Discover ItDiscover ItAn excellent blog about Indian Current Affairs as a subject of study for those appearing for competitive examinations in India like the Civil Services Exams. The content is like notes prepared from daily newspapers and is updated on daily basis. 
Articles
Satyam fiasco - Received mail
2009-01-09 07:42:00 Hi friends, I am reproducing below a mail received by me from one of our readers on the Satyam fiasco. Some of you may find it interesting.----------------------------- ----Dear Sir,I am here with sending Q&A on satyam pull off, which appeared on reuters news. Thought might be some useful for posting on the blog. ThanksReuters - The government vowed to strengthen laws to prevent corporate fraud after Satyam Computer, the country's fourth-largest software company, shocked investors by revealing profits had been falsely inflated for years.Chairman Ramalinga Raju resigned on Wednesday after revealing India's biggest corporate scandal in memory, sending the company's shares plunging nearly 80 percent.The following is an overview of how the fraud escaped detection for so long and what compelled a soft-spoken man born into a family of farmers to risk all.Q: How did Satyam escape detection?A: On the face of it, New York-listed Satyam did everything by the rulebook, with an internati... More About: Mail
Should foreign law firms be allowed to operate in India?
2008-12-31 04:28:00 In a very well reasoned article, Som Mandal, the Managing Partner of a leading law firm in India , FoxMandal Little gives us three solid reasons why we should allow foreign firms and also allays our fears on two counts. Take a look:One, as more and more Indian companies begin to do business outside India, foreign legal advice is increasingly needed. Hence the presence of foreign law firm in India is going to be of help to India Inc's increasing appetite for investing in foreign shores.Second, it gives greater opportunity, better pay to our young lawyers and also exposes them to international best practices.Third, those service sectors that have fully liberalised have experienced much higher growth than those that are still closed. Biotechnology, IT and telecom, for instance, have achieved growth rates of between 30% and 37% in 2005-6. Legal, accounting and railways are all closed and achieved only single digit growth in the same period. Then coming to some fears:On the fear that... More About: Foreign
Query on the offset policy answered
2008-12-06 17:22:00 Ashish informed me that he could not get the meaning of "mandatory offsets would mean that its armed forces would get less from the nation?s defence expenditure" in the article on defence offset policy.Here is my take on the subject:To understand the full meaning of it, let us look at what is meant by offset; once again. An offset is a compensation that the buyer is seeking from the seller; isn't it? And what is the form in which this compensation is being expected? In the form of co-production, licensed production, technology transfer, outsourcing of components, etc., related to the defence item imported or investment, collaboration and similar compensatory arrangements in civilian areas.Is the seller going to give it to the buyer for free? The obvious answer as we all can guess is a big NO. Then for every Rs. 100 that you spend on procuring defence equipment, how much worth of actual equipment are you getting? Isn't the answer clear that it is Rs. 70? (Because the offset ... More About: Policy , Offset
Query on the offset policy answered
2008-12-06 17:22:00 Ashish informed me that he could not get the meaning of "mandatory offsets would mean that its armed forces would get less from the nation?s defence expenditure" in the article on defence offset policy.Here is my take on the subject:To understand the full meaning of it, let us look at what is meant by offset; once again. An offset is a compensation that the buyer is seeking from the seller; isn't it? And what is the form in which this compensation is being expected? In the form of co-production, licensed production, technology transfer, outsourcing of components, etc., related to the defence item imported or investment, collaboration and similar compensatory arrangements in civilian areas.Is the seller going to give it to the buyer for free? The obvious answer as we all can guess is a big NO. Then for every Rs. 100 that you spend on procuring defence equipment, how much worth of actual equipment are you getting? Isn't the answer clear that it is Rs. 70? (Because the offset ... More About: Policy , Offset , Query
What should we do? Now that Mumbai carnage has ended.
2008-11-30 10:24:00 I am writing this response to the lively discussion that is going on in our shoutbox about terrorism. My response to comments from cvrk and others...What we see in most of the Middle East and North Africa, no doubt is terrorism, but of a civil war variety, barring what goes on in Palestine/Israel, which is pure civil war cum terrorism going hand in hand. The issue is not whether or not there is terrorism in those places. The issue on the table is: Is the rule of law prevailing there, to be dismissed as regressive?When heinous crimes are committed, would it not be time to take a re-look at our humanitarian outlook of the rule of law? I think a time has come for the entire humanity to reconsider the definition of rule of law. Remember the fate meted out to William Wallace in the hands of the law of Longshanks? So heroically played out by Mel Gibson in Braveheart? Or remember Judge Dredd played by Sylvester Stallone? I wonder whether or not it is time we have such judges? Tell... More About: Mumbai , Carnage
What should we do? Now that Mumbai carnage has ended.
