Under Foreign Exchange Management Act, 1999 an Indian party can invest in an overseas Joint
The Department of Industrial Policy
and Promotion (“DIPP”) functioning
under the Ministry of Commerce and
Industry, Government of India has released
the new FDI Policy viz., Circular
1 of 2012 which supersedes Circular 2
of 2011 and consolidates into one FDI
Policy (New FDI Policy) all press notes,
press releases, clarifications, circulars
etc. released by the DIPP on or prior to
April 9, 2012.
The New FDI Policy indicates that the
next consolidated FDI Policy will be
released by the DIPP only after one
year unlike after six months as was the
case earlier. The new policy is however
to be read along with other press
notes, circulars, notifications etc. issued
by the DIPP from time to time.
Below are the highlights of the
changes introduced by the New FDI
Policy:
Particulars |
Erstwhile Position |
New FDI Policy |
Commodity Exchanges |
49% Foreign Investment was allowed under Approval Route, the break-up of which was as follows:
- Investment under FDI Scheme upto 26%
- Investment by Registered FII under Portfolio Investment Scheme (PIS) upto 23%
|
The percentage of foreign investment and the break-up remain the same.
A Registered FII will now no longer require approval from the Government while Investment in commodity exchanges under the FDI Scheme continues to be subject to Government Approval. |
Non Banking Finance Companies (NBFC) |
|
It has been clarified that the ‘leasing and finance business’ as a permissible activity in non-banking financial services under the Automatic Route covers only finance lease and not an operating lease.
|
Import of capital goods / machinery / equipment (including second hand machinery) – conversion to equity
|
Conversion to equity was permitted for import of capital goods / machinery / equipment (including second-hand machinery) |
Conversion to equity in case of import of second-hand machinery has now been excluded. |
|