India Notified Insurance FDI Rules

Two months after issuing the ordinance, Indian government has notified rules for higher foreign direct investment (FDI) in the insurance sector.

The rules, expected to help foreign companies raise or make fresh investments in Indian companies, will ensure that even if the ordinance lapses now, it will continue to be in place and accordingly all actions will have legal validity.

The ordinance was issued as the Insurance Laws (Amendment) Bill has been pending in Rajya Sabha since 2008.

Now, it is mandatory for the Government to get the Bill passed, otherwise the ordinance will lapse. The Centre, on its part, expects the Bill to sail smoothly in the Budget session of Parliament.

According to these rules, foreign equity investment cap of 49 per cent is applicable to all Indian insurance companies. This will comprise both FDI and foreign portfolio investment (FPI). FDI means buying equity directly from the company and proceeds going to the company, while FPI refers to buying equity from the stock market, but money not going to the company. Instead, the shareholder, in its personal capacity, gets the money.

The 49 per cent limit is the composite cap, which means FDI or FPI alone can have 49 per cent. However, SEBI norms prescribe that FPI investment cannot be more than 24 per cent in a company.

Only if shareholders approve, FPI investment can go up to 49 per cent. The rules also say that Indian insurance companies should ensure that ownership and control remains in the hands of resident Indian entities.

FDI proposals up to 26 per cent of the total paid-up equity of an Indian insurance company will be allowed on the automatic route, and FDI proposals which take total foreign investment above 26 per cent and up to the cap of 49 per cent, will require Foreign Investment Promotion Board approval.

PM Wants ‘Make in India’ In Defence Sector

Prime Minister Narendra Modi called upon Indian industry and armed forces to develop own capabilities in defence manufacturing and stop reliance on imports.

Speaking at the Aero India 2015 Exhibition, he said the public sector defence undertakings should do much better and exploit their huge asset base and manpower to develop defence equipment and technologies.

"We must develop a financing system suited to the special needs of aerospace industry. It is a market where buyers are mainly governments, the capital investments are large and the risks are high. We must ensure that our tax system does not discriminate against domestic manufacture in comparison to imports, Modi said.

More broadly, he said the country's defence industry will succeed more if the manufacturing sector is transformed in India. The country needs great infrastructure, sound business climate, clear investment policies, ease of doing business, stable and predictable tax regime, and easy access to inputs, he stated.

Above all, there is a need for vast pool of highly skilled and qualified human resources for the defence industry, he said and added that the aerospace industry alone would need about 200,000 people in another ten years.

"We will set up special universities and skill development centres to cater to our defence industry, just as we have done in atomic energy and space. I have especially invited the State Governments to come here with package of facilities to attract investments in defence manufacturing" Modi added.

Kerala Launches Global Video Contest to Boost Tourism

Kerala Tourism has launched a month-long video sequencing contest to promote the destination, said Minister for Tourism A.P. Anil Kumar.

Thirty videos, each of two-minute duration, will be created for the contest, highlighting diverse aspects of the State. Each video will be divided into six portions of 20 seconds each and uploaded to the site. The divided portions will be in jumbled order.

Contestants have to log in to the contest page, www.keralatourism.org, where they can rearrange the jumbled portions into a single continuous sequence that accurately matches the original video.

The competition will encourage people to spend more time on the tourism website.

Three bumper prizes will be given away. The first is a seven-day and six-night Kerala package for two, with economy class one way flight tickets from anywhere in the world. The second bumper prize is six-day and five-night Kerala package for two. The third bumper prize is five days and four nights Kerala package for two.

EPFO Revives Plan to Start Commercial Bank

The Employees’ Provident Fund Organization (EPFO) has revived a proposal to start a commercial bank despite concerns whether the retirement fund manager has the ability to do so.

EPFO hopes the proposed Workers’ Bank will help it expand investments, increase earnings and improve subscribers’ engagement with the organization, which manages a corpus of over Rs.6 trillion and has an active subscriber base of more than 42 million.

EPFO, which functions under the labour ministry, may soon send the proposal to the finance ministry for consideration although the Reserve Bank of India (RBI) suggested when the proposal first came up in 2011 that such an option may not be feasible.

The Workers’ Bank is proposed to be modelled on Members’ Equity Bank, Australia, which is supported by the Australian Council of Trade Unions.