2008-11-30 10:24:00 I am writing this response to the lively discussion that is going on in our shoutbox about terrorism. My response to comments from cvrk and others...What we see in most of the Middle East and North Africa, no doubt is terrorism, but of a civil war variety, barring what goes on in Palestine/Israel, which is pure civil war cum terrorism going hand in hand. The issue is not whether or not there is terrorism in those places. The issue on the table is: Is the rule of law prevailing there, to be dismissed as regressive?When heinous crimes are committed, would it not be time to take a re-look at our humanitarian outlook of the rule of law? I think a time has come for the entire humanity to reconsider the definition of rule of law. Remember the fate meted out to William Wallace in the hands of the law of Longshanks? So heroically played out by Mel Gibson in Braveheart? Or remember Judge Dredd played by Sylvester Stallone? I wonder whether or not it is time we have such judges? Tell... More About: Mumbai
Stages of economic development
2008-11-30 08:59:00 This piece is written in response to a shout-box query on factor driven economy.The earliest stage in economic development is recognized as a factor driven economy. In this the economic growth is recognized as primarily the result of mobilization of primary factors of production viz., land, primary commodities and unskilled labour. Contrast this with economies which are investment-driven. In the latter, economic growth is largely seen as the result of harnessing of global technologies to local production. This stage transforms itself into innovation-driven economy when there occurs an improvement in technologies that support economic growth. Largely this is how economic development / growth is explained.Have more time or want more detail? Follow this piece. This is a ten page piece from the who's who of economics. Michael Porter, Jeffrey Sachs & John Mcarthur. Once in a while you should read such pieces. They will do you a lot of good and enhance the 'extensive' rea... More About: Development , Economic , Economic Development
Stages of economic development
2008-11-30 08:59:00 This piece is written in response to a shout-box query on factor driven economy.The earliest stage in economic development is recognized as a factor driven economy. In this the economic growth is recognized as primarily the result of mobilization of primary factors of production viz., land, primary commodities and unskilled labour. Contrast this with economies which are investment-driven. In the latter, economic growth is largely seen as the result of harnessing of global technologies to local production. This stage transforms itself into innovation-driven economy when there occurs an improvement in technologies that support economic growth. Largely this is how economic development / growth is explained.Have more time or want more detail? Follow this piece. This is a ten page piece from the who's who of economics. Michael Porter, Jeffrey Sachs & John Mcarthur. Once in a while you should read such pieces. They will do you a lot of good and enhance the 'extensive' rea... More About: Development , Economic , Economic Development
Infrastructure creation and job creation; a debate
2008-11-27 16:42:00 I try to answer below questions from two of our readers in the shout-box. Their questions are excerpted below for ready reference:27 Nov 08, 15:19Ashish: Pardon me Sir, but how does public expenditure in infrastructure will generate demand, apart from creating some job opportunities. What r the other constituents of demand generation, apart from jobs.Mayank: He was discussing about the negative side effects of job creation in government sector and preferred government's financing private sector infrastructure creation for job creation.My response:It is more about creating jobs at the lowest level. The casual labourer, the low wage earner and small time employee. If about Rs. 50,000 crore is being spent on creating infrastructure, a substantial portion of it will go towards creation of such jobs directly. Then there is the indirect job creation because of the material being used, the operation of the infrastructure etc. This will lead to further creation of jobs and assets. T... More About: Infrastructure , Debate , Creation
Infrastructure creation and job creation; a debate
2008-11-27 16:42:00 I try to answer below questions from two of our readers in the shout-box. Their questions are excerpted below for ready reference:27 Nov 08, 15:19Ashish: Pardon me Sir, but how does public expenditure in infrastructure will generate demand, apart from creating some job opportunities. What r the other constituents of demand generation, apart from jobs.Mayank: He was discussing about the negative side effects of job creation in government sector and preferred government's financing private sector infrastructure creation for job creation.My response:It is more about creating jobs at the lowest level. The casual labourer, the low wage earner and small time employee. If about Rs. 50,000 crore is being spent on creating infrastructure, a substantial portion of it will go towards creation of such jobs directly. Then there is the indirect job creation because of the material being used, the operation of the infrastructure etc. This will lead to further creation of jobs and assets. T... More About: Infrastructure , Debate , Creation
Why is the India story intact?
