New Delhi: In the first "big-ticket" measures towards full capital account convertibility, government on January 10 announced that mutual funds could invest abroad upto $ 1 billion in listed companies.

Announcing about a dozen such big-ticket measures, Finance Minister Jaswant Singh said the government removed the existing limit of $ 20,000 remittance under the employees stock option scheme.

"Such announcements are directed towards higher productivity and higher growth converting India's potential into a global dynamo," Singh told the first 'Bhartiya Pravasi' convention being attended by 2,000 delegates of Indian diaspora.

Another significant measure was to permit the Indian companies to retain entire ADR and GDR proceeds abroad for future foreign exchange requirement. At present the limit is $ 10,000.

The government has been emboldened to take these measures in the face of mounting foreign exchange reserves, now put at over $ 70 billion, Singh said.

He said the limits on trade-related loans and advances by export earners and foreign currency account holders would be discontinued. However, transactions would continue to be reportable to the Reserve Bank as at present.

Elaborating the measures, finance secretary S Narayanan later told reporters that corporates would now be permitted to acquire immovable property overseas for their business and staff residential purposes. This permission has been given only to those corporates that have set up branches and offices abroad.

Listed Indian companies have also been allowed to invest abroad in recognised overseas stock exchanges but would have to have at least 10 per cent shareholding in a company listed on a recognised stock exchange in India on January 1 of that particular year of investment.

Such investments should, however, not exceed 25 per cent of the Indian company's net worth as on the date of the last audited balance sheet, he said.

Though the mutual funds are permitted to invest abroad in listed companies up to $ one billion, they should have at least 10 per cent shareholding listed on a recognised stock exchange in India of the year of investment.

Apart from companies, the Finance Minister said individuals are also being permitted to invest abroad in companies, which are listed on overseas stock exchanges and which have at least 10 per cent shareholding in a company listed on a recognised stock exchange in India on January 1 of the year of investment.

However, some investment limits are being fixed for individuals, which will be announced shortly, he said.

These measures come at a time when the rupee is gaining in value against the US Dollar in the face of the country's ballooning foreign exchange reserves and the exporters wanting government to take steps to ensure that the rupee did not appreciate making them lose export competitiveness.

Singh said these were only the beginning of the series of measures that he would be announcing now on till the Budget to pump-prime the economy and encourage investments to push up growth.

Jaswant Singh said, interestingly, Indians carved out a niche for themselves in Information Technology even before the government had not stepped in.

Singh invited overseas Indians to take advantage of the favourable investment climate in India and participate in its development process.

PTI