Tag: Foreign Investment
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Foreign Collaboration and Royalty Payments
[Posted by Umakanth Varottil] Hitherto, Indian companies were allowed to make royalty payments to their foreign collaborators under the automatic route within certain limits. These involved payment for technology transfers of a lump sum fee of US$ 2 million and royalty of 5% on domestic sales and 2% for exports. Where no technology transfer was…
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Lock-in for Real Estate FDI Clarified
[Posted by Umakanth Varottil] According to Press Note 2 of 2005 issued by the Department of Industrial Policy and Promotion, there are certain conditions for foreign investment in the real estate sector. The relevant conditions are as follows: i. Minimum capitalization of US$10 million for wholly owned subsidiaries and US$ 5 million for joint ventures…
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India and China: Foreign Investment and Venture Capital
[Posted by Umakanth Varottil] RBI/2008-09/ RBI/2008-09/ The Asian Journal of Comparative Law has just published an interesting article that compares foreign direct investment (FDI) and venture capital investment in the two Asian economic giants. In Unraveling the Puzzle of Differing Rates of FDI and FVCI in India and China the authors Haitian Lu, Hong Huang…
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Recent RBI Policies
[Posted by Umakanth Varottil] RBI/2008-09/ The Reserve Bank of India (RBI) has announced some policies last week. The salient features are as follows: 1. External Commercial Borrowings (ECB) Policy – Liberalisation By a Circular dated January 2, 2009, the RBI dispensed with the requirement of all-in-cost ceilings on ECBs under the approval route, until June…
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Lock-in for Realty FDI
[Posted by Umakanth Varottil] Press Note 2 of 2005, which deals with foreign direct investment (FDI) in the real estate sector, imposes a three-year lock in foreign investments. It states: Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier…
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Demystifying concepts and terms used in agreements
[Posted by Satyajit Gupta] My colleague, Daksh Trivedi has recently written an interesting article in The Mint, where he has discussed the various legal concepts/ terms used in shareholders and share purchase agreements. He begins with: Typical documents used for capturing terms of equity investments, that is, share-purchase agreements or shareholders’ agreements, are now complex…
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Indirect FDI: A Further Press Note
[Posted by Umakanth Varottil] Continuing with the series of press notes on the issue of indirect foreign direct investment (FDI), the Government has issued Press Note 4 of 2009 that clarifies the position on downstream investment by Indian companies. Here are some quick thoughts on the new Press Note: 1. The Press Note divides downstream…
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Indirect FDI: More Changes on the Anvil
[Posted by Umakanth Varottil] In order to address the concern that Press Notes 2 and 3 of 2005 (discussed here) will allow foreign investors to take indirect stakes in sectors where foreign investment is otherwise prohibited (e.g. multi-brand retail trading), it is reported in the Economic Times that the Government is proposing to issue another…
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Direct and Indirect Foreign Investment: Is There Clarity Now?
[Posted by Umakanth Varottil] Last week, we had blogged about new guidelines that were announced on indirect foreign investments, wherein some questions were raised regarding the scope of these guidelines. However, since then, the Government has issued two Press Notes on February 13, 2009 that contain detailed provisions for implementation of the new guidelines. Press…
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FDI in Indian Investing Companies
[Posted by Umakanth Varottil] Indirect investment into Indian operating companies that are the subject matter of sectoral percentage caps on foreign investment has always been a vexed question. For instance, if a foreign company invests directly into an Indian operating company, and also invests in another Indian company that in turn invests into the operating…