February 2003
Rupee’s convertibility comes with a caveat
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Pharmaceutical bottling line: the
smooth running of
Indian industry demands liberalization of capital
flows
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India inched its way closer towards full
convertibility of the rupee early last month when finance
minister Jaswant Singh unshackled foreign investment by
Indian companies, mutual funds and investors. However, the
fine print shows that the old control mindset of the Indian
authorities has not changed.
For the first time, Indian investors, mutual funds
and companies can invest in shares of foreign-listed
companies, but there is a caveat. Foreign companies will
qualify for Indian investment if they own at least 10% equity
in an Indian-listed company. Only around 300 multinationals
qualify since they have Indian subsidiaries. Dipesh Pande, a
fund manager at Templeton Asset Management, which manages
around $2 billion in India, says it is hard to maximize
returns to investors on a limited basket of
investment.
For Indian companies, investment in foreign-listed shares is
capped at...
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