Latest news with #ShubhamBatra
Yahoo
26-05-2025
- Business
- Yahoo
India's central bank seeks approval for overseas rupee lending to neighbours, sources say
By Shubham Batra NEW DELHI (Reuters) -India's central bank is taking another step to internationalise the rupee, seeking approval to allow domestic banks to lend the currency to overseas borrowers for the first time, two sources said. The Reserve Bank of India (RBI) has asked the federal government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers to enhance the use and acceptability of the local currency in trade. The proposal, which was sent to the finance ministry last month, suggests lending in rupees to non-residents can begin in neighbouring countries such as Bangladesh, Bhutan, Nepal and Sri Lanka, the sources said. If successful, such rupee-denominated lending could be extended to cross-border transactions globally, one of the sources said. According to Ministry of Commerce data, 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion. Currently, foreign branches of Indian banks are restricted to providing loans in foreign currencies and such loans are extended mainly to Indian firms. The sources declined to be identified as the discussions are confidential. Emails sent to the Finance Ministry and the RBI requesting comment did not receive a response. The central bank has been taking steps to increase the use of the local currency in global trade and investment. As part of the strategy, RBI recently permitted the opening of rupee accounts for non-residents outside India. Earlier this month, Reuters reported the RBI has sought government's approval to remove the cap on foreign banks with so-called vostro accounts buying short-term sovereign debt, to boost rupee-denominated investment and trade. The RBI will open the foreign loans in rupees only for the purpose of trade, the sources said. Currently, rupee liquidity is provided in other countries only through a limited number of government-backed credit lines or bilateral currency swap arrangements. "The objective is to reduce dependence on such arrangements and instead allow commercial banks to provide rupee liquidity on market terms," the first source said, citing a communication from the central bank in April. The second source said enabling easier access to rupee-denominated loans will help facilitate trade settlements in rupees and reduce exposure to foreign exchange volatility. The government has received several requests from financial institutions to support strategic projects through rupee-denominated financing, the second source said. India's experience with local currency pacts with the United Arab Emirates, Indonesia, and the Maldives, as well as Special Rupee Vostro Accounts used for trade with Sri Lanka and Bangladesh, has underscored the need to deepen the availability of rupee liquidity, the source said. If implemented, the policy would mark a major step toward integrating the rupee into the global financial system, positioning it as a more widely accepted currency for international trade and investment, the second source added.
Yahoo
26-05-2025
- Business
- Yahoo
India's central bank seeks approval for overseas rupee lending to neighbours, sources say
By Shubham Batra NEW DELHI (Reuters) -India's central bank is taking another step to internationalise the rupee, seeking approval to allow domestic banks to lend the currency to overseas borrowers for the first time, two sources said. The Reserve Bank of India (RBI) has asked the federal government to allow domestic banks and their foreign branches to lend Indian rupees to overseas borrowers to enhance the use and acceptability of the local currency in trade. The proposal, which was sent to the finance ministry last month, suggests lending in rupees to non-residents can begin in neighbouring countries such as Bangladesh, Bhutan, Nepal and Sri Lanka, the sources said. If successful, such rupee-denominated lending could be extended to cross-border transactions globally, one of the sources said. According to Ministry of Commerce data, 90% of India's exports to South Asia were to these four nations in 2024/25, amounting to nearly $25 billion. Currently, foreign branches of Indian banks are restricted to providing loans in foreign currencies and such loans are extended mainly to Indian firms. The sources declined to be identified as the discussions are confidential. Emails sent to the Finance Ministry and the RBI requesting comment did not receive a response. The central bank has been taking steps to increase the use of the local currency in global trade and investment. As part of the strategy, RBI recently permitted the opening of rupee accounts for non-residents outside India. Earlier this month, Reuters reported the RBI has sought government's approval to remove the cap on foreign banks with so-called vostro accounts buying short-term sovereign debt, to boost rupee-denominated investment and trade. The RBI will open the foreign loans in rupees only for the purpose of trade, the sources said. Currently, rupee liquidity is provided in other countries only through a limited number of government-backed credit lines or bilateral currency swap arrangements. "The objective is to reduce