Wednesday April 23 2014

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: India




The Department of Industrial Policy and Promotion has published the updated Foreign Direct Investment Policy for India foreign investment.

The new FDI Policy consolidates all policy and legislative changes made to the foreign investment framework since the document was last updated in April 2013. It has been drafted to take into account the upcoming regulatory framework for foreign investment, and contains provisions on the new Foreign Portfolio Investors regime.

Under the new Foreign Portfolio Investor (FPI) Regulations, the practical application of which enters into effect in June 2014, an FPI may invest in the capital of an Indian company under the Portfolio Investment Scheme which limits the individual holding of an FPI below 10% of the capital of the company and the aggregate limit for FPI investment to 24% of the capital of the company. This aggregate limit of 24% can be increased to the sectoral cap/statutory ceiling, as applicable, by the Indian company concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body and subject to prior intimation to RBI. The aggregate FPI investment, in the FDI and Portfolio Investment Scheme, should be within the above caps.

The following changes have been incorporated in the FDI Policy:

  • Defence Industry – acquisitions beyond 26% may be approved by the Cabinet Committee on Security (CCS) on a case by case basis, wherever it is likely to result in access to modern and ‘state-of-art’ technology in the country
  • Courier services for carrying packages, parcels and other items excluding the activity relating to the distribution of letters – Automatic route
  • Telecom Services (including Telecom Infrastructure Providers Category-I) – FDI now permitted up to 100%
  • Single Brand product retail trading – now Automatic up to 49%, and Government route beyond 49%
  • Asset Reconstruction Companies – 100% of paid-up capital of ARC (FDI+FII/FPI) Automatic up to 49%, Government route beyond 49%
  • Commodity Exchanges – Automatic route
  • Credit Information Companies – 74% (FDI+FII/ FPI) under Automatic route
  • Infrastructure Company in the Securities Market – automatic route
  • Power Exchanges – automatic route

Click on the above link for the consolidated FDI Policy.