[The following post is contributed by Bhushan Shah at Mansukhlal Hiralal & Company, Mumbai] The Union Cabinet on 29 October 2014 decided to amend the Foreign Direct Investment (FDI) policy in the construction sector, i.e. townships, housing and built-up infrastructure. The press release is available here. The key amendments are as follows: Minimum area to be developed: (a) The minimum built...
Foreign Direct Investment: Trusts as Investment Vehicles
[Vishal Achanta has contributed the following guest post. Vishal is a 5th year student at the National University of Advanced Legal Studies, Kochi] Recently, two investment vehicles have been introduced that as per the relevant SEBI regulations are to be set up as trusts: Real Estate Investment Trusts (‘REITs’) and Infrastructure Investment Trusts (‘IITs’). Both are intended to be pooling...
RBI Allows FDI against “Legitimate Dues”
Hitherto, an Indian company could issue shares to a non-resident against payment obligations only in certain circumstances. These related to “lump-sum technical know-how fee, royalty, External Commercial Borrowings (ECB) (other than import dues deemed as ECB or Trade Credit as per RBI guidelines) and import payables of capital goods by units in Special Economic Zones” subject to applicable...
Foreign Investment in Rail Infrastructure
Following the liberalisation of foreign investment in the defence sector, the Department of Industrial Policy & Promotion, Government of India has issued Press Note No. 8 (2014 Series) that now permits foreign investment in the railway sector. The permitted scope of business in the sector is as follows: Construction, operation and maintenance of the following: (i) Suburban corridor projects...
Liberalisation of Foreign Investment in Defence
A few weeks ago, the Cabinet had announced the liberalisation of the foreign investment policy in the defence sector. Now, the Department of Industrial Policy and Promotion has issued the Press Note No. 7 (2014 Series) that implements the new policy. Some of the principal changes include the following: (i) Increase in the sectoral cap: The maximum...
SEBI: Infrastructure Investments and Portfolio Investments
Infrastructure Investment Trusts Last last year, we had discussed the SEBI Consultation Paper on Infrastructure Investment Trusts. While the move towards the establishment of infrastucture investment trusts (InvITs) was welcome, certain issues such as tax treatment remained to be ironed out. Now that the tax treatment has been addressed in the Budget 2014, SEBI has published a draft of the SEBI...
RBI Reforms on Investment Instruments and Pricing
The Reserve Bank of India (RBI) has recently brought about two sets of related reforms that introduce much greater flexibility to foreign investors in investing in Indian companies that gets rid of some of the rigidity that hitherto existed. In terms of investment instruments, the RBI has permitted investment in partly paid shares and warrants. Additionally, it has also relaxed the pricing...
SEBI Order on “Control” Under Takeover Regulations
Background and Facts Last week, SEBI passed its order in the Jet-Etihad case relating to whether the investment by Etihad Airways in 24% shares of Jet Airways (India) Limited and the terms thereof amount to Etihad obtaining “control” in Jet so as to require Etihad to make a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the Takeover...
Guest Post: State Consent vis-à-vis FDI in Multi-Brand Retail
[The following post is contributed by Sujoy Chatterjee who is an Advocate in New Delhi and an alumnus of the National Law University Jodhpur (’13)] In the aftermath of the December 2013 State Assembly elections, the newly elected Governments of Delhi and Rajasthan expressed their intention to withdraw their consent from allowing foreign direct investment (FDI) in multi-brand retail trading (MBRT)...
Possible Liberalization in FDI Pricing Guidelines
Despite the progressive opening up of the Indian economy to foreign investment in 1991, there has been tight control over the entry and exit prices for foreign investors into and from investments in Indian companies through the foreign direct investment route (FDI). While the initial approach was to benchmark the transaction prices to the erstwhile formula prescribed by the Controller of Capital...
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