Cabinet Committee on Economic Affairs approved the Continuation of JNNURM

The Cabinet Committee on Economic Affairs on 17 January 2013 approved the continuation of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to sanction new projects and capacity building activities till 31st March, 2014 under Urban Infrastructure and Governance (UIG) and Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) components of JNNURM.  

New Urban infrastructure projects in States / UTs would be approved till 31st March, 2014, and taking up new capacity building activities in Urban Local Bodies (ULBs) and States has also been approved. 

The proposal would enable provisioning of creation of urban infrastructure, particularly in small and medium towns, in all States and UTs. These projects would be subsumed in the next phase of the JNNURM for the 12th Five Year Plan.

World Bank slashed the Global Growth Forecast to 2.4 Percent

The World Bank on 15 January 2013 projected that the world economy would expand 2.4 percent in 2013, little higher than the 2.3 percent achieved in 2012. In June 2012, the Bank forecasted the growth up to 3 percent, but due to the slow growth rate, high unemployment rate and less confidence in businesses across the developing nations it managed to revise the forecast earlier made. 

The World Bank has reduced the projected growth rate of different countries. It has slashed the growth rate of Japan to its half from the one projected earlier and in case of US the growth rate has been slashed by 0.5 percent points. The bank also projected narrowing in the growth rate of the Euro Region. For emerging markets of Mexico, Brazil and India also the projection was lowered. 

The report from the lead author of the Bank’s Global Economic Prospects Andrew Burns describes that the predicted recoveries of the bank in 2012 would be carried forward towards the end of the first quarter and second quarter of 2013. 

The bank report also has claimed that the ongoing political battle in United States for raising the borrowing limit and spending cuts by the Government would bring loss of confidence in the rate of dollar creating an alarming situation for the world financial market and effect the growth rate. It also pointed out the diplomatic tensions between China and Japan would also have an impact on the growth rate.

Basel eases liquidity rules for Banks

International financial regulators have eased rules on minimum quantities of cash and liquid assets all banks must hold, set to take effect in 2015. The agreement, by the body that oversees the Basel Committee on Banking Supervision, is an attempt to make banks less vulnerable to runs. The new "liquidity coverage ratio" will be phased in from 2015 and take full effect four years later.

The new rules are part of efforts to prevent financial shocks such as those prompted by the 2007 run on Northern Rock in the UK, or by the 2008 collapse of Lehman Brothers in the US. Banks will have to hold enough cash and easily sellable assets, to tide them over during an acute 30-day crisis. The final version of the rules updates a draft version put forward more than two years ago. The new version allows banks to hold a broader range of eligible assets, including some shares, corporate bonds, and high-quality residential mortgage backed securities. It also gives them more time to comply with the new standards.

The new rules would force banks to hold vastly more liquid assets than they did in 2007 when big banks barely had enough cash to meet demands for repayment from relatively small numbers of depositors and creditors, our correspondent adds. They are part of the broader "Basel III" package of reforms, which will require lenders to set aside more capital to absorb losses. The Basel Committee brings together representatives regulators from 27 nations.

Basel Norms

• The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.
• Basel is a set of standards and practices developed for global banks to ensure that they maintain adequate capital to withstand periods of economic strain. It is a comprehensive set of reform measures designed to improve the regulation, disclosures and risk management within the banking sector.
• Basel I norms was introduced in 1998, focused almost entirely on credit risk. It defined capital requirement and structure of risk weights for banks.
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• Basel II was introduced in 2004, laid down guidelines for capital adequacy, risk management and disclosure requirements.
• It is widely felt that the shortcoming in Basel II norms is what led to the global financial crisis of 2008. That is because Basel II did not have any explicit regulation on the debt that banks could take on their books, and focused more on individual financial institutions, while ignoring systemic risk. To ensure that banks don’t take on excessive debt, and that they don’t rely too much on short term funds, Basel III norms were proposed in 2010.
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• Basel III establishes tougher capital standards through more restrictive capital definitions, higher risk-weighted assets (RWA), additional capital buffers and higher requirements for minimum capital ratios. It also introduces new strict liquidity requirements.