2008-11-24 07:17:00 Some fresh thoughts and points to ponder from Samir Arora, the CEO of Helios Capital Management, Singapore.Till the other day we were listening to expert opinion which said the farm loan waiver was bad and the non-opening up of our banking and insurance sector to FDI was wanting and is not in consonance with the way the developments in the developed world are progressing. And then suddenly we find that our huge forex reserves are depleting at a rate which is worrisome. How should we read all this? It is an interesting and must read. Some excerpts worth our attention:A few months ago the government of India wrote off $16 billion of loans, made over the past decade or so, to more than 40 million farmers (at the rate of $400 per head) and was criticised by the whole world that economics was being sacrificed for the sake of politics. Now everyone (in most cases the employers of these "bearish on India" analysts) is asking for similar (and larger) and much more morally indefensible ba... More About: Story , Intact
Why is the India story intact?
2008-11-24 07:17:00 Some fresh thoughts and points to ponder from Samir Arora, the CEO of Helios Capital Management, Singapore.Till the other day we were listening to expert opinion which said the farm loan waiver was bad and the non-opening up of our banking and insurance sector to FDI was wanting and is not in consonance with the way the developments in the developed world are progressing. And then suddenly we find that our huge forex reserves are depleting at a rate which is worrisome. How should we read all this? It is an interesting and must read. Some excerpts worth our attention:A few months ago the government of India wrote off $16 billion of loans, made over the past decade or so, to more than 40 million farmers (at the rate of $400 per head) and was criticised by the whole world that economics was being sacrificed for the sake of politics. Now everyone (in most cases the employers of these "bearish on India" analysts) is asking for similar (and larger) and much more morally indefensible ba... More About: Story , Intact
Why is America to be blamed for the present financial crisis?
2008-11-15 03:15:00 Some excerpts from a recently written piece by Nobel laureate, Joseph StiglitzWe all know that the current global financial crisis has had its roots in the America n mortgage market. That was just the beginning. There were quite a few other reasons / contributory factors that led to the present sorry state of affairs -- all because of America. If you are asked to list them out, can you do a better job than this one from Joseph Stiglitz?America exported its toxic mortgages around the world, in the form of asset-backed securities. America exported its deregulatory free market philosophy, which even its high priest, Alan Greenspan, now admits was a mistake. America exported its culture of corporate irresponsibility ? non-transparent stock options, which encourage the bad accounting that has played a role in this debacle, just as it did in the Enron and Worldcom scandals a few years ago. And, finally, America has exported its economic downturn.In spite of all this the world still love... More About: Financial , Present , Crisis
Why is America to be blamed for the present financial crisis?
2008-11-15 03:15:00 Some excerpts from a recently written piece by Nobel laureate, Joseph StiglitzWe all know that the current global financial crisis has had its roots in the America n mortgage market. That was just the beginning. There were quite a few other reasons / contributory factors that led to the present sorry state of affairs -- all because of America. If you are asked to list them out, can you do a better job than this one from Joseph Stiglitz?America exported its toxic mortgages around the world, in the form of asset-backed securities. America exported its deregulatory free market philosophy, which even its high priest, Alan Greenspan, now admits was a mistake. America exported its culture of corporate irresponsibility ? non-transparent stock options, which encourage the bad accounting that has played a role in this debacle, just as it did in the Enron and Worldcom scandals a few years ago. And, finally, America has exported its economic downturn.In spite of all this the world still love... More About: Financial , Present , Crisis
Interest rates and reserve requirements
