Jurisdiction - India
News
India – News Monthly Roundup.

5 December, 2012

 

Legal News & Analysis – Asia Pacific – India

 

Corporate and Commercial  

  

• Government has modified the ECB policy to include Small Industries Development Bank of India as an eligible borrower for availing of ECB for on-lending to the MSME sector, subject to certain conditions. 
 
• Certain conditions in the ECB Policy for 2G spectrum auction have been relaxed, inter alia that, successful bidders in the 2G auction will be eligible to refinance their rupee loans availed of from domestic lenders for making the upfront payment with a long-term ECB under the ‘automatic route’, subject to certain conditions. Other changes include relaxation in ECB-liability ratio, percentage of shareholding of the lender in the borrower entity and in bridge financing. 
Accordingly, the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 have also been amended.
 
• The government is likely to include sectors such as education and health within the ambit of ECBs. 
 
• 100% FDI is permitted for cold storage facilities and the government is implementing certain schemes to encourage the same. 
 
• RBI issued clarification on reporting norms to income tax authorities by liaison office/branch offices in India by foreign entities, wherein Annual Activity Certificate submitted to DGIT (International Taxation) must be accompanied with audited financial statements including receipt and payment account. Further, on renewal of permission by liaison offices, a copy of such renewal is to be submitted to DGIT. 
  
• RBI revised guidelines for the rehabilitation of Sick Micro and Small Enterprises, amending the definition of ‘sickness’; procedure for declaring a unit as unviable etc. 
 
• Amendment to SEBI (Mutual Funds) Regulations, 1996 made, that relaxes mutual fund exposure limit for housing finance companies and it also provides clarity on service tax on brokerage and transaction costs. 
 
Competition Law and Policy
 
• Competition Commission of India has been given the power to vet brownfield pharmaceutical merger and acquisition deals. 
 
• Mergers in the banking sector will require clearance from both the RBI and the CCI, with RBI examining prudential aspects and CCI examining competition aspects of the deal.
 
Banking and Finance
 
• RBI issued guidelines on liquidity management by banks, inter alia, asking them to fix lower limits for their inter-bank liability. 
 
• Master Circular on Branch Licensing modified, permitting regional rural banks to undertake state government business as sub-agents of the sponsor bank with prior approval from the concerned state government and RBI. 
 
Taxation
 
• The government, in all likelihood will not abolish short term capital gains on listed securities and will also not raise the securities transaction tax (STT). 
 
Telecom
 
• The Unified License regime proposed by the DoT to be out by end of December, wherein operators can provide any type of telecom service in the whole of India under one license. 
  

This article was supplied by Clasis Law

 

For further information, please contact:

 

Vineet Aneja, Partner, Clasis Law
 
Sakate KhaitanPartner, Clasis Law

Leave a Reply

You must be logged in to post a comment.