Changes in Consolidated FDI Policy 2017
Department of
Industrial Policy & Promotion release consolidated Foreign Direct
Investment (“FDI”) Policy every year, with amendment to bring in line with the
RBI guidelines and FEMA regulation and based on the requirement from Corporate,
towards ease of doing business and encouraging Foreign Investor at large, to
invest in Indian Corporate.
Last year,
Consolidated FDI Policy came into effective from August 28, 2017 and will be
effective till the next Consolidated FDI Policy come into force for 2018. To
bring in line with RBI guidelines and as amendments required, DIPP released
Press Note No. 1 (2018) dated January 23, 2018, amending few important clauses
in the Consolidated FDI Policy 2017.
Following are the brief summary of few
important amendments:
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Prohibition
of restrictive conditions regarding audit firm
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Within
the FDI in Investee Companies, if Investor Company is intending to call for
Joint Audit, whereby one of the auditor should not be forming part of the
same audit network. Hence, this will increase the Corporate Governance check
on bring brands, where the Foreign Investor will have stake and decision
making power.
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100%
FDI is allowed in NBFC
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Investment
by Foreign Investor in NBFC will no longer require Government approval. 100%
FDI is permitted in NBFC Companies under automatic route as against approval
route.
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Activity / Sector
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Administrative Ministry Department
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Application
involving instruments from Countries of Concern falling under automatic route
sectors/activities, requiring security clearance as per the extant FEMA 20,
FDI Policy and security guidelines, as amended from time to time
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Department
of Industrial Policy and Promotion
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Cases
pertaining to Government approval route sectors/activities requiring security
clearance as per the extant FEMA 20, FDI Policy and security guidelines, as
amended from time to time
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Nodal
Administrative Ministries / Departments
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FOREIGN INVESTMENT IS ALLOWED IN AIR-INDIA NOW
Existing policy
allowed foreign airlines to invest in the Indian aviation companies up to 49%
of capital, operating scheduled and non-scheduled air transport services,
subject to the approval from Government. This policy was not allowed to M/s.
Air India Limited. However, the restriction is removed from M/s. Air India
Limited with the amendment.
100% FDI IS ALLOWED IN THE REAL ESTATE BROKING SERVICES
100% FDI is allowed in
the real estate broking services (which does not tantamount to be real estate
business)
AMENDMENT IN
SINGLE BRAND RETAIL TRADING :
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(i)
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100%
FDI permitted
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(ii)
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Product
should sold out in single brand at international market as well
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(iii)
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Single
Brand means brand used during the manufacturing process
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(iv)
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Sourcing
of 30% of value of goods purchased by the Indian business, should be from
domestic market, after FDI above 51%. These are mandatory requirement and
duty of statutory auditor to check the accounting system to ensure the
procurement is done from the domestic market.
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EXPANSION OF
ISSUE OF EQUITY SHARES FOR PRODUCTS IMPORTED
In addition to the
existing conditions for conversion/issue of equity shares for sector(s) under
automatic route, issue of equity shares are allowed as against import of
capital goods, machinery, equipments, and pre-operative expenses, subject to
the approval from Government and filing of FC-GPR as per RBI reporting norms.
Courtesy : Mr Ashish
Baid
