Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: TDS :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: ACCOUNTING STANDARDS :: empanelment :: form 3cd :: ACCOUNTING STANDARD :: VAT RATES :: VAT Audit :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India
 
 
News Headlines »
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice

RBI may raise cap on overseas investment
April, 24th 2007
The move will partly offset the impact of foreign currency inflows on money supply.
 
The Reserve Bank of India (RBI) is considering raising the cap on overseas investments by companies to partly offset the impact of large foreign currency inflows on money supply and in turn inflation.
 
Companies are currently allowed to invest overseas to the extent of 200 per cent of their net worth every year.
 
The RBI, in consultation with the government, is exploring the option of allowing companies to invest up to 250 per cent of their net worth overseas.
 
FOREIGN DIRECT INVESTMENT
                            (In $ billion)
Year Inward Outward
2006-07 16 11.8
2005-06 5.5 3.2
2004-05 5.6 2.4
2003-04 4.3 1.9
 
The discussions follow large inflows on account of investments in equities and projects, exports and remittances by non-resident Indians. In an attempt to prevent the rupee from gaining too much, the RBI was an aggressive buyer of foreign currency in the first two months of calendar 2007.
 
However, the rupee gained over 2 per cent in March as the RBI stayed away from the foreign exchange market, since buying dollars would have released more rupees into the system and impacted the central banks efforts to keep a tight check on liquidity.
 
In fact, the central banks forex purchases in January and February contributed to a 22.1 per cent rise in money supply in early March, from 19.4 per cent in late December 2006.
 
This, in turn, forced it to raise both the cash reserve ratio (CRR) the proportion of cash deposits banks must keep with the RBI and the rate at which it lends short-term money to banks against government securities.
 
The attempt at allowing higher level of foreign exchange outflows is meant to lower the net foreign exchange inflows. It comes at a time when a growing number of Indian companies are planning overseas acquisitions.
 
According to the Ministry of Finance, the total outward FDI in 2005-06 was $3.2 billion and the inward FDI flow was to the tune of $5.5 billion.
 
India can consider allowing outflows on account of investments overseas as the foreign exchange reserves position is extremely comfortable. Foreign exchange reserves have increased by $25.84 billion to $203.09 billion since January 2007.
 
The S S Tarapore committee report on fuller capital account convertibility had also recommended gradual liberalisation of outward FDI. The committee had proposed raising the ceiling for outward investments by companies to 400 per cent of their net worth in three phases.
 
Bankers said the proposed increase in the investment limit will be a morale booster and indicates the slow but steady transformation towards fuller account convertibility.
 
An investment banker, however, said any foreign acquisition depends on the economic benefit the acquirer hopes to derive from the target company. Once that is in place, the cap on investment does not really matter, he adds.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions