Home > Business > Business Headline > Report

Local firms may get to farm abroad

Sidhartha, Subhomoy Bhattacharjee in New Delhi | August 11, 2003 10:31 IST

The Centre is likely to allow domestic companies to buy farm land abroad.

Government sources said the idea was to allow Indian companies with a sizeable presence in the food processing and agro-based industries to emerge as major players in the international arena, which is now dominated by companies from the US and European Union.

However, to allow companies to invest in farm land abroad, the government has to further relax the limit on capital account convertibility. At present, the government only permits corporates to set up overseas offices or acquire immovable property for business and staff residential premises.

Global plans

  • Domestic companies in the food processing and agro-based sectors can emerge as global players
  • Individuals can also buy farm land abroad
  • Profits to be repatriated to India
  • At present, real estate investment abroad is permitted only for office and staff residence

The idea has been mooted by the commerce ministry and will require approval by the finance ministry as well as the Reserve Bank of India. As per the proposal, even individuals should be allowed to buy land abroad.

Currently, Indian investment policies do not allow foreign companies to buy agricultural land. However, foreign firms are allowed to invest in real estate for building integrated townships.

The proposal is based on the grounds that domestic companies often export farm produce to manufacturing bases abroad. If they can buy agricultural land abroad, their shipment costs will come down and they will become more competitive in the global food processing business.

This will also solve the problems faced by local companies in buying agricultural land in the country as most states are reluctant to relax land ceilings. Moreover, it will be cost effective since land is cheaper in many foreign countries.

The officials also said some discussions had taken place with companies that supported the plan. For the government, the proposal makes sense as the profits will be repatriated to India.

Article Tools

Email this Article

Printer-Friendly Format

Letter to the Editor

Related Stories

Don't pay bribes for loans: PM

Farm credit rate to be cut to 9%

People Who Read This Also Read

Sensex gains 10 points at close

Retail real estate set to swell

Wait till Jan for 'safe' water

Powered by

Copyright © 2003 rediff.com India Limited. All Rights Reserved.