The Sahoo committee, which was set up to review and liberalise global depository receipt (GDR) norms for Indian companies looking to raise investment abroad, has now been tasked with recommending how the external commercial borrowing (ECB) norms could be liberalised further.
The panel will have its first meeting on ECBs in Mumbai on January 16 and will, over the coming months, work towards liberalising ECB norms, said an official who is also a member of the panel.
?Our aim is, let there be no regulation unless there is a need for it. If a company, for example, is fulfilling all the ECB norms laid down by the RBI and other regulatory bodies, there is no need for the government to stipulate that the investment is being pumped into certain end infrastructure projects,? the official told FE.
The panel is headed by MS Sahoo, former Securities and Exchange Board of India (Sebi) member and, currently, secretary, Institute of Company Secretaries of India. It comprises 10 members drawn from the RBI, Sebi, the capital markets division of the finance ministry, and independent think-tanks, among others.
Its aim will be to examine and review the framework related to ECBs and foreign currency convertible bonds (FCCBs), direct listing of Indian companies abroad, dual listing of Indian companies, residence or source-based taxation for Indian firms raising money abroad and relationship between authorities in India and foreign jurisdictions.
The January 16 meeting will also be attended by representatives from HSBC, Citi, BofA-Merrill Lynch, the stock exchanges, and Adani and Essar groups. The official quoted above said that the final recommendations should be presented to finance minister P Chidambaram and economic affairs secretary Arvind Mayaram by early April.?These recommendations won?t require Cabinet approval. They could be implemented just on the finance minister?s nod,? the person said.
In November, the panel had completed its previous assignment and submitted a report after a comprehensive review of GDR norms. It made several suggestions, including steps to plug loopholes in GDRs/FCCBs, and recommended safeguards in the wake of changes in the foreign direct investment policy and enactment of the prevention of money laundering legislation.
Indian companies have, so far, got in $19.05 billion for April-November 2013 through the ECB/FCCB route, either automatically, or with prior approval of the RBI. The last time that ECB norms were rationalized was in August 2013, for low-cost housing and the aviation sector. ECB of upto $1 billion was allowed for airlines to meet their working capital requirements, while in low-cost housing, an aggregate limit of $1 billion in ECB was allowed for FY14 and FY15 each.