Indian Companies can now acquire assets abroad

Recently the cabinet approved a policy to enable profit making state-run firms to acquire assets oversees.

• The new policy also seeks to enhance the power of Maharatna and Navartna companies and provide greater autonomy for acquiring raw material assets abroad.

The government will also consider setting up a dedicated Sovereign Wealth Fund to acquire assets oversees. ^{A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments.} The policy for acquisition of raw material assets abroad by public sector enterprises is expected to significantly enhance the capabilities of such entities to acquire such assets and protect the country’s long term economic interests. The benefits are:

• Firms will be able to acquire assets and raw material access abroad
• There is an increase the investment limit for Navratna firms to Rs 3,000 crore from Rs 1,000 crore for buying any overseas assets.
• If the company wants to buy something beyond this limite, Government approval would be needed.

Month: Current Affairs - December, 2011