During the upcoming Union Budget 2021, the central government is likely to announce a Special Window for Financial Investors Facilitation.
Sources informed CNBC-Awaaz that this will be specially for global financial investors having investment proposal more than 5 thousand crore. As per the proposal within 3 days investors will get response from the government on the proposal.
Meanwhile, Union Finance Minister Nirmala Sitharaman had said the upcoming Budget for 2021-22 will sustain the momentum of public spending on infrastructure and have a “vibrancy” to ensure the economic revival continues. She also said the pace of disinvestment, which has been hit by the COVID-19 pandemic, will pick up in the coming months.
The Budget for the 2021-22 fiscal is expected to be tabled in Parliament on February 1.
How SWIFT will work?
As per the draft proposal SWIFT will provide a single point of contact for large foreign investors, having investment proposal of more than five thousand crores rupees. It may be open for strategically important investors also like Pension Funds (PF) and Sovereign Wealth Funds (SWF). Sources further said that SWIFT will not only facilitate a single point of approval and issue redressal but also provide policy advocacy.
In the said draft specific timelines have been also proposed.
For example, after receiving the investment proposal within three days, first response will be given by the government. A nodal officer will be assigned for this response. If there any issues is pending since more than one month then it will be treated as a critical issue. And then a special team led by official of Department of Economic affairs will monitor this critical issue on fortnightly basis. Invest India will play a key role in this proposed facilitation system.
What are the current systems in place?
Currently, Department of Economic Affairs has a special wing which works with Institutional Investors. A special Financial Investors Initiative (FII) is also operational in Invest India. But all these existing system works at individual department levels. There is no integrated ecosystem. That’s why institutional Investors needs to deal with multiple Ministries, Departments and Regulators for obtaining approvals for each transaction they undertake.
In the proposed SWIFT not only different departments will be incorporated but financial regulators like RBI and SEBI also be a part of it. They will nominate a nodal officer for this special window.
Why SWIFT needed?
Basically, during Virtual Global Investor Roundtable on November 5, several foreign investors raised the issue of delay in approval of large investment proposal. Investors said that dealing with different departments and regulators often consume considerable time and impacts the time horizon of investment. Investors have requested for creation of a special window for coordination with various departments and regulators and facilitation. During this meeting idea of SWIFT emerged. According to the sources during one to one meetings with Prime Minister Narendra Modi, investors raised this issue. The Prime Minister also directed the official to resolve the investor’s problem.
How beneficial SWIFT is?
Institutional Investors including Pension Funds, Sovereign Wealth Funds, Insurance Companies, Fund Managers and Asset Management Companies increasing their investment in India. For example, during the period of January 2019 to July 2020, India has received around $70Bn from Institutional Investors. This is almost equal to all the PE investments received by India between 2013-2017. On the basis of such investment numbers government is expecting more investment in coming days. SWIFT is proposed to remove the hurdles for such big investors.
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