Oct. 14 (Bloomberg) -- India granted state-run companies greater powers to acquire coal, oil and other mineral assets overseas without consulting the government as it bids to compete with China for resources to power its economy.
The policy approved by the cabinet yesterday gives companies enhanced powers to examine proposals and obtain the approval of directors, and applies to units that have been profitable for three consecutive years, Information and Broadcasting Minister Ambika Soni said in New Delhi. The government will “in due course” consider forming a sovereign wealth fund to help companies compete, she said.
“Availability of raw material is a prerequisite not only for the growth of the manufacturing sector, but for the economy as a whole,” Soni said yesterday. “The acquisition of raw material abroad will also help in improving energy security.”
Companies including Oil & Natural Gas Corp., India’s biggest energy explorer, and Coal India Ltd., the world’s largest producer of the fuel, are scouring the world for energy and mining assets to meet demand in Asia’s second-fastest growing major economy. They have often lost out to China, which has promised billions of dollars in aid, investment and loans to nations in exchange for oil and ores.
A committee of secretaries will be constituted to consider proposals that require additional government funding or involve multiple ministries, the government said in a statement without elaborating. Indian embassies overseas will offer assistance to the companies.
Existing rules requiring the approval of the federal cabinet for purchases abroad can delay projects for months.
--Editors: Mark Williams, Indranil Ghosh
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