Changes in Foreign Direct Investment Norms

Government has put in place a liberal and investor-friendly policy on Foreign Direct Investment (FDI) under which FDI up to 100% is permitted on the automatic route in most sectors / activities. The policy on FDI is reviewed on a continuing basis through inter-ministerial consultations, with due consideration of relevant issues raised by various stakeholders. During February 2009, Government had issued guidelines on the subjects of calculation of total foreign investment i.e. direct and indirect foreign investment in Indian companies, transfer of ownership or control of Indian companies in sectors with caps from resident Indian citizens to non-resident entities and clarificatory guidelines on downstream investment by Indian Companies through Press Notes 2, 3 and 4 of 2009 respectively. The Department of Economic Affairs had requested Department of Industrial Policy & Promotion for examination of certain issues relating to these Press Notes including, inter-alia, certain issues mentioned by Reserve Bank of India, to which Department of Industrial Policy & Promotion had responded. The Policy on Foreign Direct Investment (FDI) is incorporated in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, notified under the Foreign Exchange Management Act (FEMA), 1999. Section 13 of the Act provides for imposition of penalty, after adjudication, for contravention of the provisions of the Act or Rules / Regulations.

This information was given by Shri Jyotiraditya M Scindia, Minister of State for Commerce & Industry, in a written reply in the Rajya Sabha today.