The Department of Industrial Policy & Promotion, Government of India has issued the revised Consolidated FDI Policy by way of Circular 1 of 2013, which came into effect on April 1, 2013. This is pursuant to the Government’s policy adopted a couple of years ago to update the FDI policy periodically (now annually) such that it is available on a consolidated basis. The new policy incorporates...
DGCA Guidelines for FDI in Civil Aviation Sector
The foreign direct investment (FDI) regime in the civil aviation sector has been progressively liberalized over a period of time. The latest round was effected in by the Department of Industrial Policy & Promotion, Government of India in September 2012 by which foreign airlines are now allowed to invest in the Indian civil aviation sector up to a limit of 49% under the Government approval...
Transfer Pricing on Issue of Equity Shares to Foreign Investors
The financial newspapers have covered this (here and here) and The Firm has an interesting discussion on this. The income tax authorities have sought to challenge the valuation on which certain Indian companies have issued shares to their foreign parents. While the shares were previously issued based on the erstwhile formulation adopted by the Controller of Capital Issues (CCI) that was...
FDI in NBFC Sector Relaxed
Foreign direct investment (FDI) in non-banking finance companies (NBFCs) has been subject to minimum capitalisation norms. For example, any foreign investment of more than 75% in an NBFC requires a minimum capitalisation of US$ 50 million through foreign inward remittances. As far as downstream investments are concerned, the Conslidated FDI Policy Circular provides that the relevant caps and...
FDI Reforms Take Effect
We had earlier discussed the key aspects of the FDI reforms proposed by the Government. Unlike the previous occasion where the Government had to keep the FDI reforms in the retail sector in suspended animation, this time it was quick to notify the reforms that have now taken legal effect, as follows: Press Note No. 4 (2012 series): FDI in single-brand product retail trading; Press Note No. 5...
A Comment on the New FDI Reforms
The Government has attempted to stem the trend of economic policy paralysis by announcing a slew of measures yesterday with a view to enhancing foreign direct investment (FDI), including in some sensitive sectors which had witnessed political deadlock over the last year or so. The new measures relate to multi-brand retail, single-brand retail, civil aviation, power trading exchanges and...
Liberalisation of FDI from Pakistan
Hitherto, a person resident in Pakistan or an entity incorporated in that country was not allowed to purchase shares or convertible debentures in an Indian company. This was by virtue of Regulation 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. By way of a circular dated August 22, 2012, the Reserve Bank fo India (RBI)...
Revised FDI Policy
The Department of Industrial Policy and Promotion (DIPP) has issued the new Consolidated FDI Policy Circular 1 of 2012 that is effective from today. An accompanying press release lists the key changes. Some of the key changes relate to sectoral issues: – relaxation for foreign investment in commodity exchanges whereby FII investment may be brought in through the automatic route; and –...
Outbound FDI and M&A
The Reserve Bank of India has published a paper/address titled “Outward Indian FDI – Recent Trends & Emerging Issues” that examines various regulatory aspects of outbound FDI by Indian companies. It considers various business aspects and comments upon regulatory issues and concerns. The latest issue of The Economist also looks at outbound M&A from India, and analyzes the level of success...
Liberalisation of Foreign Investment in Single-Brand Retail
Although the proposed policy changes on foreign investment in multi-brand retail had to be put on hold due to stiff resistance, the Government has issued Press Note No. 1 (2012 Series) to increase the limit of foreign investment in single-brand retail from 51% to 100%. Such foreign investment would continue to require the approval of the Government of India (acting through the Foreign Investment...
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