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...
Another Effort at Harmonizing Foreign Portfolio Investment
In 2010, the Working Group on Foreign Investment in India made an important set of recommendations in relation to the consolidation of various types of investment routes for foreign investors making portfolio investments into the Indian markets. The idea was to do away with the various routes presently existing, such as for non-resident Indians (NRIs), foreign institutional investors (FIIs) and...
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)...
Black Money: Corporate Entities and Securities Markets
The Government yesterday tabled its White Paper on Black Money in Parliament. Billed as the first document to comprehensively tackle the issue, it cites various studies and is replete with data. However, it has already been subjected to criticism from various quarters owing to the lack of details and clarity in solutions to deal with the issue. This post, however, briefly touches upon the role of...
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 –...
Regulating Alternative Investment Funds
At its board meeting on April 2, 2012, SEBI has approved a proposal to frame a separate set of regulations governing alternative investment funds. This is with a view to regulate the fund industry more comprehensively. Currently, there are not only various routes available for investment funds to be structured, but there is ambiguity regarding the regulation of certain types of investment funds...
Secondary Market Purchases by Foreign Venture Capital Investors
The Reserve Bank of India (RBI) has issued a circular that expands the scope of investments that foreign venture capital investors (FVCIs) can make in Indian companies. Hitherto, FVCI investments were permitted either through initial public offerings or through private placements. Under the new regime, FVCIs may acquire shares in the secondary markets from existing shareholders. The operative...
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