Lakshmi Kumaran & Sridharan AttorneysAn ISO 9001 / 27001 certified law firm

FDI Policy - Consolidated document released

24th April, 2012

The Department of Industrial Policy & Promotion in the Ministry of Commerce has issued fifth edition of the consolidated FDI Policy document. As per Circular No. 1 of 2012, effective 10th April, 2012, investment by registered FIIs in commodity exchanges will no longer require Government approval. This relaxation brings the policy in line with that of foreign investment in respect of other infrastructure companies in the securities markets. 

On conversion of ECBs, royalty, etc., into equity, allotment of equity shares under Government route will be restricted for import of capital goods and machinery and such facility will, henceforth, not be available for second-hand machinery. The circular further clarifies that for NBFCs, the activity of ‘leasing and financing’ would cover only ‘financial leases’ and not ‘operating leases’.

The aggregate limit of 24% for FII investment in the capital of an Indian company under the Portfolio Investment Scheme can be raised subject to applicable sectoral cap/statutory ceiling. A special resolution by the Board and RBI’s prior approval will be required in such cases.
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