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Business Environment and Law-Foreign Capital And Collaboration

External Commercial Borrowing (ECB) -Foreign Capital And Collaboration

   Posted On :  06.05.2018 10:07 pm

Export credit agencies like the US Exim bank, the Japanese Exim Bank, and ECGC of the UK etc. to obtain commercial borrowing from the capital market.

External Commercial Borrowing (ECB)
 
 
Export credit agencies like the US Exim bank, the Japanese Exim Bank, and ECGC of the UK etc. to obtain commercial borrowing from the capital market.
 
The Government of India liberalized its policy towards foreign investment in 1991 to permit automatic approval for foreign investment up to 51 percent equity in 34 industries. The Foreign Investment Promotion Board (FIPB) was also set up to process applications in cases not covered by automatic approval. During 1992-93 several additional measures were taken to encourage direct foreign investment, portfolio investment, NRI investment, etc.
 

Foreign Collaboration

 
 
During the early phase of the planning era, the national policy towards foreign capital did recognize the need for foreign capital, but decided not to permit it a dominant position. Consequently foreign collaborations had to keep their equity within the ceiling of 49 % and allow the Indian counterpart a majority stake. Moreover, foreign collaborations were to be permitted in priority areas, more especially those in which we had not developed our capabilities.

 
 
But in an overall sense, our policy towards foreign collaborations remained restrictive and selective. Consequently, during 1961-70 a total of 2,475 foreign collaborations were approved and during the next decade (1971 – 80) another 3, 041 collaborations were sanctioned.
 
It was only during the eighties that government relaxed its policy towards foreign collaborations. This was done specifically in respect of investors from Oil Exporting Developing countries with well-defined package exemptions. This was followed by Technology Policy Statement (TPS) in January 1983.The objective of the policy was to acquire imported technology and ensure that it was of the latest type appropriate to the requirements and resources of the country.

 

Tags : Business Environment and Law-Foreign Capital And Collaboration
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