The commissions and service charges that are now paid to banks by EPFO can be used as working capital once the proposed bank is up and running. It can also manage its growing corpus instead of going to third-party portfolio managers.

Instead of withdrawals, the bank can provide repayable loans to EPF subscribers. It can also provide personal loans to members based on their EPF balance, according to an EPFO document.

According to the document dated 19 July 2011 and placed before EPFO’s central board meeting on 19 December 2014, starting a bank with EPF money may be ideal in meeting the requirements of workers, besides providing an avenue for deploying EPF funds profitably.

Munjal Sells 4% Stakes of Hero MotoCorp

In a significant development, Hero MotoCorp Ltd promoter Brijmohan Lall Munjal pared four per cent stake in the company by selling seven million equity shares to ‘fund new growth avenues’.

The company in a statement said the BML Munjal-led Hero Group has divested seven million equity shares in its flagship company Hero MotoCorp Ltd in a major initiative towards diversification into fast growth areas.

According to information available with BSE, the promoter stake in Hero MotoCorp stood at 39.92 per cent at the end of December 2014.

Following the sale, the over $5-billion Hero Group still holds a significant stake of over 36 per cent in the company, the statement added.

Elaborating on the funds’ use, the company said: “The group will use the sale proceeds to fund new growth avenues available through the Government’s ‘Make in India’ initiative.”

The Prime Minister’s ‘Make in India’ platform has opened up new vistas, some in very high growth areas, and the Hero Group — with its experience, scale of operations and brand equity — is uniquely placed to leverage these emerging opportunities, it said.

On the focus on its core business, the company said: “The Hero Group remains strongly committed to its core two-wheeler business, where it sees enormous potential, both in India and overseas.”

Hero MotoCorp sold 6.64 million two-wheelers in 2014, including over 200,000 units in global markets.

India May Get Swiss Bank Account Details By 2018

After India and Switzerland agreed to become 'early adopters' of an 'automatic exchange of information' mechanism prepared by global body OECD to help each other in fighting the tax evasion and frauds, India may get bank account details of Indians in Switzerland by 2018.

Under a global framework, more than 40 jurisdictions including India had agreed to become 'early adopters' of an 'automatic exchange of information' mechanism prepared by global body OECD to help each other in fighting the tax evasion and frauds.

"This so-called early adopters group plans to collect data from 2016 and exchange information for the first time in September 2017," according to a new report by the Swiss government.

However, Switzerland would see its 'first exchange' under this framework taking place in the year 2018. As per the report, as many as 58 countries would see their 'first exchange' taking place in 2017, followed by another 35 in the year 2018.

While India is part of the 'First Exchange 2017' group, it will have to wait till 2018 for 'automatic exchange of information' with Switzerland because of the Alpine nation being in the second grouping.

The details that would be shared include account number, name, address and date of birth, tax identification number, interest and dividends, receipts from certain insurance policies, credit balances on accounts, as also proceeds from the sale of financial assets.

Explaining the exchange process, the report said: If a taxpayer in a Country A has a bank account in Country B, the bank would disclose financial account data to authorities in the Country B, which would automatically forward the details to authorities in Country A to help them examine the data.

Once in place, the mechanism would help the Indian authorities to have a strong ground while seeking to bring back and tax the funds stashed overseas by its citizens.

To curb illicit fund flows and to tax unaccounted wealth stashed abroad, India has stepped up its efforts, including re-negotiating tax treaties with various countries. India expects automatic exchange to help curb this menace.

Many countries worldwide are taking steps to address the menace of illicit funds being stashed away in tax havens.

India,Sri Lanka Ink Civil Nuke Deal

In a historic deal, India and Sri Lanka have signed a civil nuclear deal.

Prime Minister Narendra Modi said the bilateral agreement on civil nuclear cooperation will unlock the vast potential of our economic cooperation.

Modi held talks with visiting Sri Lankan President Maithripala Sirisena at the Hyderabad House in New Delhi.

He said India is pleased to be Sri Lanka's largest trading partner. "We have expressed support for more balanced growth in both directions," he said.

India has decided to go ahead with civil nuclear cooperation with Sri Lanka following its own "breakthrough understanding" over the same during US President Barack Obama's recent visit.

The two countries in the past have held negotiations for a civil nuclear agreement but these lost steam last year under Sirisena's predecessor Mahinda Rajapaksa.