The Government has notified by Press Note No. 8 (2015)
Series Dated July 30, 2015 the composite caps for
simplification of Foreign Direct Investment (FDI) policy to attract
foreign investments. All sectors other than banking and defence
sectors can now get up to 49 per cent foreign institutional
investment through the automatic route. In sectors under government
approval route, any transfer of ownership due to foreign investment
will require government approval.
As per the new norms, all direct and indirect overseas
investments, whether portfolio or FDI, will be subject to a
composite foreign investment cap for that particular sector. An
FII/FPI/QFI (Schedule 2, 2A and 8 of FEMA (Transfer or Issue of
Security by Persons Resident Outside India) Regulations, as the
case may be) may invest in the capital of an Indian company
under the Portfolio Investment Scheme which limits the individual
holding of an FII/FPI/QFI below 10 percent of the capital of the
company and the aggregate limit for FII/FPI/QFI investment to 24
percent of the capital of the company. This aggregate limit of 24
percent can be increased to the sectoral cap/statutory ceiling, as
applicable, by the Indian company concerned through a resolution by
its Board of Directors followed by a special resolution of the
shareholders and subject to prior intimation to RBI. The aggregate
FII/FPI/QFI investment, individually or in conjunction with other
kinds of foreign investment will not exceed sectoral/statutory
It is also clarified that total foreign investment shall include
all types of foreign investments, direct and indirect, regardless
of whether the said investments have been made under Schedules 1
(FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and
10 (DRs) of FEMA (Transfer or Issue of Security by Persons Resident
Outside India) Regulations.
Foreign Currency Convertible Bonds and Depository Receipts,
having underlying of instruments which can be issued under Schedule
5, being in the nature of debt, shall not be treated as foreign
investment. However, any equity holding by a person resident
outside India resulting from conversion of any debt instrument
under any arrangement shall be reckoned as foreign investment.
Portfolio investment, up to aggregate foreign investment level
of 49% or sectoral/statutory cap, whichever is lower, will not be
subject to either government approval or compliance of sectoral
conditions, provided such investment does not result in transfer of
ownership and/or control of Indian entities from resident Indian
citizens to non-resident entities.
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