11 Nov 2020: PIB Summary & Analysis

November 11th, 2020 PIB:- Download PDF Here

TABLE OF CONTENTS

1. PLI Scheme extended
2. Viability Gap Funding Scheme
3. International Financial Services Centres Authority (Banking) Regulations, 2020
4. National Water Awards 2019

1. PLI Scheme extended

Context:

Cabinet approves the PLI Scheme to 10 key sectors.

Details:

• The Union Cabinet has extended the Production-linked Incentive (PLI) Scheme to ten key sectors. The following table gives the sectors and the implementing agency of the scheme for those sectors.

• Currently, the PLI scheme is being implemented in the sectors: mobile manufacturing and specified electronic components; critical key starting materials/drug intermediaries and active pharmaceutical ingredients (APIs); and manufacturing of medical devices.

Know more about the PLI scheme in PIB dated Aug 1, 2020.

2. Viability Gap Funding Scheme

Context:

Cabinet approves Continuation and Revamping of the Scheme for Financial Support to Public Private Partnerships in Infrastructure Viability Gap Funding (VGF) Scheme.

Details:

• The approval has been given to continue the scheme till 2024-25 with a total outlay of Rs.8100 crore.
• The revamped Scheme is mainly related to the introduction of the following two sub-schemes for mainstreaming private participation in social infrastructure:
  • Sub-scheme 1: caters to social sectors like wastewater treatment, water supply, solid waste management, health and education, etc.
    • These projects face bankability issues and poor revenue streams to cater fully to capital costs.
    • The projects eligible under this category should have at least 100% operational cost recovery.
  • Sub-scheme 2: will support demonstration/pilot social sector projects. The projects may be from the health and education sectors where there is at least 50% operational cost recovery.
• Benefits of the scheme:
  • The aim of the scheme is to promote PPPs in social and economic infrastructure leading to the efficient creation of assets and ensuring their proper operation and maintenance and make the economically/socially essential projects commercially viable.
  • The scheme would be beneficial to the public at large as it would help in the creation of infrastructure for the country.

3. International Financial Services Centres Authority (Banking) Regulations, 2020

Context:

IFSC Authority approves the International Financial Services Centres Authority (Banking) Regulations, 2020.

Background:

• Banking constitutes one of the major focus areas of IFSC and is expected to drive and facilitate the other constituent operations in the IFSC in due course.
• A self-contained regulation laying down the major principles of banking operations at IFSCs is thus an important step in the IFSC reaching its desired potential.
• India is trying to promote IFSC, situated at the Gujarat International Finance Tech (GIFT) City, as an alternative for investors, after Hong Kong’s ability to function as a global financial centre came under a cloud after China tightened its grip on the city.
• IFSCA, which was set up in April 2020, is working to provide an efficient and facilitative regulatory system comparable with the best jurisdictions in the world, to develop IFSC in India as a preferred global hub for international financial services.

Know more about the IFSCA in PIB dated Oct 19, 2020.

Salient features of the Banking Regulations are:

• Laying down the requirements for setting up IFSC Banking Units (IBUs).
• Permitting persons resident outside India (having net worth not less than USD 1 Million) to open foreign currency accounts in any freely convertible currency at IFSC Banking Units (IBUs).
• Permitting persons resident in India (having net worth not less than USD 1 Million) to open foreign currency accounts in any freely convertible currency at IFSC Banking Units (IBUs) to undertake any permissible current account or capital account transaction or any combination thereof under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India.
• Laying down the permissible activities of IBUs including credit enhancement, credit insurance, and sale, purchase of portfolios, engage in factoring and forfaiting of export receivables and undertake equipment leasing, including aircraft leasing.
• Permitting the Authority to determine the business that a Banking Unit may be permitted to conduct in INR with persons resident in India and persons resident outside India, subject to settlement of the financial transaction in relation to such business in freely convertible foreign currency.

Related Information:

IFSCA Committee Report

What’s in the news?

IFSC International Retail Business Development Committee presented the final report to IFSCA.

Details:

• The terms of reference of the Committee were to create a roadmap for the development of international retail business in the IFSC and also make other suggestions. The Committee also made recommendations for the overall development of the IFSC.
• The Committee highlighted the opportunity for FinServ from India and taking India global through the IFSC.
• The Committee suggested that IFSCA should balance a robust regulatory framework with ease of doing business and aim to benchmark itself with the best-in-class jurisdictions.
• It suggested that there is immediate potential to promote international retail business in the IFSC, and it will meet three key objectives:
  • Boosting job creation
  • Generating additional revenue for India
  • Attracting funds (especially from the Indian diaspora) for building India’s infrastructure
• The Committee outlined the dual role of the IFSCA of development as well as regulation.
• Some of the key recommendations include:
  • Banking:
    • Permit retail participation including LRS investments by resident Indians and enable IFSC Banking Units (IBUs) to provide banking products and solutions to retail/individual clients.
    • Wealth management capabilities should be enabled in the IBU by allowing investments in various markets across different geographies.
    • Permit IBUs to offer foreign currency (FCY) clearing services from the IFSC. For this purpose, a central clearing mechanism should be set-up in the IFSC.
  • Insurance:
    • Permit NRIs/PIOs to buy Life Insurance policies for themselves as well as their family members who are based in India and abroad from companies set up in the IFSC and allow them to pay the premium in the currency of their choice (including Indian rupees).
    • Allow insurance companies to offer health insurance products to NRIs/PIOs including covering their family members who are based in India.
    • Insurers should be allowed to set up subsidiaries in IFSC to promote business.
    • IFSC should emerge as a reinsurance hub for Asia and Africa and also as an aviation insurance hub for the world.
  • Asset Management and Capital Markets:
    • Permit resident individuals to invest in Alternative Investment Funds (AIFs) or Mutual Funds (MFs) in the IFSC via the LRS route.
    • Permit resident individuals to invest in companies listed on the IFSC exchanges via the LRS route.
    • Develop a framework for allowing foreign or Indian issuers to raise equity or debt in the IFSC.

4. National Water Awards 2019

Context:

The winners of the National Water Awards 2019 have been declared.

Details:

• Know more about the National Water Awards 2019 in PIB dated Nov 6, 2020.
• The Best State Awards for 1^st, 2^nd and 3^rd positions have gone to Tamil Nadu, Maharashtra and Rajasthan.
• Mizoram won the first prize in the special category States.
• The Awards for Best District in Revival of Rivers and Water Conservation were given to:
  • North – Ayodhya and Almora
  • South – Vellore and YSR Kadapa
  • West – Sangli and Kachchh
  • East – Bilaspur and Surajpur
  • Northeast – West Tripura (WC)
  • Aspirational district category – Khandana and Vizianagaram

Read previous PIB here.

November 11th, 2020, PIB:- Download PDF Here