RBI's move to dampen global aspirations of cos: India Inc
New Delhi: Perturbed over the RBI's decision to impose restriction on outward investments, India Inc Friday said it would dampen global aspirations of domestic companies.
Reserve Bank's restrictions on outward investments, CII said, "would be a dampener to India's global aspirations".
It hoped that these measures would be revisited soon and status quo would be restored.
"To stabilise the rupee, it would have been more appropriate to initiate policies which prevent influx of non-essential imports such as coal and iron ore and augment forex inflows by encouraging FDI by promising a conducive and stable policy regime," it said.
Sharing similar views, Ficci said the markets today experienced a free fall and has not reacted well to the Central Bank's restrictions on rupees flows offshore with heightened fears that more restrictions may come including for FIIs.
"These fears need to be addressed. After all India has never restricted dividend flows offshore or indeed sales of equity share proceeds even when the situation was more dire . The fall in the rupee essentially underlines weakness in the economic fundamentals," Ficci President Naina Lal Kidwai said.
She hoped that RBI's measures are temporary in nature and would be reversed once situation stabilises.
The S&P BSE Sensex has crashed 769 points, the most in four years, as the rupee plunged to an all-time low of 62.03 amid fears the government may move to a capital- control regime to curb forex volatility and narrow CAD.
Consultancy firm Deloitte said that capital controls enforced by the RBI seems to have aggravated the rupee slide.
It said that the rupee may continue to depreciate further till India see a significant and consistent improvement in the trade deficit position.
"Overall pick up in exports of goods and services in coming months, coinciding with recovery in advanced economies like US and Europe, should ease down the pressure in external sector to some extent and will certainly play a crucial role in the recovery of Rupee," it added.