Government plans to introduce direct cash transfer for food subsidy in 6 UTs and ‘willing states’

The government plans to introduce direct cash transfer for food subsidy in six Union Territories and 'willing states' for PDS scheme, taking a key step to plug leakages in welfare schemes. In the pilot project, expected to be rolled out from April, beneficiaries will receive the subsidy amount in their bank accounts, and will buy rice and wheat from the fair price shops.

The fair price shops will sell rice and wheat at a price, which is the 'economic cost', determined by the Food Corporation of India, plus handling and transportation and a commission for the fair price shop dealer. The food and civil supplies ministry has asked the UT administrations to ensure that all beneficiaries have a bank account, which will be linked with the ration card number in the database.

While the food and civil supplies ministry's direct cash transfer pilot is linked to the ration card number, the Andhra Pradesh government has begun a pilot in the East Godavari district of using the Aadhar or unique identification number enabled direct cash transfer for the public distribution system. Food subsidy has not been included in the national roll out for the Aadhar-enabled direct benefit transfer in 20 districts across the country.

Govt postpones GAAR implementation by 2 years to 2016

Giving a big relief to overseas investors, the government has postponed implementation of controversial GAAR provisions by two years to April 1, 2016.

"Having considered all the circumstances and relevant factors, the government has ...Decided that provisions of Chapter 10A of the Income Tax Act (dealing with GAAR) will come into force from April 1, 2016 as against April 1, 2014," Finance Minister P Chidambaram said.

The General Anti Avoidance Rules (GAAR) provisions, introduced by the then Finance Minister Pranab Mukherjee in the Budget 2012-13, were aimed at checking tax avoidance by overseas investors. The proposal, however, generated controversy, with investors expressing apprehensions that it would result in unnecessary harassment by tax authorities.

The decision to postpone the implementation, Chidambaram said, follows the recommendations of the Shome Committee which was set up by Prime Minister Manmohan Singh in July last year to look into investor concerns.

The government, Chidambaram further said, has accepted major recommendations of the panel with some modifications.

The GAAR provisions, the Minister also clarified, would override the double taxation avoidance agreement (DTAA) benefits if the arrangements were intended solely to evade taxes.

India’s foreign reserves up by near $40 million

India’s foreign exchange (forex) reserves increased by $39.6 million to $296.57 billion for the week ended December 28, 2012, data released by the Reserve Bank of India (RBI) showed.

The reserves had gone down by $92.8 million to $296.53 billion for the week ended December 21, 2012.

The foreign currency assets (FCA) — the biggest component of the forex reserves — went up by $63.9 million at $262.01 billion, according to the weekly statistical supplement released by the RBI. The FCA decreased by $169.9 million at $261.94 billion in the previous week.

The central bank said FCA in US dollar terms included the effect of appreciation or depreciation of non-U.S. currencies held in reserve, such as the pound sterling, euro and yen.

Gold reserves value remained the same at $27.80 billion. The value had dipped by $386.2 million in the week ended November 30. The value had remained unchanged at $28.18 billion since the week ended November 2, when the value of gold reserves rose by $56.4 million.

However, the special drawing rights (SDRs) decreased by $15.9 million to $4.43 billion during the week under review, while reserves with the International Monetary Fund (IMF) went down by $8.4 million to $2.32 billion.

The SDRs had increased by $15.8 million to $4.45 billion during the week ended December 21 while reserves with the IMF had gone up $61.3 million to $2.33 billion.

SEBI moots tougher norms for corporate governance

The Securities and Exchange Board of India (SEBI), to further tighten corporate governance norms, has proposed tougher guidelines for listed companies to make their functioning transparent and to enhance investor's trust in the capital market.

