India Issues Consolidated FDI Policy to Attract Foreign Investment: Update From International Expansion Services Team

Sunnyvale, CA (PressExposure) April 12, 2013 -- The consolidated FDI policy, which takes effect from April 5, 2013, encompass changes introduced during the last year mainly in multi-brand and single-brand retail, Asset Reconstruction Companies (ARC), power exchanges, civil aviation, Non-banking Financial Companies (NBFCs) and the broadcasting sector.

Consolidated FDI Policy Guidelines: Key Highlights

-Up to 51% FDI is allowed in multi-brand retail sector. -FDI in ARCs is increased to 74% (from 49%) which will bring in more foreign expertise. However, a single FII cannot invest more than 10% of the total paid up capital of the ARC. -FDI ceiling for various broadcasting services is increased to 74%, 49% in power trading exchanges and 49% in the domestic airlines.

Other Important Policies:

Downstream Investment

Under the Automatic Route, Indian companies having FDI are permitted to make downstream investment in a Limited Liability Partnership (LLP). However, they need to fulfill the following conditions:

-The company and the concerned LLP need to operate in sectors where 100% FDI is permitted through the automatic route; and -No FDI-linked performance conditions exist.

Conversion of a Company into a Limited Liability Partnership The policy has also listed around eight obligatory conditions and one optional clause, related to the conversion of a company with FDI, into a Limited Liability Partnership (LLP).

Issue Price of Shares

With regards to the "issue price of shares" for shares issued to a non-resident who invests in an Indian company through subscription to the Memorandum of Association (MOA) during incorporation, the share price can be the face value subject to the non the non-resident's eligibility to invest under the FDI scheme.

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Press Release Submitted On: April 12, 2013 at 6:09 am
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