dependence on such arrangements and instead allow commercial banks to provide rupee liquidity on market terms," the first source said, citing a communication from the central bank in April. The second source said enabling easier access to rupee-denominated loans will help facilitate trade settlements in rupees and reduce exposure to foreign exchange volatility. The government has received several requests from financial institutions to support strategic projects through rupee-denominated financing, the second source said. India's experience with local currency pacts with the United Arab Emirates, Indonesia, and the Maldives, as well as Special Rupee Vostro Accounts used for trade with Sri Lanka and Bangladesh, has underscored the need to deepen the availability of rupee liquidity, the source said. If implemented, the policy would mark a major step toward integrating the rupee into the global financial system, positioning it as a more widely accepted currency for international trade and investment, the second source added. Sign in to access your portfolio
Yahoo
19-05-2025
- Business
- Yahoo
Exclusive-India plans stricter rules for companies with foreign ownership, sources say
By Shubham Batra and Sarita Chaganti Singh NEW DELHI (Reuters) -India is planning to tighten foreign ownership rules, two sources said, in a move that may have significant implications for businesses ranging from e-commerce to pharmaceuticals. The changes would redefine how India views foreign-owned companies, whether directly or indirectly, making them subject to foreign direct investment (FDI) regulations when it comes to share transfers or restructurings. The discussions are close to being finalised, the sources, both government officials said. They declined to be identified as the discussion was not public. The Finance Ministry and the Reserve Bank of India, which issues the final rules, did not respond to requests for comment. India is reviewing its foreign investment laws to simplify them and plug any loopholes. New Delhi plans to create a new category of "foreign-owned and controlled entities" (FOCE), which will also include Indian firms with "indirect foreign investment", the first source said. "What cannot be done directly should not be allowed indirectly either. That will now be clearly reflected in the rules," the source said. "Even a domestic restructuring or internal transfer could trigger FDI obligations for foreign-owned firms if the rule change is implemented," the source said. An FOCE will be defined as an Indian company or investment fund that is controlled by persons resident outside India. As well as covering indirect ownership, it will also make directly owned foreign firms subject to FDI rules when it comes to changes in structure or ownership. In particular, any transfer of the indirect shareholding will need to be reported and will have to comply with sectoral foreign investment caps. These transactions will also be subject to rules stating they be made at fair market value. The proposed revision in the rules aims to ensure foreign investors cannot bypass the intent of India's FDI policy, sources said. The central bank is in agreement on the matter, the second official said. Since 2020, India has required prior government approval for investments from nations sharing its land borders, including China, after clashes between the two neighbours in the remote Himalayan border. The new FOCE definition will make it harder for Chinese or other foreign investors to use indirect structures such as offshore investment funds or layered Indian entities to enter regulated sectors through the back door, the second source said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Exclusive-India plans stricter rules for companies with foreign ownership, sources say
By Shubham Batra and Sarita Chaganti Singh NEW DELHI (Reuters) -India is planning to tighten foreign ownership rules, two sources said, in a move that may have significant implications for businesses ranging from e-commerce to pharmaceuticals. The changes would redefine how India views foreign-owned companies, whether directly or indirectly, making them subject to foreign direct investment (FDI) regulations when it comes to share transfers or restructurings. The discussions are close to being finalised, the sources, both government officials said. They declined to be identified as the discussion was not public. The Finance Ministry and the Reserve Bank of India, which issues the final rules, did not respond to requests for comment. India is reviewing its foreign investment laws to simplify them and plug any loopholes. New Delhi plans to create a new category of "foreign-owned and controlled entities" (FOCE), which will also include Indian firms with "indirect foreign investment", the first source said. "What cannot be done directly should not be allowed indirectly either. That will now be clearly reflected in the rules," the source said. "Even a domestic restructuring or internal transfer could trigger FDI obligations for foreign-owned firms if the rule change is implemented," the source said. An FOCE will be defined as an Indian company or investment fund that is controlled by persons resident outside India. As well