Finance ministry toughens stand on indirect FDI

Taking a firm stand on indirect foreign investment, the finance ministry has said that all interests of foreign entities — control, economic benefits and shareholding —be included in calculating the effective foreign holding in a company.
 
This view, favoured by the Department of Economic Affairs, has been forwarded by the finance ministry to the Department of Industrial Policy and Promotion (DIPP), under the commerce ministry, according to the finance ministry.
 
The DIPP, which is the nodal body for framing foreign investment regulations, had earlier suggested that indirect foreign interest in an Indian company should be reckoned only if it is owned more than 10 per cent by another Indian company, which has foreign shareholders.
 
The finance ministry is of the view that all interests — direct and indirect — should be taken into account and that there should not be any threshold for calculating total effective foreign shareholding in a company.

At present, indirect foreign holding in an Indian entity is calculated under a two-pronged method. Under this, the foreign company should at least have 50 per cent plus one share in an Indian company, which in turn should have at least 10 per cent stake in another Indian company in which the indirect foreign holding is sought to be calculated.
 
Thus, management control can be manipulated through indirect foreign holding. The finance ministry’s recommendation opposes this policy of DIPP on indirect foreign shareholding.

30th September 2007
Source: Business Standard

Rural job guarantee Act extended to entire country

The Government on Friday decided to extend the National Rural Employment Guarantee Act (NREGA) to the entire country at a cost of Rs 20,000 crore. The decision was taken at a meeting chaired by the Prime Minister, Dr Manmohan Singh.

Announcing the decision at a conference, the Union Rural Development Minister, Mr Raghuvansh Prasad Singh, said that in the first phase launched in February last year, 200 districts were covered, while 130 more were added this year, thus bringing the districts under NREGA to 330. “Now the National Rural Employment Guarantee Act will be extended to the entire country with effect from April 1, 2008, at a cost of Rs 20,000 crore,” he said.

Notified in 2005, the NREGA aims at enhancing the livelihood security of the people in rural areas by guaranteeing 100 days of employment in a financial year.

29th September 2007
Source: Hindu Businessline