Govt raises cap for overseas acquisitions by PSUs, to consider setting up sovereign wealth fund

The government has decided to enhance the investment limit for select public sector companies wanting to buy overseas assets, besides considering the establishment of a sovereign wealth fund (SWF) to help them in the task.

Information and broadcasting minister Ambika Soni said that the union cabinet on Thursday approved the policy for acquisition of raw material assets abroad by state-owned units.
 
''While some countries have already taken the lead in acquiring sources of raw material assets globally, Indian companies have not been very assertive,'' said the minister.

Under the new policy, 'navratna' public sector companies will be able to invest up to Rs3,000 crore for acquisition of overseas assets without seeking the government's approval. The current ceiling is Rs1,000 crore. 

An empowered committee of secretaries headed by the cabinet secretary would take quick decisions in cases where the investments ranged between Rs.3,000 crore and Rs.5,000 crore.

''There is a strong feeling that if India were to have security in raw material it should be investing aggressively in acquiring assets abroad,'' said S. Sundareshan, secretary, heavy industries and public enterprises. ''The feeling has been that we have not been as nimble-footed as other countries in this regard. The proposal approved today will possibly make our companies more so.''

Many leading public sector companies have been eager to acquire overseas assets, but have been facing bureaucratic hurdles. Coal India Ltd (CIL), the public sector mining behemoth, has been eager to buy mining firms in Indonesia, Australia and the US. However, its proposals have not been cleared by the finance ministry.