As part of the latest relaxation in capital account transactions
announced by Finance Minister Jaswant Singh in Budget
2003-04, corporates can now make such investment even
if it is not in the area of the core activity they are
engaged in, Reserve Bank of India (RBI) has said.
will also be permitted to invest in such ventures up to
100 per cent of their net worth from only 50 per cent
earlier. Till now, Indian corporates were permitted to
invest under the automatic route in an overseas joint
venture, or a wholly owned subsidiary engaged in the same
core activity, which constituted at least 50 per cent
of its average turnover.
of external commercial borrowings (ECBs) under the automatic
route has also been permitted without any limit by removing
the current ceiling of $100 million. Earlier, any prepayment
out of market purchases beyond $100 million required the
prior approval of the RBI.
RBI has said this facility will be available until further
notice, subject to review.