In an effort to send a positive signal to the market, the Cabinet Committee on Economic Affairs (CCEA) may take up foreign direct investment proposals in pharmaceuticals, including US-based Mylan’s takeover of Agila Specialties, as early as this week.
The Mylan proposal alone can bring in $1.6 billion.
Also, instead of announcing new measures to stabilise the rupee and contain the current account deficit, the Finance Ministry aims to consolidate and assess all the measures announced so far.
On Friday, at a meeting chaired by the Prime Minister, it was decided that the existing Pharmaceutical Policy will be applicable to pending proposals.
“The aim now is to act immediately,” said a senior Finance Ministry official, speaking to Business Line.
Proposals pending
It may be noted that a number of FDI proposals in brownfield pharmaceutical projects were cleared by the Foreign Investment Promotion Board (FIPB) but kept in abeyance due to objections by the Department of Industrial Policy and Promotion.
After a series of measures announced last week, the Finance Ministry now plans to focus on improving sectors such as coal and steel.
“The measures will not have an overnight impact. Our effort will be to consolidate the measures already announced and make an assessment early next month,” said the official.
On Tuesday, the Government raised the import duty on gold, platinum and silver to 10 per cent, the third time since January.
Public sector financial institutions, such as PFC, IIFCL and IRFC, were permitted to raise quasi-sovereign bonds to finance long-term infrastructure projects. Guidelines for external commercial borrowings and non-resident accounts were also liberalised.
On Wednesday, the Reserve Bank of India reduced the limit for Overseas Direct Investment (ODI) by an Indian company under the automatic route to 100 per cent of its net worth from 400 per cent earlier, for all fresh transactions.
Similarly, it reduced the limit for remittances made by resident individuals, under the Liberalised Remittance Scheme (LRS Scheme), to $75,000 from $200,000.
It also prohibited use of this facility for acquisition of immovable property outside India, directly or indirectly.
However, the market saw these measures as a return to capital controls.
This, along with the likelihood of a recovery in the US and earlier than predicted phasing out of quantitative easing, created mayhem in the market on Friday.
The official said that other emerging markets, such as Brazil and South Africa, also saw a fall last week. “But there the fall was spread over the first three working days, while the Indian market suffered in just one day,” he said, adding that he hoped the measures taken so far would bring confidence back into the market.