The consultative paper on "Review of Corporate Governance norms" has suggested following guidelines:

a) The splitting of the post of chairman-cum-managing director thus giving greater responsibilities and powers to independent directors and to avoid concentration of power with one person. This may lead to changes in the structure of a large number of Indian companies, mainly PSU and family-owned firms, where one person holds the position of chairman-cum-managing director (CMD).
b) The appointment of independent directors should be done only by minority shareholders, such directors should be formally trained to be on company boards and they should also be regularly evaluated for their performance by an exam, under National Institute of Securities Markets (NISM), a training body under SEBI
c) SEBI is also aiming to change Clause 49 of the listing agreement between companies and stock exchanges to align it with the proposed Companies Bill. Listing agreement deals with the rules that all listed companies should adhere to remain listed on the bourses. These rules, although aimed at making the Indian market a safer place in terms of corporate governance, could lead to shortage of good independent directors since remunerations for these people may not commensurate with the duties and responsibilities.
d) SEBI also proposed that while resigning, an independent director should disclose the reasons for his/her decision.
e) The board should eliminate policies that promote excessive risk-taking for the sake of short-term increases in stock price performance and ensure that a risk/crisis management plan is in place.
f) It has proposed mandatory disclosure of ratio of remuneration paid to directors and their median staff salary.

The market regulator has also suggested hefty penalties for non-compliance of the revised corporate governance norms. Stating that delisting would affect investors and prosecution was a costly and time-consuming process, SEBI, to strengthen the monitoring of the compliance, has suggested carrying out of corporate governance rating by credit rating agencies, inspection by stock exchanges/ SEBI for verifying the compliance made by the companies.

RBI set up Working Group to review Banking Ombudsman Scheme

The Reserve Bank of India in the month of January 2013 had set up a working group to evaluate and make improvements in the grievance redressal mechanism for bank customers. 

The working group constituted in the Reserve Bank of India is going to review, update, and revise the Banking Ombudsman Scheme, 2006. 

As per the RBI annual report of the Banking Ombudsman Scheme 2011-12, In Financial Year 2011-12, the banking ombudsman’s office of the RBI received around 72889 complaints. It disposed off 94 per cent of the customer complaints, About one-fourth of the total customer complaints were about banks’ failure to meet commitments and non-observance of fair practices code. 

Also, it was seen that the Banking Ombudsman received 14492 card-related complaints in the reporting year. Unsolicited cards and charging of annual fee in spite of being offered ‘free’ card formed the basis of some of the complaints against the banks. 

Presently, we have 15 Banking Ombudsmen with unambiguous jurisdiction covering the 29 States and seven Union Territories in India.

Bihar became the Fastest Growing Indian State between 2006 and 2010

As per the data released by the Planning Commission of India, Bihar became the fastest growing state in India at 10.9 per cent between 2006 and 2010 while Gujarat’s growth rate declined to 9.3 per cent and it lagged behind Bihar and other four states- Orissa, Maharashtra, Haryana, Chhattisgarh in terms of growth rate. Bihar was the slowest growing state during 2001-05 period with GDP figure of 2.9 percent whereas Gujarat was the fastest growing state between 2001 and 2005 with figure of 11 percent.

Chhattisgarh grew from 7.7 per cent in 2001-05 to 10 per cent growth between 2006 and 2010  while Haryana grew from 8.4 per cent to 9.7 per cent, Maharashtra from 8.2 per cent to 9.6 per cent and Orissa from 7.8 per cent to 9.4 per cent between 2006 and 2010.   

The period between 2004-05 and 2011-12 registered an average increase of 300 per cent in consumption in rural areas, minimizing the gap between rural and urban area thus highlighting the inclusive growth.

