Corporate India has come down on the Reserve Bank's move to bring back capital controls by slashing the resident remittances limit and the amount companies can invest abroad to protect the rupee.
Leading the India Inc attack, the Confederation of Indian Industry (CII) president S Gopalakrishnan said, “The RBI’s step to contain current account deficit by imposing a cap on outward investment acts against the Indian economy’s globalisation drive and detracts from the overall reforms process.”
Terming the capital control as retrograde, the CII chief noted that the reduction of limit in outward investment from 400 per cent of net worth to just 100 per cent under the automatic route was too drastic a step. Observing that outward investment by India has progressively come down from $16.5 billion in 2010-11 to $7.1 billion in 2012-13, he said that this would severely dent India’s strategic footprint in the global marketplace.
“With such a minimal amount of outflows impacted, the gains to the rupee may in fact not be as much as expected. We are deeply concerned... as it would disrupt ongoing investment plans,” Gopalakrishnan said.
“Ironic that we have controls on capital on Independence Day. Feels like the 1980s. Well the silver lining is that I feel young again,” said Anand Mahindra, chairman, Mahindra & Mahindra.
Naina Lal Kidwai, president, Ficci, said, “...India has never restricted dividend flows offshore or indeed sales of equity share proceeds even when the situation was more dire.”
“We hope that the recent liquidity tightening measures and rupee outflow restrictions are temporary and would be reversed once we are on a firm ground,” she said.