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Higher investment allowed in energy sector abroad

MUMBAI: The Reserve Bank of India on Tuesday allowed Indian companies to invest in overseas energy and natural resources sectors such as oil, gas, coal and mineral ores in excess of the current limits with prior approval of the central bank.

“With a view to providing greater flexibility to Indian parties for investment abroad, it has been decided, in consultation with the Union Government, to allow Indian companies to invest in excess of 400 per cent of their net worth, as on the date of the last audited balance sheet, in the energy and natural resources sectors such as oil, gas, coal and mineral ores. The investments in excess of 400 per cent of the net worth shall be made only with the prior approval of the RBI,” the RBI stated in a notification.

An Indian party was allowed, till date, to make direct investment in joint ventures and/or wholly owned subsidiaries outside India up to 400 per cent of the net worth as on the date of the last audited balance sheet, under the automatic route.

In terms of an earlier notification, Navaratna public sector undertakings were allowed to invest in overseas unincorporated entities in the oil sector (that is, for exploration and drilling for oil and natural gas and the like), which are duly approved by the Central Government, without any limits, under the automatic route.

“This facility is now extended to ONGC Videsh and Oil India,” the Reserve Bank stated, adding that “With a view to further liberalising the procedure, it has now been decided, to allow a similar facility to other Indian entities to invest in overseas unincorporated entities in the oil sector.”

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