Mumbai, April 28
INDIAN companies increasing their global presence through overseas investments received a fillip from the Credit Policy with the RBI hiking the limit for such investment under the automatic route from the earlier level of 100 per cent of a company's net worth, to 200 per cent.
"We have been encouraging corporates to acquire companies outside. This move is a signal to support overseas investment," Dr Y.V Reddy, Governor, RBI, said at a press briefing. On their part, companies have lauded the move.
Essel Propack, which has a large overseas presence, hopes to get more room for acquisitions. "We were very close to the 100 per cent ceiling of our net worth. This will be a big boon for the company," Mr R. Chandrasekhar, Chief Operating Officer, Essel Propack, said. The company had made a representation to RBI to lift the ceiling a couple of months ago. "For companies like Essel Propack, whose net worth is small, 100 per cent was too little," he said.
Any liberalisation in overseas investment policy is welcome news for India Inc, now seriously looking at international acquisitions. Of late, old economy players have also vaulted into the international arena along with their new economy counterparts, picking up companies or setting up joint ventures.
Companies such as Tata Steel, Tata Motors, Bharat Forge, Essel Propack, VSNL, Infosys and Raymond have made investments overseas in the recent past.