Create overseas investment corp to facilitate global M

New Delhi, Nov 23 (UNI) Creation of an Overseas Investment Corporation on the lines of Overseas Private Investment Corporation (OPIC) of US should be set up in India, said Advisor and former Secretary DIPP Government of India (Delhi-Mumbai Industrial Corridor) Dr Ajay Dua.

This will help in protecting companies against political risks, violence, currency inconvertibility and nationalisation as it does in case of US MNCs, said a statement.

It can also provide information about legal frameworks, political regimes as well as specific information in most countries.

Asia is the largest recipient of FDI driven largely by heavy inflows into China. India, which attracts an inflow of 15.7 billion dollars has also joined the league of attractive destinations.

Overseas investment by Indian corporations has gone up from 1.7 billion dollars in 2004, to 7.2 billion dollars in the first three quarters of the year 2006-07.

''India's external sector had recorded phenomenal growth since the initiation of reforms. A new wave of confidence was sweeping across the corporate world,'' said Hero Corporate Services Chairman, Sunil Kant Munjal.

However, there is need for accelerating the cross border investment by encouraging FDI and portfolio investment into the country, he added.

Mr Munjal said greater number of M&As should be encouraged and added that 78 per cent of the M&As do not fructify.

Greater degree of vigilance is required at the firm level to scrutinize the efficacy of the mergers and acquisitions, he added.

''A few regulations still remain and the Indian companies would like to see them to go,'' said Mr Dua.

These include investments made in foreign companies through the convertible route, that is by providing loans to foreign companies that can be converted to equity at a pre-determined price, which is particularly attractive for small acquisitions in sectors like IT.

Also, making dividend from foreign subsidiary tax free, relaxation in the FEMA guidelines for loans for overseas ventures by Indian banks and ready availability of debt financing are some of the other demands by the corporates.

UNI