A few months ago, we had discussed a change of policy stance by the Government of India in allowing options (such as puts and calls) on shares of Indian companies to foreign investors. While the Government initially specified that the existence of such options would turn the foreign investment into an external commercial borrowing, it was quick to withdraw this stipulation due to the immediate outcry from various quarters. We had remarked at that time: “it remains to be seen whether the Reserve Bank of India (RBI) will also now adopt a more liberal approach to options and modify their prevailing position”. It appears that the RBI has not changed its approach despite the change in policy stance of the Government of India, and continues to raise doubts with respect to transactions where the foreign investor is conferred such options. The contrary signals emanating from different government authorities does give rise to tremendous regulatory uncertainty in structuring investments in India.
*Monday, October 31, 2011
Reversal of FDI Policy on Options
http://vswaminathan-vswaminathan-swamilook.blogspot.com/2011/11/bl-1st-nov-httpwww.html
>”POINT TO PONDER:
ARE THE 2 VIEWS AIRED, AS HIGHLIGHTED, MUTUALLY DIVERGENT OR COMPATIBLE ? > IT IS FOR 'EXPERTS' TO ELUCIDATE, IN ORDER TO BRING ABOUT CLARITY FOR A NON-EXPERT TO UNDERSTAND.”
Going back to the earlier Post*, as per a non-expert's perception/ limited understanding, the point of poser is seen to have found an answer in the subject Post! It bears on its sleeves the reality that, more often than not, no two authorities, in exercise of their own individual powers in regard to even any vital 'policy' matter, prefer to act independently, with no scope for any meeting point; that is, not see 'eye to eye'. The outcome /consequence, from the investors' point of view could only be, – confusion worse confounded.
@vswami > "prefer to act independently, with no scope for any meeting point" – to please be read – "prefer to co-ordinate and act in unison, with scope for any meeting point"