Bihar recorded lowest per capita NSDP in 2011-12

Bihar had the lowest per capita Net State Domestic Product (NSDP) at Rs 23,435 in FY'12 among the Indian states at current prices, Finance Minister P Chidambaram informed Rajya Sabha.
"As per information published by Directorate of Economics and Statistics of respective state governments, the per capita NSDP at current prices of Bihar was the lowest at RS 23,435 in 2011-12".

The Banking Laws (Amendment) Bill 2011

The Banking Laws (Amendment) Bill 2011 was introduced in order to amend the Banking Regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. The said Bill has been passed by both the Houses of Parliament during its just concluded Winter Session.

This Bill would strengthen the regulatory powers of Reserve Bank of India (RBI) and to further develop the banking sector in India. It will also enable the nationalized banks to raise capital by issue of preference shares or rights issue or issue of bonus shares. It would also enable them to increase or decrease the authorized capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore.

Beside above, the Bill would pave the way for new bank licenses by RBI resulting in opening of new banks and branches. This would not only help in achieving the goal of financial inclusion by providing more banking facilities but would also provide extra employment opportunities to the people at large in the banking sector. 



The salient features of the Bill are as follows:

• To enable banking companies to issue preference shares subject to regulatory guidelines by the RBI;

• To increase the cap on restrictions on voting rights;

• To create a Depositor Education and Awareness Fund by utilizing the inoperative deposit accounts;

• To provide prior approval of RBI for acquisition of 5% or more of shares or voting rights in a banking company by any person and empowering RBI to impose such conditions as it deems fit in this regard;

• To empower RBI to collect information and inspect associate enterprises of banking companies;

• To empower RBI to supersede the Board of Directors of banking company and appointment of administrator till alternate arrangements are made;

• To provide for primary cooperative societies to carry on the business of banking only after obtaining a license from RBI;

• To provide for special audit of cooperative banks at instance of RBI by extending applicability of Section 30 to them; and

• To enable the nationalized banks to raise capital through “bonus” and “rights” issue and also enable them to increase or decrease the authorized capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.

Certain additional official amendments have been proposed on the basis of recommendations of the Standing Committee of Finance which gave its report on the Bill on the 13th December, 2011 and has recommended enactment of the Bill, subject to the following modifications:

i) Voting rights in banks may be restricted up to 26%.

ii) The Depositors’ Education and Awareness Fund may be used for the purpose of promoting depositors’ interests.

Further, pursuant to the discussion with Indian Banks’ Association (IBA), RBI and Industry Associations, the following additional amendments are proposed:

a) to exempt guarantee agreements of banks from the purview of the section 28 of the Indian Contract Act, 1872 to bring finality to redemption of such guarantees;

b) to allow select Directors on the Board of RBI a fixed maximum tenure of eight years with terms of not more than two terms of four years each either continuously or intermittently in consonance with the directions of the ACC;

c) to exempt conversion of branches of foreign banks to wholly owned subsidiary entities of foreign banks and transfer of shareholding of banks to the Holding Company structure pursuant to guidelines of RBI from payment of stamp duty; and

d) to ensure that unnecessary inspections are avoided and to encourage regulatory coordination, a condition has been added such that the inspection of the associate enterprise of a banking company would be conducted by RBI jointly with the sector regulator.

Bombay Stock Exchange launched SME Platform Index

The Bombay Stock Exchange (BSE) on 14 December 2012  launched an SME index which primarily aims at tracking the current primary market conditions in the Indian capital market and measuring the growth in investors’ wealth over a period.

The index is going to be constituted by small and medium enterprises (SMEs) which are listed on the BSE SME platform. Presently, there are 11 companies which are listed on the SME platform and this index is going to have features similar to the BSE IPO index.

Through SME index the authorities can recognize the viability of the company and based on the report, people can invest in these companies, which will not only help the organisations to grow their businesses but also suppose to create employment.

Small and Medium Enterprises (SMEs) in India constitute an important segment of Indian economy. Currently, the contribution of SMEs alone is greater than 7 per cent to GDP and 45 per cent to industrial production. Small and Medium Enterprises (SMEs) is also the second largest provider of employment after agriculture.

