Liberalization of Foriegn Direct Investment Policy in Single Brand Trading in India

In process to accelerate liberalization policy in retail market, govt. of India has reviewed FDI policy in single brand trading in Press Note no. 1/2012.

As per existing FDI policy, foreign players were allow to have investment in India under 51% cap, which has been revised under first press note of DIPP and now 100% FDI allowed in single brand trading market in India.

However, present press note has laid down following conditions for proposed door of FDI in single brand trading:

(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.

This new step has definitely being a commendable step of govt. of India and participation of small industry in brand marketing can lead for more sustainable structure in long run.

Tough Indian Court Stands towards Facebook and Google: Issue Objectionable Content

Delhi High Court, last week started hearing of posting "objectionable contents" on social websites like Facebook and Google. Indian Court has taken a toughen stand on present issue and warned Facebook and Google and extended their views "like china, we will block all such sites".

However, this case has gone beyond Information Technology Act, and added public values of social website. This case is still pending with Delhi High Court and final judgment shall definitely lay down an emphatic precedent for social websites in India.

Business Standard Article.

New Disclosure Regime of SEBI for Merchant Bankers

In process to protect interests of investors and encourage comprehensive disclosure regime of Initial Public Offering, Indian Capital Market Regulator 'SEBI' has issued new circular "Disclosure of Track Record of the public issues managed by Merchant Bankers".

This additional step has come from SEBI, at the time when Indian equity market is affected by global recession and performance of IPO's gone down significantly.

SEBI has added additional disclosure requirements for Merchant Bankers, who play a very crucial role in Initial Public Offering. Circular has laid down two broader disclosure regime for merchant bankers:
- disclose the track record of the performance of the public issues managed by merchant banker; and
- to channelize due diligence process of merchant bankers in light of post issue performance.

SEBI Circular: http://www.sebi.gov.in/sebiweb/home/list/1/7/0/0/Circulars

Circular Related to Investment by QFI's In India Equity Shares Market

Furtherance to the Central Government, vide press release dated January 1, 2012 has announced its decision to allow QFIs to directly invest in Indian equity, in order to widen the class of investors, attract more foreign funds, reduce market volatility and to deepen the Indian capital market, SEBI and RBI has issued circulars to streamline operation of the investment in equity markets by QFI's.

With checks on KYC and ultimate beneficial ownership issues, like for Mutual funds, regulators has opened an additional doors along with FII route. However, present step of Govt. of India and India regulator needs to be more refined and required comprehensive changes in other laws, to avid conflict between existing laws and QFI route regulations.

SEBI Circular: http://www.sebi.gov.in/cms/sebi_data/attachdocs/1326453304731.pdf
RBI Circular: http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/APD130112FS.pdf

New Opening Doors to Invest in Indian Stock Market for Foreign Investors

New year 2012 has come with some good news for Indian stock markets and off course for foreign investors. The process of liberalization which was initiated through last year QFI Regulations has stepped into next phase, where govt. of India shall allow QFI to invest directly in Indian stock markets.
As per Aug 2011 SEBI regulation on "QFI Investment in Indian Mutual Funds", Qualified Foreign Investors (QFI) can invest in Indian Mutual Funds Scheme directly through process laid down by the SEBI and RBI.
However, technically above regulation is not for all foreign investors and it is restricted to QFI's only, which has certain conditions stated by SEBI.
Now, Govt. in extension of logical process of liberalization in Indian capital market, has officially announced to opening up stock market to QFI also. Formal regulation of SEBI is still awaited.

Please read Article:
http://timesofindia.indiatimes.com/business/india-business/Foreigners-can-now-invest-directly-in-Indian-stocks/articleshow/11331706.cms

BRIC countries' growth story coming to an end?

Economic Times article dated 29th Dec. 2011 has definitely initiated a new talk in the Market, whether BRIC Countries (Brazil, Russia, India & China) growth story has paused in dynamic changes in global economy in last three years.

Please read article:

http://economictimes.indiatimes.com/news/international-business/bric-countries-growth-story-coming-to-an-end/articleshow/11285589.cms

Challenges Ahead for Capital Market Regulation in India

Beginning of a new decade definitely viewed as opening of new opportunity and challenges for regulators and governing regulations related to various components of capital market. Core question is whether present structure of Capital market is adequate to face and maintain future opportunities and challenges standing ahead of the new decade?

Somesekhar sundaresan has tried to evaluate such challenges of capital market in “Fin sector reform panel has its task cut out in '11”, dated 3/01/2011 in Business standard.

Concern over future challenges can be categorised in following heads:

- Uniformity of the interpretation of various components of capital markets
by regulators
- Adopting existing regulations of capital market with future challenges
and dynism of capital market
-Check and balance structure on various capital market regulators for
stability of market.


As new decade has certainly been going to recognise Indian capital market as a strong presence in the world. Such strong presence always follow by effective and comprehensive regulation of the Indian market in uniform manner. Uniformity is the most critical issue related to interpretation of Indian capital market regulation, and best example is wide interpretation of 'Collective Investment Vehicle' and various hybrid components of capital market like offshore funds.

Last year shall be known for tussle between various regulators on regulation of subjects of capital markets, like ULIP, and role of government for solving above issues has always been taken into consideration by critics of Indian capital market. Hoping for The Financial Sector Legislative Reforms Commission (FSLRC) is expected to be finally set up this year, which may redefine check and balance on various capital market regulators.