Initially, Foreign Direct Investment (FDI) up to 49% was permitted in companies investing in the infrastructure / services sector excluding the telecom sector.
In light of the steady increase in foreign investment in India, spanning a broad spectrum of industries in the past few months, the FDI policy has been continuously reviewed. For the rationalization/ liberalization of the FDI policy, several measures have been announced from time to time.
Accordingly, the Government of India ("GOI") has recently vide its press release dated 13th November 2006, further enhanced the FDI limit in respect of companies investing in the infrastructure / services sector excluding the telecom sector from 49% to 100%. Such investment is however not permitted vide the automatic route and would be regulated by the Foreign Investment Promotion Board ("FIPB") route.
Such 100% investment is however subject to the following conditions:
- Where a prescribed cap for foreign investment is in place, only the direct investment will be considered for the prescribed cap; and
- foreign investment in an investment company will not be set off against the prescribed cap provided the FDI in such investment company does not exceed 49% and the management of the investment company is with the Indian owners.
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