to help conglomerates use a part of the group to help other parts in need of financing.
Follow-up: Finance minister P.Chidambaram.
The FCEB scheme allows an issuing company to offer foreign currency bonds overseas, which would be exchangeable into the equity shares of another listed company of the group. The issuing company can use FCEB only if it offers its own holding in a listed group company.
The key benefit of the scheme is the flexibility it provides an issuing company, said S.Venkat, executive director, finance, National Aviation Co. of India Ltd, which runs Air India.
The scheme was notified by the government on 15 February as a follow up to finance minister P.Chidambaram’s promise in the 2007 Union Budget to create a mechanism to allow Indian companies to unlock a part of their holding in group companies for meeting their financing requirements.
As the scheme allows issuing companies to offer a part of a group company’s shares, the cost of overseas borrowings would be lower than regular borrowings, said Venkat.
Borrowings under FCEB would have to be in harmony with current guidelines on foreign direct investment and external commercial borrowings, said a finance ministry statement. Resources raised through FCEB are not allowed to be used in capital market or real estate in India, the statement added.
Pakistan, India agree on 16 more flights
Islamabad: Pakistan and India agreed on Friday to more than double the number of weekly flights between the two nations and start flights linking their capitals as part of a peace process, officials said.
The nuclear-armed neighbours agreed to operate 28 flights a week instead of the current 12, and add Islamabad, New Delhi and Chennai to the list of destinations, a statement said after two days of talks.
Currently, flights only operate between Karachi and Lahore in Pakistan, and New Delhi and Mumbai in India.
They also agreed to let three airlines from each country operate services on the agreed routes, the statement said. Only one airline from each side is currently allowed to fly between Pakistan and India.
Delegations from both sides signed a memorandum of understanding over the changes at the Pakistani ministry of defence in the garrison city of Rawalpindi, the statement said.
RIL gets SC nod for pipeline in sanctuary
New Delhi: The country’s No.1 company by market value, Reliance Industries Ltd (RIL), secured approval from the Supreme Court to build part of a pipeline from the nation’s biggest gas field through a bird sanctuary.
The court asked RIL to deposit 5% of the cost of laying the underground pipeline through the sanctuary in a special fund for replanting trees, according to an order passed on Thursday by Chief Justice K.G. Balakrishnan and justices Arijit Pasayat and H.S. Kapadia.
RIL will spend Rs11,500 crore building the 940km-long pipeline connecting Kakinada on the east coast with pipelines in the west. This includes an 84km stretch through a nature reserve in Maharashtra at an estimated cost of Rs520 crore.
Billionaire Mukesh Ambani is developing the natural gas field in the Krishna Godavari basin, which is projected to double the nation’s supply of the fuel with a peak output of 80 million cubic metres a day.
Curbing inflation is priority, says PM
New Delhi: Prime Minister Manmohan Singh said inflation hurts the poor the most, indicating that controlling prices was the government’s top priority.
“There have been some impatient editorials about the sacrifice of growth at the altar of inflation,” Singh said at a conference in New Delhi on Friday.
“I see things differently. Inflation is an iniquitous tax. It is essential that we ensure that the poor are not adversely affected by high inflation.”
Economic growth may slow for the first time this year since 2005, as the highest interest rates in six years hurts consumer demand and investments.
While companies seek conditions that favour faster growth, Singh may prefer a firmer grip over inflation with general elections just a year away.
“Slowing growth is unacceptable to us,” said Habil F. Khorakiwala, president, Federation of Indian Chambers of Commerce and Industry. “Interest rates must be brought down to stimulate demand.”
US plans investment treaty with India
Washington: The US is in preliminary talks to establish investment treaties with countries including China, Russia and India, the treasury’s top international adviser said.
“US firms are already investing in these three markets at a rate two-and-a-half times that with the rest of the world,” David McCormick, the US treasury’s undersecretary for international affairs, said on Friday. Such agreements “are an important next step to protect these existing investments.” McCormick said “exploratory discussions” are under way to forge “bilateral investment treaties” with three of the fastest growing emerging economies.
SC asks panel to reply to Sterlite plea
New Delhi: The Supreme Court on Friday asked the Central Empowered Committee (CEC) to respond to a fresh application filed by Sterlite Industries India Ltd (SIIL) seeking permission to mine bauxite in Orissa. The apex court gave the panel two weeks to reply.
CEC is a panel appointed by the Supreme Court to monitor and ensure compliance of its orders concerning forests and wildlife.
In November, the court had refused permission to Vedanta Alumina Ltd (VAL) to mine in Orissa’s Niyamgiri Hills. But it gave VAL’s associate company SIIL an opportunity to file a fresh proposal, subject to conditions such as forming a special purpose vehicle with the Orissa government.
EC notice to Sonia on Belgian honour
New Delhi: The Election Commission on Friday served a notice on Congress party president Sonia Gandhi on a complaint seeking to disqualify her from the Lok Sabha for receiving a Belgian honour in 2006. The three-member commission, headed by chief election commissioner N. Gopalaswamy, asked her to respond within three weeks.
The commission could not come to a conclusion on the issue earlier because of differences among them on whether to issue notice to Gandhi or not.
A Congress spokesman Satyavrat Chaturvedi dismissed the complaint as ‘ridiculous’.