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Foreign investment limit in company raised

Declaring that financial sector and capital market reforms would continue, Finance Minister Yashwant Sinha raised the foreign investment limit in a company under the portfolio investment route by foreign institutional investors to 49 per cent from 40 per cent.

Presenting the Budget for 2001-02, he said provided that foreign investors bring in a minimum of $50 million, foreign direct investment (FDI) in non-banking financial companies would not have to be accompanied with a divestment of a minimum of 25 per cent of their holding in the domestic market.

Turning to capital account liberalisation, he said Indian companies may now invest abroad upto $50 million annually through the automatic route without three year profitability condition under the account.

He said companies which have issued ADRs/GDRs may henceforth make foreign investments up to 100 per cent of these proceeds, up from the current ceiling of 50 per cent.

Besides, he said Indian companies that have issued ADRs/GDRs, may acquire shares of foreign companies upto an amount of $100 million or an amount equivalent to ten times of their exports, whichever is higher.

Sinha said Indian companies would be permitted to list in foreign stock exchanges by sponsoring ADR/GDR issues against block share holding. This facility would have to be offered to all categories of shareholders.

Budget 2001
Money

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