Daily Current Affairs – 2020Topic: For Prelims and Mains
India and the USA has recently intended to upgrade their bilateral relationship to a Comprehensive Global Strategic Partnership (CGSP).
The CGSP will include issues such as defence, security cooperation and revitalisation of the Indo-Pacific with quadrilateral dialogue.
The USA has proposed the Free Trade Agreement (FTA) between the two countries.
FTA will include the restoration of benefits of low or zero duty to certain Indian exports under the Generalised System of Preferences (GSP) and market access for each other’s agricultural products.
The Trade Policy Forum will be set up as a joint study group to facilitate smooth framing of FTA.
The signing of this agreement will allow Indian professionals working in the USA to get a refund of social security contribution that they make while working in the USA.
Asian Development Bank (ADB) has listed its 10-year masala bonds worth Rs 850 crore on the global debt listing platform of India INX. The proceeds would be used to support local currency lending and investment in India.
India INX is the country’s first international exchange, located at International Financial Services Centre, GIFT City in Gujarat. ADB’s masala bonds are listed on both Luxembourg exchange and India INX.
They are bonds issued outside India by an Indian entity or corporate. These bonds are issued in Indian currency than local currency.
Indian corporates usually issue Masala Bonds to raise funds from foreign investors. As it is pegged into Indian currency, if the rupee rates fall, investors bear the risk.
The first Masala bond was issued in 2014 by IFC for the infrastructure projects in India.
How does Masala Bonds help bond issuer?
As Masala bonds are issued directly in Indian rupees, the investor needs to bear the exchange rate risks. Rupee rate falls will not affect the issuer of Masala Bonds. In simpler words, as Masala Bonds are rupee-denominated bonds, the risk goes directly to the investor.
Investors from outside of India who would like to invest in Indian assets can invest in Masala bonds. Indian entities like HDFC, NTPC and India bulls Housing have raised funds via Masala Bonds.