Foreign firms can hike stake in Indian JVs with change in FDI norms

Giving scope to foreign firms to increase equity in their Indian joint ventures, the Govt changes FDI policy and excludes indirect investment through domestic companies from overall sectoral ceilings.

Giving scope to foreign firms to increase equity in their Indian joint ventures, the government on Wednesday changed FDI policy and excluded indirect investment through domestic companies from overall sectoral ceilings.

HT Image

The decision to change the FDI policy guidelines was taken by the Cabinet Committee on Economic Affairs (CCEA).

"The foreign investment through (an) investing Indian company would not be considered for (calculating) the indirect foreign investment in (the) case of Indian companies 'owned and controlled' by resident Indian citizens and Indian companies owned and controlled ultimately by resident Indian citizens," a new guideline says.

Asked what the objective of the changes in the FDI policy was, Home Minister P Chidambaram said, "The objective is to make (FDI policy) simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP)."

In another amendment, the CCEA decided that government approval would be required for transferring the ownership of an Indian company that has a joint venture with a foreign firm in any sector covered by FDI caps.