SMEs also contribute to 40% of total exports directly and a significant amount of exports indirectly through large trading houses or third parties.

With the SME platform, companies did not have to rely on loans from banks, as they can raise funds through the market and play an important role in contributing to the economic growth of the country.
Out of the 11 companies listed so far, 10 are trading above their issue prices, while one is below its IPO price.

Zero Balance Account for Beneficiaries of Government Programmes

The Reserve Bank of India (RBI) has advised all Scheduled Commercial Banks (SCBs) on 10.8.2012 to offer a ‘Basic Savings Bank Deposit Account’ and also convert existing basic banking ‘no-frills’ accounts’ to ‘Basic Savings Bank Deposit Account’. Such accounts do not have the requirement of any minimum balance and comes with the facility of ATM Card or ATM-cum-Debit Card. However, the holders of such accounts are not eligible to open any other savings bank deposit account in that bank. Under Financial Inclusion, banks have already opened 3.16 crore accounts by March 31, 2012.

Direct Transfer of Cash for Subsidies

The process for implementing the direct transfer of cash subsidy on PDS Kerosene has been initiated in 11 identified states/UTs. The Department of Food and Public Distribution proposes to implement direct transfer of food subsidy to the Targeted Public Distribution System beneficiaries in 6 Union Territories on a pilot basis. With regard to fertilizers, the Government has not asked the State Governments to prepare for direct transfer of cash for fertilizer subsidy to the poor through banks by 01.01.2013.

The concerned Central Ministries have set up Implementation Committees on Direct Cash Transfer for sorting out the issues of hassle free transfer of cash to the beneficiaries with due consultation with State Governments.

India has around 7 cr unemployed or under-employed

Around seven crore people in the country are either unemployed or under-employed, the National Sample Survey Office (NSSO) has said in its latest report.

"As per results of the latest survey conducted by NSSO during 2009-10, the number of unemployed or under-employed persons on usual status basis in the country was 95 lakhs and about six crore respectively," Labour and Employment Minister Mallikarjun Kharge said in Rajya Sabha during Question Hour.

The government has been making continuous efforts by focusing on creation of productive employment at a faster pace in order to raise incomes of masses with the aim of bringing about a general improvement in their living conditions, he said.

"The job opportunities are created on account of growth in Gross Domestic Product ( GDP), investment in infrastructure development, growth in exports, etc," Kharge said.

Replying to a supplementary, the Minister said though there was a system of involving industry in drafting course curricula and their revision, possibility of mismatch between demand and supply in the labour market still remains.

"No demand surveys are conducted by the Government. However, National Skill Development Corporation conducted a study for 21 high growth sectors which has estimated, skilled manpower requirement of 34.7 crore up to 2022," he said.

India's domestic air traffic growth to be world's 2nd highest

India's domestic air travel market would be among the top five globally, experiencing the second highest growth rate in domestic passenger traffic after Kazakhstan but before China, IATA said.

Global airlines' body International Air Transport Association (IATA) released its Airline Industry Forecast 2012-2016, saying only Kazakhstan, India and China would experience double-digit growth in domestic passenger traffic during the period, recording 22.5, 13.1 and 10.1 per cent growth respectively, adding a total of 49.3 million new passengers.
"No other country is expected to experience double-digit growth rates over the forecast period," the IATA study said.
By 2016, the five largest markets for domestic passengers would be the United States (710.2 million), China (415 million), Brazil (118.9 million), India (107.2 million) and Japan (93.2 million).
Globally, the IATA industry traffic forecast showed that the airlines were expected to fly some 3.6 billion passengers in 2016, which is about 800 million more than the 2.8 billion carried by them in 2011.
In terms of air cargo carriage too, India would be among five fastest growing international freight markets over the 2011-2016 period.
The compound annual growth rate of the air cargo sector would be the highest for Sri Lanka at 8.7 per cent, followed by Vietnam (7.4 per cent), Brazil (6.3), India (6.0) and Egypt(5.9), the IATA said.

