Government approves bond buy for extra World Bank borrowing

By Nigam Prusty

NEW DELHI (Reuters) - The cabinet has approved a plan that will allow it to borrow an additional $4.3 billion from the World Bank by investing in special bonds, but could not agree on an increase in taxes on cotton exports, a minister said on Thursday.

Ministers also gave conditional approval to a long-delayed plan to build two semiconductor factories with state subsidies, Information and Broadcasting Minister Manish Tiwari said, an effort to rein in expensive electronics imports longer term.

The steps come as India strives to bring in capital and stabilise the rupee currency, which hit a record low last month. New Delhi also needs to boost exports and cut imports to narrow the world's third-largest current account deficit.

Under the borrowing plan, India's central bank will invest in bonds issued by the International Bank of Reconstruction and Development (IBRD), a World Bank subsidiary that lends to middle income countries, and in return the government will be able to borrow the additional funds.

The borrowing arrangement allows India to circumvent the $17.5 billion limit it has with the IBRD, giving it access to more development financing at a time the country is hungry for capital inflows to stabilize the volatile rupee currency.

The cabinet failed to agree on imposing a 10 percent duty on cotton exports, which would have favoured value-added textile exports from domestic mills and could have boosted flagging global cotton prices.

A government official said the agriculture ministry opposed the move, which would hurt cotton farmers.

India is the second-biggest cotton producer after China and earned about $8.94 billion from cotton exports in 2012/13, equivalent to some 2.92 percent of total goods exports.

SEMICONDUCTORS

The semiconductor factories will need some $4 billion in investment and media reports have named IBM and STMicroelectronics among potential investors.

IBM and STMicroelectronics declined to comment on Thursday.

Israeli chipmaker TowerJazz has said it has submitted a bid with two partners to build a plant in India.

India's demand for electronics products is forecast to rise nearly 10 times during the current decade to reach $400 billion by 2020.

Policymakers have said the electronics import bill could surpass that of oil due to lack of major local manufacturing.

As sales of smartphones, computers and television sets surge, annual imports of semiconductors is expected to touch $50 billion by 2020 from $7 billion in 2010.

(Additional reporting by Devidutta Tripathy, Mayank Bhardwaj, Manoj Kumar, Meenakshi Sharma and Harichandan Arakali; Editing by Jason Neely/Catherine Evans)

Matches

MORE TOP STORIES TODAY

Duminy steals first win for Delhi

Duminy steals first win for Delhi

Furious fifties by Duminy and Dinesh Karthik end a long losing streak for the Daredevils. More »

AB, Parthiv seal Bangalore's second win

AB, Parthiv seal Bangalore's second win

Royal Challengers overcame a stutter to cruise to the small target they were set by Mumbai Indians. More »

Glenn Maxwell carves his parallel universe

Glenn Maxwell carves his parallel universe

Glenn Maxwell seems to project an icy disdain when at the crease. Match situations rarely faze him and the bubble in which he plays excludes everyone … More »

Srinivasan can attend BCCI meeting

Srinivasan can attend BCCI meeting

His status as president of TNCA makes him eligible to attend the Working Committee meeting on Sunday. More »

No way back for Pietersen: ECB

No way back for Pietersen: ECB

Kevin Pietersen's hopes of reviving his international career appeared to end Saturday when ECB managing director Paul Downton said there was 'no way back'… More »

[REWIND] The world record that nearly wasn't

[REWIND] The world record that nearly wasn't

Twenty years ago this week, Brian Lara became Test cricket's highest scorer, but he almost didn't make it. More »

Moores gets second stint as England coach

Moores gets second stint as England coach

In a two-year spell from 2007 to 2009, the 51-year-old Moores led England in seven Test series. More »

Bangladesh senior players to see shrink

Bangladesh senior players to see shrink

Bangladesh's senior players will have three sessions with a psychological skill development coach later this month More »

BCCI is not anybody’s property — Dalmiya

BCCI is not anybody’s property — Dalmiya

Dalmiya feels that Srinivasan’s ‘power hungry’ attitude isn’t helping matters. More »

KP ridicules idea of day-night Tests

KP ridicules idea of day-night Tests

Kevin Pietersen has ridiculed the idea of day-night Test cricket, saying the game would be so different to proper Test cricket that we will need a whole… More »

Rajasthan edge low-scoring thriller

Rajasthan edge low-scoring thriller

The bowlers restricted Hyderabad to 133 for 6 before Rahane and Binny took Rajasthan over the line. More »

Tough for bowlers: Saeed Ajmal

Tough for bowlers: Saeed Ajmal

The 36-year-old believes the T20 format and rule changes in 50-over matches have made a real difference. More »

Maxwell blitz takes Punjab home

Maxwell blitz takes Punjab home

The Kings XI batsman blasted a 43-ball 95 to help his team pull off a massive chase against Chennai Super Kings. More »

BCCI members want independent probe

BCCI members want independent probe

The board members are realising after the Supreme Court's observations that something has to be done — IS Bindra More »

'BCCI lacks leaders to take on Srini'

'BCCI lacks leaders to take on Srini'

Two former BCCI presidents, Shashank Manohar and Jagmohan Dalmiya, have reacted strongly to the news of the BCCI calling an emergent meeting on Sunday… More »

Delhi look for first points against confident Kolkata

Delhi look for first points against confident Kolkata

Preview — The threat of Sunil Narine looms large again. More »

Bangalore vs Mumbai: A battle of the big-hitters

Bangalore vs Mumbai: A battle of the big-hitters

Preview — Given the firepower in both line-ups, Dubai crowd may see another high-scorer More »

Yuvraj tees off to Sharjah's delight

Yuvraj tees off to Sharjah's delight

Yuvraj Singh was hardly convincing to begin with against Delhi, but a big dose of crowd support and a helping of poor bowling meant he had the opportunity… More »

Stressed Trott stands down again

Stressed Trott stands down again

The England and Wales Cricket Board (ECB) on Friday confirmed that batsman Jonathan Trott is to take another break from all cricket with immediate eff… More »

PCB starts another coach hunt

PCB starts another coach hunt

The PCB has decided to not extend the contracts of head coach Moin Khan, fielding coach Shoaib Mohammad and batting consultant Zaheer Abbas, and has invited… More »

Fiery star Stokes bids to curb his temper

Fiery star Stokes bids to curb his temper

England all-rounder Ben Stokes admits he must keep his anger under control if he is to end his international exile. More »

Bangalore's arsenal blazes to victory

Bangalore's arsenal blazes to victory

Yuvraj Singh was back to his best in his first match for Royal Challengers Bangalore. More »

Pakistan cricketers face probe

Pakistan cricketers face probe

Pakistani cricket authorities have launched an investigation after a number of current international stars played in exhibition matches in the United States… More »

BCCI to meet before next court hearing

BCCI to meet before next court hearing

The BCCI will hold an emergent working committee meeting on April 20 to discuss the future course of action with regard to the Supreme Court hearing concerning… More »