2008-11-09 04:24:00 I was asked the following question yesterday in the Indian Current Affairs shout-box."When Federal bank of USA reduces interest rates, what rate exactly is that with context to RBI's? Is it in relation to CRR?"The simple answer to the question is NO. The complicated answer is:US Fed announces two different rates: the discount rate and the federal funds rate. The discount rate is the interest rate charged by the US Fed on the loans it gives to commercial banks. The federal funds rate is the interest rate at which banks lend to each other overnight. The US Fed only prescribes a target federal funds rate.In contrast, the RBI announces only the bank rate. This is the same as the US Fed discount rate. There is no equivalent for the federal funds rate from the RBI. Instead, it announces its repo and reverse repo rates. Market rates (i.e., lendings and borrowings among the market participants) are determined based on these repo and reverse repo rates. Repo rate is the rate the RB... More About: Interest Rates , Interest , Rates , Reserve
Interest rates and reserve requirements
2008-11-09 04:24:00 I was asked the following question yesterday in the Indian Current Affairs shout-box."When Federal bank of USA reduces interest rates, what rate exactly is that with context to RBI's? Is it in relation to CRR?"The simple answer to the question is NO. The complicated answer is:US Fed announces two different rates: the discount rate and the federal funds rate. The discount rate is the interest rate charged by the US Fed on the loans it gives to commercial banks. The federal funds rate is the interest rate at which banks lend to each other overnight. The US Fed only prescribes a target federal funds rate.In contrast, the RBI announces only the bank rate. This is the same as the US Fed discount rate. There is no equivalent for the federal funds rate from the RBI. Instead, it announces its repo and reverse repo rates. Market rates (i.e., lendings and borrowings among the market participants) are determined based on these repo and reverse repo rates. Repo rate is the rate the RB... More About: Interest Rates , Interest , Rates
Education as fundamental right
2008-11-01 07:19:00 I am prompted to write this post because of a question in the shout-box on Indian Current Affairs. The question was to the following effect:"When the Constitution of India already has the 86th amendment, guaranteeing right to education as a fundamental right, where is the necessity for the government to introduce yet another bill in the Parliament?"It is a good question. To understand the answer, take a look at the 86th amendment first. What does Article 21A now read as? It says that the State shall provide free and compulsory education to all children in the age group of 6 to 14 years, in such manner as the State may, by law, determine. This highlighted portion is the key.The Constitution amendment has just given an enabling provision. It is for the State to come out with an appropriate law that prescribes the method and manner in which this fundamental right is to be secured for the citizens. More About: Education , Fundamental
Education as fundamental right
2008-11-01 07:19:00 I am prompted to write this post because of a question in the shout-box on Indian Current Affairs. The question was to the following effect:"When the Constitution of India already has the 86th amendment, guaranteeing right to education as a fundamental right, where is the necessity for the government to introduce yet another bill in the Parliament?"It is a good question. To understand the answer, take a look at the 86th amendment first. What does Article 21A now read as? It says that the State shall provide free and compulsory education to all children in the age group of 6 to 14 years, in such manner as the State may, by law, determine. This highlighted portion is the key.The Constitution amendment has just given an enabling provision. It is for the State to come out with an appropriate law that prescribes the method and manner in which this fundamental right is to be secured for the citizens. More About: Education , Fundamental
What is Market Stabilization Scheme?
2008-10-31 06:52:00 To understand this we need to take a look at the year 2004 when FIIs (Foreign Institutional Investors) started bringing in dollars to buy Indian stocks. This has resulted in an oversupply of US dollars in the Indian market. RBI bought dollars, thus creating an equivalent amount of rupees. This dollar buying raised forex reserves from $100 bn in January 2004 to about $300 bn by 2007-08. Thus there was a liquidity overhang that was caused by the inflow of dollars. This has forced the government to mop up the rupees by creating the MSS bonds.MSS was introduced by way of an agreement between the government and the Reserve Bank ofIndia (RBI) in early 2004. Under the scheme, RBI issues bonds on behalf of the government and the money raised under bonds is impounded in a separate account with RBI. The money does not go into the government account. As on October 22, 2008 the balance under MSS stood at Rs 1,71,317 crore. More About: Market
What is Market Stabilization Scheme?
