The Banking and Strategy Initiative

Chillin' out till it needs to be funded

The FDI cat is out of the bag | Advantage 'zyaada'

The first of six public debates was kicked off yesterday, with DIPP [Department of Industrial & Public Policy] proposing processes in bidding and domestic production/ value addition obligations to facilitate FDI inDefence in India of 74%. The Ministry of Defence had earlier this year rejected a L&T prposal with the famed Aeronautic Defence and Space Co. NV of Europe because of their offices and obligations in Pakistan and China. MoD favors a cap of 50% FDI, while DIPP/FIPB can go up to 100%.

The other public debates are likely in FDI in Multi brand retail where DIPP proposes to overcome turf issues and public outcry with allowing limited FDI with conditions preventing their entry in towns with pop less than 1 million. Carrefour has been waiting for such a manna, operating in 100% cash and carry in the mean time. Walmart would also welcome the move after the discussion paper gets the desired traction and if it manages to change public perceptions and evolve the requiredresponse to policy issues to protect small retailers and local agrarian populations.

In Pharmaceuticals, India’s provision for 100% FDI in the automatic route has been questioned by some policymakers.

The other discussion papers are likely to relate to agriculture, banking & finance and probably Education / Infrastructure. Don’t forget our reviews of the extant FDI policy and issues like PE valuation.


This entry was posted on May 18, 2010 by in Banking, Emerging Markets, Financial Markets, India, Mergers etc and tagged , , , .


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