The cabinet on Wednesday unshackled overseas investment in industries such as civil aviation, mining and petroleum to attract more foreign companies.

The move, said analysts, will help the sectors not only get funds but also technical knowhow. DNA Money asked some experts on their take:

Aviation

The industry has by and large welcomed the changes. Kapil Kaul, CEO, India and Middle East, Centre for Asia Pacific Aviation (CAPA) said the changes in the FDI policy would generate significant interest in flying schools, technical institutes etc.

“I don’t think the existing projects in MRO, Ground handling, cargo and chartered airlines would be influenced in the short term in any major way by the changes. These are a reflection of the government policy to seek structural changes in civil aviation in India.”

Manav Singh, managing director, Club One Air, said, “It will make the environment more competitive. In fact I recommend 100% FDI in chartered services. International expertise will also come in. “It will also help us become more professional and keep us on our toes.”

Helicopter operators also feel that the changes come at an appropriate time.

Nailesh Mashru, CMD of ground handling companies 7Star Aviation and MD, Divya Tourism, said, “Right now because of privatisation of airports around the country, there are huge investments which are going into ground handling. This ruling will enable smaller players to form joint ventures with foreign companies and bid for these contracts.”

Commodity exchanges

 P H Ravikumar, MD and CEO, NCDEX said the move was long due and was along the expected lines.

“Exchanges would need these investors for four things: to raise money, to acquire knowledge-base for product development, for risk management and for technology,” he said.

More than the financial investment, foreign exchanges can add considerable value by helping the local bourses raise themselves to global standards in terms of newer products and stronger risk management platforms.

So would we see a Chicago Board of Trade entering India soon?
“Individual exchanges can take a call on what kind of investment they need. As far as NCDEX is concerned, we already have a couple of foreign investors both are strategic partners.”
Joseph Massey, deputy managing director, MCX, said the approval of the FCRA Bill provides greater autonomy to the Forward Markets Commission and allows launch of new products such as options and indices.

“The participation of banks, FIIs and institutional investors was also in some way linked to the approval of this Bill. With autonomy of the FMC, we believe, that these institutions will now be allowed to participate in commodity futures market.”

Petroleum

The government has relaxed norms for foreign direct investment in the petroleum sector. Foreign companies entering into marketing and trading of petroleum products will no more need to divest 26% equity in favour of Indian partners or public within five years of operations.

That would help Shell India Marketing Pvt Ltd, which is currently the only 100% foreign-owned entity marketing petroleum products in India.

FDI policy in general requires that 100% subsidiaries of foreign companies need to disinvest 26% of their paid-up equity in the favour of Indian companies or public within five years of operation. Shell has been operating in the country since 2004.

“It is a positive move aimed at encouraging more companies to invest in India,” Vikram Singh Mehta, chairman, Shell India, said. On how useful such waiver will be in attracting foreign investment in view of skewed pricing policy, Mehta said, “India is a large market but today it is a difficult market because prices are determined by the government.”

Source : Dna