2008-10-31 06:52:00 To understand this we need to take a look at the year 2004 when FIIs (Foreign Institutional Investors) started bringing in dollars to buy Indian stocks. This has resulted in an oversupply of US dollars in the Indian market. RBI bought dollars, thus creating an equivalent amount of rupees. This dollar buying raised forex reserves from $100 bn in January 2004 to about $300 bn by 2007-08. Thus there was a liquidity overhang that was caused by the inflow of dollars. This has forced the government to mop up the rupees by creating the MSS bonds.MSS was introduced by way of an agreement between the government and the Reserve Bank ofIndia (RBI) in early 2004. Under the scheme, RBI issues bonds on behalf of the government and the money raised under bonds is impounded in a separate account with RBI. The money does not go into the government account. As on October 22, 2008 the balance under MSS stood at Rs 1,71,317 crore. More About: Market
On subprime loans and securitization
2008-10-31 06:51:00 This post follows the request from two of our readers in the shout-box on Indian Current Affairs.Though we have covered it quite a few times in our blogs, I take this opportunity again for the benefit of newcomers to our blogs.The term 'subprime loan' refers to loans advanced to subprime borrowers. Subprime refers to the borrower's classification. A borrower is classified as subprime when her creditworthiness is less than perfect. That is her ability to repay the loans given her is fraught with high risk. Therefore, the rate of interest on loans given to her attract higher rates and usually prepayment penalties.Securitization of these subprime loans means pooling and repackaging these loans into securities that are sold to investors who are willing to buy them. Because the lender has already invested his money in giving loans to subprime borrowers, by securitizing them, what he does is raise more money on the strength of the asset (subprime loans given by him) from willing i... More About: Loans
On subprime loans and securitization
2008-10-31 06:51:00 This post follows the request from two of our readers in the shout-box on Indian Current Affairs.Though we have covered it quite a few times in our blogs, I take this opportunity again for the benefit of newcomers to our blogs.The term 'subprime loan' refers to loans advanced to subprime borrowers. Subprime refers to the borrower's classification. A borrower is classified as subprime when her creditworthiness is less than perfect. That is her ability to repay the loans given her is fraught with high risk. Therefore, the rate of interest on loans given to her attract higher rates and usually prepayment penalties.Securitization of these subprime loans means pooling and repackaging these loans into securities that are sold to investors who are willing to buy them. Because the lender has already invested his money in giving loans to subprime borrowers, by securitizing them, what he does is raise more money on the strength of the asset (subprime loans given by him) from willing i... More About: Loans
Global financial crisis. Why did it hit India? What should it do?
2008-10-20 05:54:00 Why did the current global financial crisis affect India ? What could India do? India did not lend in a great way to subprime borrowers within its borders. Nor did its banks and financial institutions invest in the subprime related assets (barring the ICICI Bank to a small extant; but which by no means can really pull it down) in the US. In spite of this, how come we are witnessing a downturn in our financial fortunes? Why are our markets collapsing? What could be the possible reasons? How can this be explained? In a very well written article Arthur Okun, Professor of Yale University reels out the reasons and the possible course of action that India should take. Worth a read. Do so here. Some excerpts which I found are worth our filing in our library: Actually, the similarity of market behaviour across countries is evidence that something else, deeper than the causes that are usually given for the subprime crisis in the US, is at work. The most fundament... More About: Financial , Global , Crisis
Global financial crisis. Why did it hit India? What should it do?
2008-10-20 05:54:00 Why did the current global financial crisis affect India ? What could India do? India did not lend in a great way to subprime borrowers within its borders. Nor did its banks and financial institutions invest in the subprime related assets (barring the ICICI Bank to a small extant; but which by no means can really pull it down) in the US. In spite of this, how come we are witnessing a downturn in our financial fortunes? Why are our markets collapsing? What could be the possible reasons? How can this be explained? In a very well written article Arthur Okun, Professor of Yale University reels out the reasons and the possible course of action that India should take. Worth a read. Do so here. Some excerpts which I found are worth our filing in our library: Actually, the similarity of market behaviour across countries is evidence that something else, deeper than the causes that are usually given for the subprime crisis in the US, is at work. The most fundament... More About: Financial , Global , Crisis
Reform of the defence offset policy
2008-07-31 05:19:00 I am one of those die hard fans of companies like PWC (Price Waterhouse Coopers). Though I do criticise them at times; by and large I am a great fan of many an international consultant. They really bring lot of value add to the discussions on the table. Look at today?s article by Dhiraj Mathur on India?s defence offset policy ? a subject which we are interested in and have covered earlier also in our blogs. He discusses with cogent reasons as to why the FDI cap in defence production (currently at 26%) makes no sense. While I recommend reading the full article at least once (do so here), let us look at some excerpts: The government is scheduled to announce a new (and delayed) defence procurement policy (DPP 2008) in the next couple of days. From Indian industry?s perspective, the defence offset policy is a key element of the DPP. The existing version (DPP 2006) stipulates that 30% (or more) of the value of a defence purchase from a foreign vendor for a contract exceedi... More About: Reform , Policy , Defence , Offset
