India plans panel to suggest foreign capital regulations

The government will set up a working group to look at various types of foreign capital flows, which are taking advantage of arbitrage across the respective stand-alone regulations and make suitable recommendations.

The group, besides suggesting specific short, medium and long term legal, regulatory and other policy changes in respect to foreign investment, would also make recommendations based on capital account convertibility prospects and the proposed Mumbai international financial centre.

This is being done with a view to rationalising the present arrangements relating to foreign portfolio investments by foreign institutional investors (FIIs), non-resident Indians (NRIs) and other foreign investments like foreign venture capital investor (FVCI) and private equity entities, a government release said.

The working group will consist of members from the government, the regulators and the private sector, the release said, adding that details of composition of working group and the office order is available at the finance ministry website.

The working group will review the existing policy on foreign inflows, other than foreign direct investment (FDl), such as foreign portfolio investments by FIIs, NRIs and others such as FVCIs and private equity entities and suggest rationalisation of the policies with a view to encourage foreign investment and reduce policy hurdles in this regard while maintaining the `Know Your Customer (KYC)' requirements.

The group will identify challenges in meeting the financing needs of the lndian economy through foreign investment, which include investment in listed and unlisted equity, derivatives and debt, including government bonds, corporate bonds and external commercial borrowings.