India Grants Approval to Buy Assets Overseas for Public Sector Units
Oct. 14 – The government of India has permitted a policy to facilitate profit-making state-run firms to obtain assets overseas. The new policy also seeks to augment the power of Maharatna and Navratna companies and provide greater autonomy for acquiring raw material assets abroad.
The government will also mull over setting up a dedicated Sovereign Wealth Fund to obtain assets overseas. The guidelines for acquisition of raw material assets abroad by public sector enterprises is likely to appreciably improve the capabilities of such entities to acquire such assets and protect the country’s long term economic interests.
The new document also plans to raise the investment limit for Navratna firms to Rs.3,000 crore from Rs.1,000 crore for buying any overseas assets. Government support would be needed for any additional sum outside this boundary.
A section of secretaries, headed by the Cabinet Secretary, would be established to take speedy decisions in cases where the buyout amount exceeds the limit. For Maharatna firms, the limit has been set at Rs.5,000 crore.
Public sector units (PSUs) in the agriculture, mining, manufacturing and electricity sectors having a three-year record of making net profits would be entitled under this policy. CPSEs will inspect proposals, undertake due diligence and obtain sanction of their board of directors in a transparent manner. The Ministry of External Affairs and Indian missions abroad will be associated right from the beginning of the process for a buyout.
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