FII’s May Have Their Money Locked In
Mar. 27 – The finance ministry is mulling over locking in investments of FII’s for a certain time period in select industries such as aviation, telecom and banking. While the Indian government has been relaxing FDI and FII norms to attract investments into India, it is also trying to curb foreign fund volatility. In order to better regulate foreign funds, the Foreign Investment Promotion Board recently said that foreign investors in real estate cannot sell their stake to another foreign investor before termination of the lock in period of three years. Experts feel that while attracting FII’s and FDI into these sectors will help grow the sectors, restricting funds with a lock in period might deter foreign investors and be counter-productive.
In order to spur the investment of foreign funds into select sectors, the finance ministry has proposed, that investments by foreign funds in companies operating in sectors with investment caps be exempt from the need to obtain prior approvals from the foreign investment promotion board (FIPB), which clears all foreign investment proposals, according to the Economic Times. This is expected to remove bottlenecks and make the process easier for foreign investors and funds to enter India’s vast market.
India expects its FDI to reach US$28 billion for the fiscal year ending March 2009. In the previous fiscal year, the total FDI into India was US$24.5 billion. Beginning 2009, FDI into has been rising again. In January, the total foreign direct investment was up 58.5 percent on year at US$2.79 billion,” the Dow Jones Newswire reported.
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