Signs that India is Opening up to Foreign Investment
| Date Published | 9/30/2013 |
| Author | Marja Hoek-Smit |
| Theme | |
| Country | India |
Signs that India is Opening up to
Foreign Investment
September 26, 2013
India has traditionally
placed many restrictions on foreign investment in rupee dominated bonds. These include caps on the total as well as
limits by investor class, maturity and issuer and have been implemented through
a complicated mechanism for allocation and reinvestment. A new publication by the Securities and Exchange Board of India (SEBI)
presents an analysis that shows that these restrictions no longer meet the
objectives of current economic policies. It recommends removal of quantitative
restrictions on foreign holding of Indian rupee dominated debt and suggests
ways to move to a more efficient framework.
Similarly, proposals have been prepared by the Ministry of Urban Development to open up restrictions on direct foreign investment in real estate
(e.g., relaxation of restrictions on the minimum land parcel size for
development), and in real estate
companies, transfers of shares of RE companies between non-residents, as well
as foreign investment in urban renewal and slum redevelopment projects. If approved these changes would enable real
estate players to raise foreign capital at competitive rates and reduce current
dependency on domestic financial institutions.