Tag: Foreign Investment
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Changes to FDI Policy – Part II: Shares Against Non-Cash Consideration
[Posted by Umakanth Varottil] The FDI policy allows issue of shares by Indian companies to foreign investors only against cash remittances received through normal banking channels. However, the only exceptions to this are conversion of external commercial borrowings outstanding as well as payment obligations towards lump sum fee or royalty for technical collaborations. Any other…
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Changes to FDI Policy – Part I: Convertible Securities
[Posted by Umakanth Varottil] The Department of Industrial Policy and Promotion (DIPP), Government of India today released its new edition of the Consolidated FDI Policy, Circular 1 of 2011 that comes into effect April 1, 2011. This is part of the bi-annual review process that the DIPP commenced last year so as to ensure that…
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Possible Relaxation for Foreign Investors with “Existing Ventures”
[Posted by Umakanth Varottil] Since 1998, the Indian Government’s policy has required foreign investors to obtain approval of the Foreign Investment Promotion Board (FIPB) while investing in a field where they have or had a previous joint venture in India. In other words, such investors are ineligible from investing under the automatic route. In considering…
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New Framework for Foreign Investment Proposed
[Posted by Umakanth Varottil] The Ministry of Finance recently published on its website a report of the Working Group on Foreign Investment in India. The report seeks to address the complexity and overlaps in the existing regime on foreign investment in India and to propose a more streamlined framework. It focuses largely on foreign portfolio…
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Depository Receipts and Voting Rights
[Posted by Umakanth Varottil] SEBI has written to the Ministry of Finance and the Reserve Bank of India to curb the practice whereby holders of ADRs/GDRs pass on their voting rights to boards or managements of the companies in which they hold these instruments. As the Economic Times reports: The Securities & Exchange Board of…
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The Impact of Tightening Financial Regulation
[Posted by Umakanth Varottil] The last week has witnessed tighter financial regulations emerging out of the U.S. and European markets. While some of the reforms are expected to result in migration of investments into more liberal markets in Asia (including India), others represent introduction of stringent measures that are already in place in India. Possible…
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Consolidated FDI Regime Operational
[Posted by Umakanth Varottil] As we had discussed in December 2009, the Government had proposed a draft master press note to consolidate the regime relating to foreign direct investment (FDI). The consolidation exercise has now fructified with the issue of the Consolidated FDI Policy (Circular 1 of 2010), which takes effect from April 1, 2010.…
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FIPB Website
[Posted by Umakanth Varottil] I chanced upon a website dedicated solely to the Foreign Investment Promotion Board (FIPB). It is not clear as to how long this website has been in existence. Today’s Business Standard reports that the FIPB will soon commence receiving electronic applications, and that the e-filing facility will be formally launched tomorrow…
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Pricing Adjustments for FCCBs
[Posted by Umakanth Varottil] On November 27, 2008, the Ministry of Finance introduced changes to the pricing norms for FCCBs. As we had discussed then, two changes were proposed: (i) the minimum price will be the average weekly high and low prices for the 2 weeks prior to the relevant date, instead of the previous…
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Easing the FDI Approval Process
[Posted by Umakanth Varottil] The Government has introduced a recent change to the approval process for FDI that may ease the process, at least for some large transactions. The threshold for obtaining the approval of the Cabinet Committee on Economic Affairs has been increased from Rs. 600 crore (Rs. 6 billion) to Rs. 1200 crore…