Reform of the defence offset policy
2008-07-31 05:19:00 I am one of those die hard fans of companies like PWC (Price Waterhouse Coopers). Though I do criticise them at times; by and large I am a great fan of many an international consultant. They really bring lot of value add to the discussions on the table. Look at today?s article by Dhiraj Mathur on India?s defence offset policy ? a subject which we are interested in and have covered earlier also in our blogs. He discusses with cogent reasons as to why the FDI cap in defence production (currently at 26%) makes no sense. While I recommend reading the full article at least once (do so here), let us look at some excerpts: The government is scheduled to announce a new (and delayed) defence procurement policy (DPP 2008) in the next couple of days. From Indian industry?s perspective, the defence offset policy is a key element of the DPP. The existing version (DPP 2006) stipulates that 30% (or more) of the value of a defence purchase from a foreign vendor for a contract exceedi... More About: Reform , Policy , Defence , Offset
Concerns about WTO draft agreement on services
2008-07-19 07:31:00 The release of the draft text had taken many countries by surprise as the delegations were reportedly not informed nor were all members consulted, and some even accuse the Chair of lack of transparency. Some member countries such as Bolivia, Cuba and Venezuela, which have been opposing a services text on the ground that it is inappropriate and unnecessary since the 2005 Hong Kong ministerial had already concluded the modalities, have expressed surprise. But the new draft had been agreed on July 15 to by ambassadors of the Enchilada Group (India, China, Pakistan, Philippines, Japan, the EU, the US, Canada, Brazil, South Africa, Indonesia, Malaysia, Thailand, and some others). Paragraph 4 of the draft text has become the most contentious. Developed countries demand a comparable level of ambition in services as in agriculture and Nama. This means that developing countries should agree to bind their current actual level of liberalisation as well as offer more market access and ... More About: Services , Draft , Agreement
Concerns about WTO draft agreement on services
2008-07-19 07:31:00 The release of the draft text had taken many countries by surprise as the delegations were reportedly not informed nor were all members consulted, and some even accuse the Chair of lack of transparency. Some member countries such as Bolivia, Cuba and Venezuela, which have been opposing a services text on the ground that it is inappropriate and unnecessary since the 2005 Hong Kong ministerial had already concluded the modalities, have expressed surprise. But the new draft had been agreed on July 15 to by ambassadors of the Enchilada Group (India, China, Pakistan, Philippines, Japan, the EU, the US, Canada, Brazil, South Africa, Indonesia, Malaysia, Thailand, and some others). Paragraph 4 of the draft text has become the most contentious. Developed countries demand a comparable level of ambition in services as in agriculture and Nama. This means that developing countries should agree to bind their current actual level of liberalisation as well as offer more market access and ... More About: Services , Draft , Agreement , Concerns
Press Note 1 (PN 1) on the way out?
2008-07-18 05:44:00 THE government is planning to scrap Press Note 1, allowing foreign companies to invest in sectors where they already have a joint venture without obtaining a no objection certificate (NOC) from their current partner. The government appears to have veered round to the view that PN 1 is making MNCs bypass India to invest in China.PN1 shields local firms by mandating that foreign allies must get their nod before investing in the same sector. It thus enables local companies to get the technology and financial resources to expand operations.Scrapping PN-1 would allow foreign firms to invest without getting NOC from their JV partners. Getting NOC is a dampener for MNCs; their plans are often jettisoned on frivolous grounds.Press Note 1 was formulated in 2005 to dilute an earlier government provision called Press Note 18, which stipulated that the foreign company had to furnish a NOC from an Indian partner if it planned to set up a wholly-owned subsidiary in an allied field. Press Note 1...
Press Note 1 (PN 1) on the way out?
More articles from this author:2008-07-18 05:44:00 THE government is planning to scrap Press Note 1, allowing foreign companies to invest in sectors where they already have a joint venture without obtaining a no objection certificate (NOC) from their current partner. The government appears to have veered round to the view that PN 1 is making MNCs bypass India to invest in China.PN1 shields local firms by mandating that foreign allies must get their nod before investing in the same sector. It thus enables local companies to get the technology and financial resources to expand operations.Scrapping PN-1 would allow foreign firms to invest without getting NOC from their JV partners. Getting NOC is a dampener for MNCs; their plans are often jettisoned on frivolous grounds.Press Note 1 was formulated in 2005 to dilute an earlier government provision called Press Note 18, which stipulated that the foreign company had to furnish a NOC from an Indian partner if it planned to set up a wholly-owned subsidiary in an allied field. Press Note 1... 1, 2, 3, 4, 5 |
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