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India Morning Report: FDI flows bolstered in 13 sectors including Defence and Telecom (FX Intervention 2013 – This week in Asia July 15-19, 2013)

English: Prime Minister Manmohan Singh in the ...

English: Prime Minister Manmohan Singh in the Opening Plenary – Resillient india: 25 years of Economic and Social Progress. Participants captured during the World Economic Forum’s India Economic Summit 2009 held in New Delhi, 8-10 November 2009. (Photo credit: Wikipedia)

Pending Cabinet decisions, Parliamentary Debates, Ordinance and Laws

A welcome decision was announced to increase FDI limits in state of the art Defence equipment to 49% from 24% through the approvals route and base cellular networks in Telecom to 100% from a 74% currently removing an important roadblock in the plans of Global Services companies to enter the lucrative Indian market which created unseemly compromises in corporate governance and issues of under priced auctions. These two sectors can see immediate fDi commitments The decisions were pushed by an embattled PM and Economist Manmohan Singh likely to be singled out if the UPA fails General elections in 2014

The reforms initiated yesterday, unlikely to be rolled back in the long term except for temporary occassions of political opportunism by new governments were long expected and remain important for India Inc, even in sectors like power exchanges, commodities exchanges and Stock exchanges where the existing 49% limits have been brought under the automatic investment route.

Importantly, the long standing increase in FDI limits for insurance to 49% meets private insurance companies requirements and the sector looks for IPO issuance in the next 2-3 years with heightened participation from investors adding to solvency ratios and potenial new business underwritten in a market growing at a double digit CAGR

The removal of brownfield pharma projects from 100% automatic FDi stands as Ranbaxy reorts a new FDA strictures at an Indian plant

The rupee will likely continue to trade above 59 but there are unlikely to be further selling pressures on the currency at this point though the depleted FX reserves and coninued demand spiral for Oil ncessitates careful watching

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