KBS Sidhu writes to Finance Minister as RBI’s dollar window closes; cites 2013 precedent, seeks temporary cap on corporate overseas investment
Chandigarh, 17 October 2026 (Yes Punjab News)
When India is paying a premium to keep every diaspora dollar at home, why are its biggest tycoons free to invest tens of billions of dollars abroad without even prior permission? KBS Sidhu, former Special Chief Secretary, Government of Punjab, and Principal Secretary (Finance), Punjab, 2010–2012, has put this question to Union Finance Minister Smt. Nirmala Sitharaman, urging that the ceiling on corporate overseas investment be temporarily lowered until the rupee steadies.
In a letter sent yesterday evening, with a copy to the RBI Governor, Shri Sanjay Malhotra, KBS Sidhu noted that the RBI’s special swap facility for FCNR(B) deposits, which closed on 16 October, nearly doubled such deposits from about $32.6 billion to $60.6 billion between June and July. Banks offered up to 6.5 per cent on these dollar deposits, and the exchange risk on roughly $28 billion of fresh money now rests with the RBI for three to five years.
“The inflow tap has been opened at a premium, but the largest outflow tap remains at its peacetime setting,” KBS Sidhu wrote.
He pointed to a sharp asymmetry. A resident individual may remit only $250,000 a year abroad, pays 20 per cent tax collected at source on investment remittances above ₹10 lakh, and has been restrained from keeping such money in deposits overseas. An Indian company, by contrast, may commit up to 400 per cent of its net worth abroad on the automatic route, needing RBI approval only beyond $1 billion a year. Indian entities committed $48.6 billion abroad in 2025–26, and nearly $9.6 billion more in July and August this year alone.
Without naming them, the letter refers to two of the country’s largest business groups that have this year made high-profile commitments in the United States: one a stated willingness to invest some ten billion dollars, voiced while resolving legal proceedings there; the other participation in a new refinery on the Texas Gulf coast. The US Secretary of State, Marco Rubio, begins his India visit today, with a stop at the refining complex in Jamnagar.
“I do not question any Indian group’s freedom to grow abroad,” KBS Sidhu wrote. “But every such dollar is bought with Indian savings, in a season when the nation is paying a premium to keep dollars at home.”
KBS Sidhu recalled that on 14 August 2013, during the taper-tantrum slide, the RBI cut the corporate overseas-investment ceiling from 400 to 100 per cent of net worth and simultaneously cut the individual limit from $200,000 to $75,000, restoring the corporate ceiling in July 2014. “In 2026 we have revived the inflow instrument of 2013 but not its outflow counterpart,” he observed.
His six suggestions, all temporary and rule-based, are:
• lower the automatic-route ceiling for fresh commitments from 400 to 200 per cent of net worth for two quarters, protecting projects already under way, ideally through a pre-announced trigger linked to reserves or the exchange rate;
• apply a funding test, so that investments financed from overseas earnings remain automatic while those financed by converting rupees need approval;
• reduce the annual threshold for prior RBI approval from $1 billion to $500 million;
• fast-track investments that secure energy, critical minerals, technology or export markets, and defer the rest;
• publish a quarterly statement of actual outflows, guarantee invocations and the cost of the FCNR swaps; and
• use moral suasion to invite the largest groups to defer non-essential overseas commitments.
“This is a dial, not a wall,” KBS Sidhu said. “It asks nothing more of corporate India than the Liberalised Remittance Scheme already asks of every resident individual.”
Contact: kbs.sidhu@gmail.com · 7837-001-001
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