Maintaining that aviation globally supported some 57 million jobs and USD 2.2 trillion in economic activity, IATA DG and CEO Tony Tyler said governments would have to "recognise aviation's value with policies that do not stifle innovation, tax regimes that do not punish success and investments to enable infrastructure to keep up with growth."

India ranks 94 in list of corrupt nations

India was ranked 94 out of 176 countries surveyed in the Corruption Perceptions Index (CPI) 2012, with a score of 36 on a scale from 0 (highly corrupt) to 100 (very clean), the Transparency International India (TII) said.

Last year India ranked 95 out of 183 countries. However, due to an update in the methodology, CPI scores of 2011 cannot be compared with this years' score, S.K. Agarwal, vice-chairman of TII told IANS. He added that India had the same score of 36 in 2011 as well.

"The 2012 index ranks countries by their perceived levels of public sector corruption and assigns scores of between one (highly corrupt) and 100 (clean).

While Somalia, North Korea and Afghanistan were the most corrupt countries with a score of eight,  Denmark, Finland and New Zealand tied for the first place of the least corrupt with a score of 90.

China had a CPI score of 39, which is better than India, while Pakistan's was 27.

CPI scores and ranks countries based on how corrupt a country's public sector is perceived to be. It is a combination of surveys and assessments of corruption collected by a variety of reputable institutions.

Grameena Vikas Bank’s grama sabhas get good response

In a single day, the Andhra Pradesh Grameena Vikas Bank has conducted grama sabhas in 1,249 villages.

This also includes 35 customer relationship programmes. The initiative is part of the financial inclusion project for banks and was done, according to the Bank Chairman K. Lakshmana Rao.

The bank a regional rural bank, sponsored by State Bank of India, is the biggest in Andhra Pradesh and among the three-four largest in the country. It is operating in eight districts of Srikakulam, Vizianagaram, Visakhapatnam, Khammam, Nalgonda, Warangal, Mahabubnagar and Medak with a network of 575 branches. 

At the grama sabhas which is an interaction with customers, village elders, self-help groups, Government officials particularly from Indira Kranthi Pathakam and agriculture departments have participated.

For implementation of Financial Inclusion Plan, the bank was allotted 869 villages having a population of 2,000 and above without access to banking services.  

BSE launches carbon-based index CARBONEX

The Bombay Stock Exchange (BSE) has launched BSE Carbonex, the first carbon-based thematic index in the country, which takes a strategic view of organizational commitment to climate change mitigation.

This index has been launched with the aim of creating a benchmark, and increasing awareness about the risks posed by climate change.

It will enable investors to track performance of the constituent companies of BSE-100 index regarding their commitment to greenhouse gases emission reduction.

Constituents of BSE Carbonex are over or underweighted compared to the benchmark based on their performance in the assessment process. In every industry, companies that achieve the strongest assessment scores are favoured at the expense of those achieving poor results.

The British High Commission in India through the British Foreign & Commonwealth Office’s Prosperity Fund supported the development phase of  the index. ENDS Carbon, a specialist in environment, social and governance (ESG) ratings and benchmark services provider, has provided its expertise in assessing the companies with data sourced from the carbon disclosure project (CDP), a not-for-profit organisation which holds the largest and most continuous set of climate change data in the world.

The top 10 constituents in BSE Carbonex are ITC Ltd having 7.11 per cent market capitalisation followed by Reliance Industries (6.48 per cent market capitalisation), ICICI Bank (5.54 per cent), HDFC Bank (5.48 per cent), HDFC Ltd (5.30 per cent), Infosys (5.27 per cent), L&T (4.21 per cent), TCS (3.49 per cent), Hindustan Unilever (2.73 per cent) and ONGC (2.68 per cent).

