New Funding Avenues For A Better Olympic Tally
As the second most populous country in the world, India won only 2 medals at the recently held Rio Olympics. Compared to us, the U.K. won 67 medals, China won 70 medals and the USA won 121 medals.
Surely there is no lack of talent in our country, evidenced by the tremendous potential showcased by the Indian Olympians in Brazil. Political apathy coupled with inadequate sporting infrastructure and training facilities seem to be the two main causes for our sportspersons not realising their optimum potential.
As Abhinav Bindra tweeted, “Each medal costs the UK 5.5 million pounds.”
Each medal costs the UK £5.5 million. That's the sort of investment needed. Let's not expect much until we put systems in place at home.
August 16, 2016Can Corporate India Step Up?
In order to boost the sports sector in India, the Government has expressed its political will to make India a sporting superpower by instructing industry associations such as CII, FICCI and ASSOCHAM to encourage their members to take steps towards making investments in this sector. It has also included construction and maintenance of sports infrastructure within the purview of the corporate social responsibility rules under the Companies Act, 2013 to encourage companies to spend towards sports promotion.
Cheaper Funding For Sports Infrastructure
In a welcome move, which will provide impetus to the dismal sports infrastructure sector in the country, the Department of Economic Affairs has included “Sports Infrastructure” under the category of “Social and Commercial Infrastructure” in the Harmonised Master List of Infrastructure Sub-sectors (Harmonised List).
The term “Sports Infrastructure' in the Harmonized List includes provision of
(a) sports stadia, and
(b) infrastructure for academies for training or research in sports and sports related activities.The “infrastructure” status accorded to sports stadiums and sports academies will confer benefits to this cash-strapped sector in the form of easier access to cheaper and long-term loans from a variety of sources.
Go For Green
Indian entities engaged in the sports infrastructure sector will now be eligible to raise loans from foreign lenders under the external commercial borrowings (ECB) route.
Under the ECB guidelines, they can raise
- mid-term infrastructure loans denominated in foreign currency with a minimum average maturity of 3 or 5 years.
- long-term infrastructure loans denominated in foreign currency with a minimum average maturity of 10 years.
- rupee denominated mid-term infrastructure loans with a minimum average maturity of 3 or 5 years.
Such entities will be eligible to raise an amount of up to $750 million per financial year without any approval of the Reserve Bank. Furthermore, subject to certain conditions being met, they can also avail ECBs for the purpose of refinancing rupee loans availed by them for capital expenditure, from domestic banks.
Dear FPI, What About Investing In Sports?
Indian companies engaged in sports infrastructure will also be able tap funds from foreign portfolio investors registered with SEBI. FPIs are permitted to invest in listed as well as unlisted non-convertible debentures (NCDs) issued by Indian infrastructure companies. This may be an attractive option for raising debt by Indian companies as the regulatory framework for issuance of NCDs to FPIs offers considerable flexibility to Indian issuers on the terms that can be offered to NCD holders.
Opportunity To Repair, Upgrade Infrastructure
Following the liberalisation of the norms applicable to infrastructure debt funds, an infrastructure debt fund, irrespective of whether it is set up as a NBFC or a mutual fund, can now also invest in those infrastructure projects in sectors where there is no presence of a project authority. However, such investment can be made only in those infrastructure projects which have commenced operations and have completed satisfactory commercial operation for a period of at least 1 year. Therefore, existing sport stadia and academies which are in dire need of repair, upgradation, expansion and modernisation can explore this avenue for raising immediate funds.
A Sports InvIT?
As per the SEBI (Infrastructure Investment Trusts) Regulations, 2014, an infrastructure investment trust (InvIT) can invest in infrastructure projects in the sectors identified in the Harmonised List. Therefore, InVITs could be set up for the purpose of investment in, inter alia, sports infrastructure projects and could prove to be a lucrative alternate to traditional modes of raising finance and providing liquidity to the cash strapped sports infrastructure businesses.
The Fine Print
However, there are some ambiguities in how “sports infrastructure” has been defined. For instance, it is unclear whether “sports infrastructure” will also cover activities such as setting up of private clubs offering, inter alia, sport facilities or construction of state-of-the art gymnasiums (including fitness or yoga studios). It will also be interesting to see what is intended to be brought within the ambit of “sports related activities”.
The global sports economy is a multi-billion dollar global industry and at an international stage, the success of an athlete is a culmination of the combined and concerted efforts of a team of dedicated professionals such as coaches, trainers, doctors, nutritionists, fitness experts and analysts which work in tandem with the athletes. A befitting example of this is the instance of Pullela Gopichand's Badminton Academy, a state of the art training facility of international standards which has already produced two Olympian medallists since its inception in 2008.
The abovementioned regulatory changes, are much needed to give a fillip to the beleaguered sports industry and incentivise it enough to attract not only private funding required to build world class infrastructure and training facilities, but also to attract talented human resources required to provide support to our gifted sportspersons. With this regulatory amendment, coupled with appropriate political support, we can hope for the game to change in India.
Aashit Shah is a partner at leading law firm J Sagar Associates. Megha Saraf, Senior Associate, JSA also contributed to this article.
The views expressed here are those of the author's and do not necessarily represent the views of BloombergQuint or its editorial team.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.
-
Medicine Pricing: Where Must Profit Stop?
India must confront excessive margins, hidden incentives and regulatory gaps that threaten the integrity of medicine.
-
Why Amazon And Flipkart Are Struggling To Beat Meesho In India's Smaller Cities
With 274 million users and lowest-cost logistics, Meesho is defending its value commerce crown against giants like Amazon and Flipkart.
