FDI Policy Amendment as on 23.01.2018

Press Note No. 1 (2018 Series)

Prohibition of restrictive conditions regarding audit firms

Old Provisions New Provisions
Prohibition of restrictive conditions regarding audit firms
h) The onus of compliance of above provisions will be on the investee company.

Para 5.2 (h) of FDI Policy is replaced with the following:

Wherever the foreign investor wishes to specify a particular auditor/audit firm having international network for the Indian investee company, then audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network.

Existing Para 5.2 (h) shall be renumbered as 5.2 (i)

Foreign investment into an Indian company engaged only in the activity of investing in the capital of other Indian company/ies
3.8.3.1 Foreign investment into an Indian company, engaged only in the activity of investing in the capital of other Indian company/ies / LLP, will require prior Government approval, regardless of the amount or extent of foreign investment.

3.8.3.2 Those companies, which are Core Investment Companies (CICs), will have to additionally follow RBI’s Regulatory Framework for CICs.

(A) Para 3.8.3.1 of FDI Policy is amended to read as under:

Foreign Investment in Investing Companies registered as Non-Banking Financial Companies (NBFC) with the Reserve Bank of India, being overall regulated, would be under 100% automatic route.

(B) Para 3.8.3.2 of FDI Policy is amended to read as under:

Foreign Investment in Core Investment Companies (CICs) and other investing companies, engaged in the activity of investing in the capital of other Indian company/ies/LLP, is permitted under Government approval route. CICs will have to additionally follow RBI’s regulatory framework for CICs.

Competent Authority for FDI proposals examining countries of concern

Para 4.1.1 (ix) of FDI Policy is amended to read as under:

Sr. No. Activity/ Sector Administrative Ministry/ Department Sr. No. Activity/ Sector Administrative Ministry/ Department
(ix) a

 

Applications involving investments from Countries of Ministry of Home Affairs Concern which presently include Pakistan and Bangladesh, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time Ministry of Home Affairs (ix)

a

Applications involving investments from Countries of Concern falling under automatic route sector/activities, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time Department of industrial policy and promotion.
      (ix) b Cases pertaining to Government approval route sectors/activities requiring security s per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time Nodal administrative Ministries/department
Civil Aviation
5.2.9…….Note (iii) the policy mentioned at para (c) above is not applicable to M/s Air India Ltd. A. Note (iii) at Para 5.2.9 of FDI Policy which presently reads that “the policy mentioned at para (c) above is not applicable to M/s Air India Ltd.”, stands deleted.

B. Following new clause (d) is added to Other Conditions laid down at Para 5.2.9 of FDI Policy:

(d) In addition to the above conditions, foreign investment in M/s Air India Pvt. Ltd shall be subject to the following conditions:

(i) Foreign investment(s) in M/s Air India Pvt. Ltd., including that of foreign airline(s), shall not exceed 49% either directly or indirectly.

(ii) Substantial ownership and effective control of M/s Air India Pvt. Ltd. shall continue to be vested in Indian Nationals.

Construction Development: Townships, Housing, Built-up Infrastructure and Real Estate Broking:
  Following new clause (vi) is added after Note (v) at Para 5.2.10.2 of FDI Policy:

Para 5.2.10.2 Note (vi):

Notwithstanding anything contained in Para 5.2.10 above, it is clarified that real-estate broking service does not amount to real estate business and 100% foreign investment is allowed in the activity under automatic route.

Single Brand Product Retail Trading
% of Equity/ FDI Cap Entry Route % of Equity/ FDI Cap Entry Route
100% Automatic up to 49% Government route beyond 49% 100% Automatic
Power Exchange
Para 5.2.24.2 (i) FII/FPI purchases shall be restricted to secondary market only Para 5.2.24.2 regarding “Other Conditions” for foreign investment Power Exchange sector/activity the present clause (i) “FII/FPI purchases shall be restricted to secondary market only;” stands deleted.
 Pharmaceuticals
 

 

Medical device means-

a. any instrument,……………………..

 (i),…………………………..

(ii) ………………………….any injury or handicap;

(iii) ……………………………………………….

b. an accessory to such an instrument, apparatus, appliance, material or other article;

c. a device …………………………. specimens derived from the human body or animals.

iii. The definition of medical device at Note (ii) above would be subject to the amendment in Drugs and Cosmetics Act.

Para 6 (iv) …………..

Issue of equity shares under the FDI policy is allowed under the Government route for the following:

(I) import of capital goods……………………………….

(a)Any import………………………….

 (b)The application ……………………………..

(c)Applications complete in all ………………. goods.

 (II) pre-operative …………………………. conditions:

(a)Submission of FIRC …………………………. incurred.

(b)Verification and …………………… the statutory auditor.

(c) Payments should be made ……………. under FEMA Regulations.

(d)The applications, ………………. of the company.

General conditions:

(i) All requests …………………………… of the company.

(ii)Government’s …………………………….tax clearance.

(A) Definition of “Medical Device” as contained at Para 5.2.27.3 Note (ii) of FDI Policy is amended to read as under:

Medical device means –

(a) any instrument,………………………….

(i) ………………………

(ii) ……………………….., any injury or disability;

(iii) ……………………………………………..

(b) an accessory to such an instrument, apparatus, appliance, material or other article;

(c) in-vitro diagnostic …………………………. the human bodies or animals.

(B) Para 5.2.27.3 Note (iii) of FDI Policy which presently reads that “the ……………Drugs and Cosmetics Act”, is deleted.

10. Para 6(iv) of Annexure-3 of FDI Policy is amended to read as under:

Issue of equity shares for sectors requiring Government approval under the FDI policy is allowed under the Government route for the following:

(I) import of capital goods/ ……………………..:

(a) Any import of ……………………imports.

(b) The application ………………………………..

(c) Applications complete in all …………… goods.

(11) pre-operative ……………………. conditions:

(a) Submission of FIRC ……………… incurred.

(b) Verification and ……………………… auditor.

(c) Payments should be ……….. FEMA Regulations.

(d) The applications, ………………….the company.

General conditions:

(i) All ……………………………….of the company.

(ii) Government’s …………………… tax clearance.

(iii) For sectors under automatic route, issue of equity shares against import of capital goods/ machinery/ equipment (excluding second-hand machinery) and pre- operative/pre- incorporation expenses (including payments of rent etc.) is permitted under automatic route subject to compliance with respective conditions mentioned above, and reporting to RBI in form FC-GPR as per procedure prescribed under the FDI policy.

Author Bio

More Under Corporate Law

Posted Under

Category : Corporate Law (3754)
Type : Articles (16217)
Tags : FDI (159) FDI circulars (54) FDI policy (100)

Leave a Reply

Your email address will not be published. Required fields are marked *