Consolidated FDI Policy

The Department of Industrial Promotion and Policy (DIPP) under the Ministry of Commerce has published the latest edition of the Consolidated FDI Policy effective from April 10, 2012. The DIPP undertakes to issue revised Consolidated FDI Policy every six months in April and October every year. Now onwards they will issue it on a yearly basis i.e. the next consolidated FDI policy will be issued in March 2013.

Simultaneous to the consolidated FDI policy which makes for ponderous reading because it is more than 100 pages, the DIPP has also issued a press release detailing the changes that were carried out in the FDI policy from October 2011. Some of the changes in the policy is highlighted below:

i)                    In Commodity Exchanges, government approval is required only for the FDI component, not for the FII investment;

ii)                  In case of NBFC, FDI is allowed only on financial lease activity, not on operational leases;

iii)                In case of conversion to equity on the value of imported machinery etc. Second hand machinery, capital goods etc. Will not be allowed to be converted into equity, only first hand imported state of the art technology;

iv)                Investment by Foreign Venture Capital Investors and Qualified Financial Investors in permitted securities;

v)                  FDI in single brand retailing upto 100%,

Among others

The copy of the press release can be found here

A copy of the consolidated FDI circular can be found here