FDI Policy & RBI Updates |
Permitting FDI in multi-brand product retail trading |
The Cabinet has on 14.09.2012 approved 51% FDI in multi brand retail trading subject to specified conditions:
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FDI In multi brand product retail trading has been allowed with a view to benefit farmers, small manufactures, small traders, young persons seeking employment, and consumers. |
Amendment of conditions in the policy on Foreign Direct Investment in single-brand product retail trading |
The Cabinet has on 14.09.2012 approved an amendment proposal of the Department of Industrial Policy & Promotion. The DIPP has proposed for amendment of the existing policy on Foreign Direct Investment in Single-Brand Product Retail Trading, which was approved by the Cabinet on 10.01.2012 to liberalise policy for FDI in single brand retail. Government had permitted FDI, up to 100%, in single brand product retail trading, subject to specified conditions, including, interalia, the conditions that:
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The CCEA has approved modification of the above mentioned conditions, for the activity of single brand product retail trading, as under:
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Policy on Foreign Investment in Power Trading Exchanges |
The Cabinet Committee on Economic Affairs has approved on 14.09.2012 the proposal of the Department of Industrial Policy & Promotion for permitting foreign investment up to 49 percent, in Power Trading Exchanges.
The CCEA has decided to permit foreign investment, up to 49 percent (FDI & FII) [FDI limit of 26 per cent and FII limit of 23 per cent of the paid-up capital], in Power Trading Exchanges, in compliance with SEBI Regulations; Central Electricity Regulatory Commission (Power Market) Regulations, 2010; and other applicable laws/ regulations; security and other conditionalities. FII investments would be permitted under the automatic route and FDI would be permitted under the government approval route. This is subject to the conditions that FII purchases shall be restricted to secondary market only, and no non-resident investor/ entity, including persons acting in concert, will be holding more than 5 percent of the equity in these companies. |
Review of the policy of Foreign Investment in Companies Operating in the Broadcasting Sector |
The Cabinet Committee on Economic Affairs has approved on 14.09.2012 the proposal of the Department of Industrial Policy & Promotion for Review of the policy on Foreign Investment (FI) in companies operating in the Broadcasting Sector.
The CCEA, after review, has liberalized the policy on foreign investment, for companies operating in the broadcasting sector, as below:
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Foreign investment, in companies engaged in all the aforestated services, will be subject to sectoral and security conditionalities and guidelines, as may be specified from time to time, by the concerned Ministries. |
The foreign investment limit in companies engaged in various activities of the I&B sector shall include, in addition to FDI, investment by Foreign Institutional Investors (FIIs), Non Resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entities. |
Review of Policy on Foreign Direct Investment in Civil Aviation Sector |
The Cabinet Committee on Economic Affairs has approved on 14.09.2012 the proposal of the Department of Industrial Policy and Promotion for permitting foreign airlines to make foreign investment, up to 49 percent in scheduled and non-scheduled air transport services. |
The Government has permitted foreign airlines to invest, under the Government approval route, in the capital of Indian companies operating scheduled and non-scheduled air transport services, up to the limit of 49 percent of their paid up capital. The 49 percent limit will subsume FDI and FII investment. The investments so made, would need to comply with the relevant regulations of SEBI, such as the Issue of Capital and Disclosure Requirements (ICDR) Regulations / Substantial Acquisition of Shares and Takeovers (SAST) Regulations, as well as other applicable rules and regulations. Such investment would further be subject to the conditions that:
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Establishment of Liaison Office (LO) / Branch Office (BO) / Project Office (PO) in India by Foreign Entities – Clarification |
As per extant FEMA guidelines, a person resident outside India requires prior approval of the Reserve Bank of India for establishing a Liaison Office (LO) / Branch Office (BO) in India.
General permission is, however available to a foreign company to open project office in India provided it has secured from an Indian company, a contract to execute a project in India, and subject to satisfying certain other criteria. As per the provisions of A. P. (DIR Series) Circular No. 23 dated December 30, 2009, applications from Non – Government Organisations / Non – Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Government of India, Ministry of Finance Reserve Bank of India has once again issued a clarification vide its A. P. (DIR Series) Circular No. 31 dated September 17, 2012 that permission to establish offices, in India by foreign Non-Government Organisations/Non-Profit Organisations/Foreign Government Bodies/Departments, by whatever name called, are under the Government Route. Accordingly, such entities are required to apply to the Reserve Bank for prior permission to establish an office in India, whether Project Office or otherwise. |