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Journalism of Courage
The government may launch its largest ever auction of oil and gas block next month at completely revamped terms after the current profit-sharing regime came in for sharp criticism from the Comptroller and Auditor General CAG.
The excessive outgo should not be there. We are not saying that royalty will not go but we are looking at this issue as to how to address the sudden outgo of these funds. This needs a little bit of tampering, commerce and industry minister Anand Sharma told PTI in an interview.
8220;There has to be a fool proof reporting8221; of such funds,he said,adding that he has written a letter to finance minister P Chidambaram.
The increase in outflow of these payments started after the government liberalised the FDI policy in 2009. It had removed the cap and permitted Indian companies to pay royalty to their technical collaborators without seeking prior government approval.
The outflows on account of royalty and fee for technical services,taken together,are in the range of 16-33 per cent of the foreign direct investment FDI inflows over the period 2009-10 and 2012-13.
India had attracted FDI worth 22.42 billion in FY13.
In his letter,Sharma has said that given the current economic situation and a high quantum of outflows on this account,there is a need to take a view on whether the ceiling on royalty payments and fee for technical services should be re-introduced in the FDI policy to check the large outflows and also to prevent possible misuse of this window.
