INDIA: DIPP publishes Consolidated India FDI Policy

Wednesday April 11 2012

The Department of Industrial Policy and Promotions (DIPP) has published the updated Consolidated India FDI Policy. Effective 10 April 2012, it replaces the existing FDI Policy, detailing the framework for India Foreign Direct and India Foreign Institutional Investment into India.

Among other changes announced, the rules on investment in commodity exchanges have been relaxed. While the existing sectoral cap is maintained at a total of 49%, with 26% in FDI and 23% in India FII, government approval is no longer required for India FII acquisition.

In addition, the Government has clarified that the activity of ‘leasing and finance’ (in the 18 non-banking financial companies activities where FDI is allowed) extends only to ‘financial leases’, not ‘operating leases’.

Currently, 100 per cent foreign investment into NBFCs is allowed through the automatic route. With the amendments introduced, ‘operating lease’ activity in NBFCs will no longer come under the automatic route.

FII investment norms have also been amended. Previously, the Portfolio Investment Scheme limited the individual holding of an FII to 10 per cent of a company’s capital and the aggregate for FII investment to 24 per cent. Now, the 24 per cent aggregate FII limit can be increased to the applicable foreign investment cap of the sector in which the company is operating, provided it is done through its Board resolution, followed by a general body special resolution. The change in the sectoral cap will be subject to prior intimation to the Reserve Bank of India.

Click on the above link for more details.