New Delhi, Oct 13 (IANS): India has decided to consider a sovereign wealth fund to assist its state-run units acquire oil and mineral assets and related raw material abroad as part of its larger goal for achieving energy security and approved a new policy in this regard.
In a meeting of the union cabinet, chaired by Prime Minister Manmohan Singh, it was also decided to set up a Coordinating Committee of Secretaries under the cabinet secretary to ensure expeditious approvals and sanctions for acquisition of overseas assets.
The new policy comes against the backdrop of limited success of Indian state-run units, such as Oil and Natural Gas Corp, Coal India and National Thermal Power Corp in acquiring oil blocks and ores abroad to meet the demand back home.
"There is a strong feeling that if India were to have security in raw material it should be investing aggressively in acquiring assets abroad," S. Sundareshan, secretary, heavy industry and public sector enterprises, said after the cabinet meeting.
"The feeling has been that we have not been as nimble footed as other countries in this regard. The proposal approved today will possibly make our companies more so," he said adding that the new norms will apply to firms in agriculture, mining, manufacturing and power.
According to the secretary, companies with a three-year track record of profitability are covered by the policy. The navratna firms can now buy assets worth Rs.3,000 crore without cabinet approval, against the current limit of Rs.1,000 crore.
As per the new policy, the process of overseas buyouts will now be streamlined and fast-tracked to ensure that Indian firms do not miss out on the opportunities of securing precious resources abroad due to procedural delays.
The cabinet note circulated after the meeting said the coordinating committee will help in quick decision making, coordinate the grant of concessional credit to foreign firms and government and decide about the nature of the government funding required.
Also of significance is the decision to involve the Ministry of External Affairs and the Indian missions abroad right from the beginning of bidding. This is expected to smoothen the acquisition process in case of any disputes arising from foreign countries.
In recent weeks, Indian power plants have been severely hit by a coal crunch, which has resulted in electricity generation dropping across the country. Several other sectors such as steel have also been complaining about the shortage of raw materials.