The Securities and Exchange Board of India has set up a committee headed by ex-Cabinet Secretary K.M. Chandrasekhar to look into a single route for foreign investments in India.
The committee has been set up with a view to channelise investments from overseas investors such as foreign financial investors, qualified foreign investors, foreign venture capital investors, NRIs, among others into one single window.
Combined routes
“In consultation with the Government, we have now decided to combine the various routes that are present today into one single route. We set up this committee about three to four days ago. And I hope very soon we will have the measures to combine all routes into one single route,” said SEBI Chief at the CII Capital Market Summit.
A committee had been set up by the Government of India in July 2010 and had questioned the need for separate routes for foreign investments in India.
Sinha remarked that although India has robust FII inflows, the QFI flows have “not picked up in a meaningful manner.” FIIs have pumped in over Rs 1 lakh crore in Indian equities as at end November 2012.
Most of the investments of QFIs in the Indian equity markets are in no-risk blue chip companies such as TCS, Reliance Industries, Power Grid Corporation and SBI.
Reason for Low interest
Compliance issues such as KYC, PAN card and taxes were some of the reasons for low QFI interest. Sinha said that the KYC issue had been resolved. “The only grievance that has still not been resolved is the requirement of a PAN card. But that is something that can only be done by the Government and the Government with the help and assistance of the Parliament,” Sinha said.
One of the recent demands have been for the removal of all taxes applicable to them. But Sinha said that keeping in mind the fiscal situation of the country, it was not feasible.
Separately, he said that SEBI’s solution for a safety net mechanism for the protection of retail investors during IPOs would be a “mild” one. “The whole idea behind safety net is that we want to put some pressure in the minds of promoters and advisers on pricing.
So, somebody who wants to protect the small investor for all-time to come, he will be disappointed. Somebody who theoretically feels that there should be no safety net, he will be disappointed. As and when SEBI comes out with a solution, it will be a mild solution,” said Sinha.