Meanwhile, the carbon credit market worldwide is now reported to be worth about USD 188 billion, one of the only markets that continued to increase during the recent years of worldwide recession.

About BSE

Established in 1875, BSE Ltd. (formerly known as Bombay Stock Exchange Ltd.), is Asia’s first Stock Exchange and one of India's leading exchange groups and has played a prominent role in developing the Indian capital market. BSE is a corporatized and demutualised entity, with a broad shareholder-base which includes two leading global exchanges, Deutsche Bourse and Singapore Exchange as strategic partners.

BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, mutual funds. It also has a platform for trading in equities of small-and-medium enterprises (SME). BSE also provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and education. It has a global reach with customers around the world and a nation-wide presence. BSE systems and processes are designed to safeguard market integrity, drive the growth of the Indian capital market and stimulate innovation and competition across all market segments. It operates one of the most respected capital market educational institutes in the country (the BSE Institute Ltd.). BSE also provides depository services through its Central Depository Services Ltd. (CDSL) arm.

FDI in Various Sectors

As per extant FDI policy, FDI, up to 26% is permitted, in the defence sector, with prior Government approval. Government has, further, interalia announced the following decisions:-

(i) Amendment of certain conditions relating to FDI, up to 100%, in single brand retail trading, vide Press Note No. 4(2012 Series) dated 20.9.2012

(ii) Permitting FDI, up to 51%, in multi-brand retail trading, subject to specified conditions, vide Press Note No. 5 (2012 Series) dated 20.9.2012

(iii) Permitting foreign airlines to invest, in the capital of Indian companies, operating scheduled and nonscheduled air transport services, up to the limit of 49% of their paid-up capital, vide Press Note No.6 (2012 Series) dated 20.9.2012

(iv) Permitting FDI, up to 49%, in power exchanges, vide Press Note No. 8 (2012 Series) dated 20.9.2012

The above mentioned decisions have been incorporated in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 vide Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Sixth Amendment) Regulations, 2012 notified in the Gazette of India: Extraordinary vide G.S.R.795(E) dated 19.10.2012.

It is the Government’s assessment that implementation of the policy is likely to facilitate greater FDI inflows into front and back-end infrastructure; technologies and efficiencies to unlock the potential of the agricultural value chain; additional and quality employment; and global best practices. This, in turn, is expected to benefit consumers and farmers in the long run, in terms of quality and price. The 30% mandatory sourcing condition has been incorporated to encourage local value addition and manufacturing. The increased level of activity, in the front-end, as well as in the back-end, resulting from greater FDI inflows, is expected to create additional employment opportunities for rural and urban youth. It is, further, expected to encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to consumers and better remuneration to the producers from whom they source their products.

The consultations with key stakeholders regarding FDI in multi-brand retail trading brought out views both for and against FDI in multi brand retail trading. On balance, however, the discussions generally indicated support for the policy, subject to the introduction of adequate safeguards. The necessary safeguards have, accordingly, been incorporated in the policy and are expected to protect the interests of various stakeholders. Government has also decided to constitute a high-level group to make recommendations on internal trade reforms, with a view to ensuring distributional efficiencies and also that the benefits from trade are available to all sections of society.

Two proposals have been received for FDI up to 100% in single brand retail trading (from M/s Ingka Holding Overseas B.V, Netherlands and M/s Fossil India Private Limited). Further, seven proposals have been received, for single brand product retail trading, with foreign equity participation up to 51% (from M/s Fapa Company Ltd., Samoa; M/s Promod S.A.S, France; M/s Tommy Hillfiger B.V, The Netherlands; M/s NA Pali Europe SARL; M/s The Semex Alliance, Canada; M/s Le Cruset SAS France and M/s Sketchers South Asia Private Limited). No proposal has been received for FDI in multi-brand retail trading.