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A bird's eye view

A bird's eye view

M&A deals in the country are in for a dose of regulation. If the Ministry of Corporate Affairs has its way, global M&A deals involving assets exceeding Rs 500 crore and a turnover in excess of Rs 1,500 crore in India, will require the approval of the Competition Commission of India (CCI).

Is M&A regulation going global? 
 
M&A deals in the country are in for a dose of regulation. If the Ministry of Corporate Affairs has its way, global M&A deals involving assets exceeding Rs 500 crore and a turnover in excess of Rs 1,500 crore in India, will require the approval of the Competition Commission of India (CCI).

 
CCI: Will it make a difference in his life? 
Says Vinod Dhall, a member of CCI: "The present regime is very liberal. There are high threshold limits and even when there is a domestic nexus, the notification to CCI is voluntary. Globally, in 90 per cent of the countries, it is mandatory." One of the intentions behind this move is to prevent any negative fallout, of a merger outside the country, on competition in India. The Corporate Affairs Ministry is planning to introduce this stipulation in the Competition Amendment Bill which is likely to be tabled in Parliament in its next session. For those dissatisfied with CCI's order, there will be room for appeal. The Bill seeks to put in place an appellate tribunal that will look into such issues.

CCI has led a rather passive existence since its inception in 2003, largely due to a petition that challenged the appointment of a bureaucrat to head it. Hopefully, this time around, if the proposed legislation passes muster in Parliament, CCI will be able to flex its muscles.

Wedging the FDI door open? 
 

  • Press Note 1, (2005) to be reviewed; to improve the business environment for foreign firms

  • Clearer definition of indirect foreign holding where sectoral cap exists

  • FDI in organised retail to be reviewed

  • More sectors could be moved to automatic FDI route 

FDI norms may loosen up

The government plans to liberalise the FDI policy, which is up for review in the next one month. What's on the table? A proposal to do away with a regulation that lets Indian companies hold their joint venture foreign companies to ransom when the latter decides to go it alone. On this matter, the Finance Ministry is convinced that Press Note 1, (2005), which governs this issue, must cease to exist. The Commerce Ministry, however, is not blinking.

Also, the FDI limit in single brand retailing (currently at 51 per cent) may be raised. The issue of indirect equity in sectors where the limit is below 100 per cent (like telecom) will also be visited, officials say.

Bail out for sugar barons

Having faced the brunt of declining prices, owing to oversupply of sugar in the market both domestically as well as globally, sugar companies are in financial doldrums.

However, unlike in other sectors where the industry has to fend for itself in the marketplace, the sugar barons can expect some relief from the government, as their survival is key to the prosperity of sugarcane farmers, a vote base that cannot be ignored by the political class.

Hence, the Centre is considering a slew of sops, including a central excise waiver for three years and a debt restructuring package which will be formulated by the Finance Ministry over the next three months.

If the Cabinet approves the package, it will be the second round of intervention by the government in the sugar business over the last few months. In March, it decided to create a two-million-tonne buffer. Evidently, sugar appears to be a well-hedged business.

(With Aman Malik and Kapil Bajaj)

Published on: Sep 03, 2007, 5:18 AM IST
Posted by: AtMigration, Sep 03, 2007, 5:18 AM IST