as covering indirect ownership, it will also make directly owned foreign firms subject to FDI rules when it comes to changes in structure or ownership. In particular, any transfer of the indirect shareholding will need to be reported and will have to comply with sectoral foreign investment caps. These transactions will also be subject to rules stating they be made at fair market value. The proposed revision in the rules aims to ensure foreign investors cannot bypass the intent of India's FDI policy, sources said. The central bank is in agreement on the matter, the second official said. Since 2020, India has required prior government approval for investments from nations sharing its land borders, including China, after clashes between the two neighbours in the remote Himalayan border. The new FOCE definition will make it harder for Chinese or other foreign investors to use indirect structures such as offshore investment funds or layered Indian entities to enter regulated sectors through the back door, the second source said. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
09-05-2025
- Business
- Yahoo
Exclusive-India offers to slash tariff gap by two-thirds in dash to seal trade pact with Trump
By Shubham Batra, Shivangi Acharya and Ira Dugal NEW DELHI (Reuters) -India has offered to slash its tariff gap with the U.S. to less than 4% from nearly 13% now, in exchange for an exemption from President Donald Trump's "current and potential" tariff hikes, two sources said, as both nations move fast to clinch a deal. This would mean that the average tariff differential between India and the U.S., calculated across all products without weighting for trade volume, would be reduced by 9 percentage points, in one of the most sweeping changes to bring down trade barriers in the world's fifth largest economy. The United States is India's largest trading partner, with bilateral trade totalling some $129 billion in 2024. The trade balance is currently in favour of India, which runs a $45.7 billion surplus with the U.S. Trump announced on Thursday his administration's first "breakthrough deal" with Britain. It lowers average British tariffs on U.S. goods but keeps in place the 10% base tariff imposed by Washington on British goods, likely setting a template for Washington's approach with other trading partners. Last month, Trump announced a 90-day pause on his long-planned reciprocal tariffs on global trading partners, including a 26% tariff on India, while his administration negotiates trade deals. A 10% base tariff continues to apply to India and many other nations during the pause. After the UK, India and Japan are the next two nations in line to finalise a deal, a third Indian government official said. "We will see which one crosses the line first." To achieve this, New Delhi has offered to reduce duties to zero on 60% of the tariff lines in the first phase of the deal which is under negotiation, said the first two sources, both Indian government officials familiar with the matter. India has offered preferential access to nearly 90% of goods imported from the United States, including the reduced tariffs, one of the two officials said. Details of India's offer to slash the tariff gap and what it has asked the U.S. in return have not been previously reported. A delegation of Indian officials is likely to visit the U.S. later this month to take the negotiations forward, a fourth official said, adding that India's trade minister, Piyush Goyal, might visit too but his plans were not finalised. All four government officials did not wish to be identified as details of the negotiations are private and sensitive. India's trade ministry, which is leading talks, did not respond to a request for comment. PREFERENTIAL ACCESS Alongside tariff exemptions, India has also asked for preferential market access for key export sectors including gems and jewellery, leather, apparel, textiles, plastics, chemicals, oilseeds, shrimp, and horticultural produce such as bananas and grapes. "Preferential market access for India would mean better terms of trade for these goods compared to America's other trading partners," the first official said. India is also looking for concessions that would give it an edge over competitors in supplying "products of interest", the official added. However, India's expectation of being exempted completely from tariffs on its exports is at odds with the deal struck between the U.S. and Britain. To make the deal more attractive for Washington, India has offered to ease export regulations on several high-value U.S. exports, the first official said. These include aircraft and parts, luxury cars and electric vehicles, telecom equipment, medical devices, hydrocarbons, wines and whiskey, berries, prunes, certain chemicals, and animal feed. Beyond tariffs, India has also asked the U.S. to treat it at par with other top U.S. allies such as Britain, Australia and Japan in critical technology sectors such as AI, telecoms, biotech, pharmaceuticals, and semiconductors. Washington's desire to share critical technologies with allies like India has often faced hurdles due to the U.S. government's own restrictive rules. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
