Sunday, 29 January 2012
Tuesday, 17 January 2012
Foreign Direct Investment (FDI) means investment by non-resident entity/person resident outside India in the capital of the Indian company. It is the policy of the Government of India (GOI) to attract and promote productive FDI in activities which significantly contribute to industrialization and socio-economic development. FDI supplements domestic capital and technology. Presently, 51% FDI was permitted in Single Brand Retail which was opened to Foreign Players almost 6 years ago. GOI has allowed 100% FDI in this segment of retailing paving the way for International Players vide notification dated 10-01-2012. The highlights of the notification of GOI is as under :
(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.
(2) FDI in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.
(3) Application seeking permission of the Government for FDI in retail trade of 'Single Brand' products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a 'Single Brand'. Any addition to the product/ product categories to be sold under 'Single Brand' would require a fresh approval of the Government.
(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.
Source : Press Note No.1 (2012 Series) of GoI , Ministry of Commerce & Industry,
Department of Industrial Policy & Promotion, (FC-I Section)
Shailendra Kumar Singh
Posted by Udyog Bandhu – A Helping Hand For Entrepreneurs at 14:17
Wednesday, 11 January 2012
In the year the Department of Economic Affairs (DEA). Ministry of Finance, GoI had issued detailed guidelines for selection of consultants, developers for PPP projects and private Partners for disinvestment, in order to more transparency in the bidding process, these guidelines, in the year 2007 were adopted by GoUP with certain modifications. It was further clarified by DEA that financial support to PPP projects in infrastructure projects shall be granted under Viability Gap Funding (VGF) scheme subject to being in conformity to its guidelines.
Now DEA has issued a PPP (Preparation, Procurement and Management) Draft Rule 2011 for discussions to give more impetus on transparency and conformity defining duties and responsibilities at each stage of implementation of projects. These exhaustive rules on bidding process, monitoring of projects during and after implementation and on audit procedures, are proposed to be applicable on all projects undertaken by Government of India and projects of State Government or of its authorities or Corporations etc barring projects of few Ministries.
Some of the very important highlights of draft PPP rules are as under :
1. It involves qualitative and quantitative assessments to ascertain the Value for Money.
2. The Contracting Authority has been made responsible for ensuring the interests of land owners under the extant of laws.
3. In very complex PPP projects, a new stage known as Request for Technical Proposal between RFQ and RFP, and Competitive Dialogue system, have been incorporated for assessment technical qualification of developer and to establish project objectives.
4. A provision of appointment of an Independent Monitor is made to ensure the transparency in bidding process. However, it may not be practically possible as in some states exiting Bid Evaluation and Consultant Evaluation Committee are being headed by fairly senior government officers of the state.
5. It is proposed that bid security amount shall not be more than one percent of estimated project value.
6. One applicant can submit only one application either individually or as a member of consortium
7. Negotiations with the Bidder are strictly prohibited except in case of sole bid to get better terms.
8. Suitable provision for exit strategy for continued service delivery projects, are required to be made in concession agreement.
9. A data bank to deal with dissemination of information following in-principle approval, signing of the Concession Agreement, after Financial Close, during Construction and Operations Phase and following Termination of the Concession Agreement shall be created.
10. An Approach to audit has been formulated and provision of constitution of Contract Management Team (CMT) and Empowered Review Cell (ERC) to deal with the activities related to Post Award Project and Contract Management, has been made with clearly defining their duties.
11. A code of conduct for officers or employees of Contracting Authority shall be documented and implemented.
It is evident from the above, that implemented of these exhaustive rules would give new dimension to the PPP projects.
Posted by Udyog Bandhu – A Helping Hand For Entrepreneurs at 15:17