Govt Mulls Easing Of FDI Norms - June 30, 2009

The board that approves overseas investments has decided to allow the issue of warrants without board''s approval, which means saving of 40 to 60 days on deals in India. This will help to fast track the mergers and ease red tape. The government is looking to easing the process of selling stake and raising funds through the issue of warrants and partly paid shares. The finance ministry has decided that issue of warrants and partly paid up shares can go through the automatic route without the FIPB approval, which will help the foreign firms to save time in concluding their equity deals.

Besides this, the finance ministry has also plugged a major inconsistency in the policy. The Companies Act permits raising FDI through partly paid shares while the Foreign Exchange Management Act does not allow it. However, with an amendment in FEMA, now the RBI will also address this glitch.

Foreign Investors In Indian Real Estate Locked For Three Years - March 25, 2009

Overseas investors in Indian real estate cannot sell their stakes before three years to another foreign investor, the Foreign Investment Promotion Board (FIPB), the body that clears such proposals, said.

Along with this, FIPB has ruled against a provision in FDI policy that excused foreign players from the rule in cases where fund transfer is from one non-resident to another. Until now, this three-year lock-in was applicable only on foreign investment in real estate and not on investors.

According to the FIPB, the stand taken by the department of industrial policy and promotion (Dipp), the nodal agency that formulates FDI rules in the country. Dipp’s view is that a foreign investor can send back funds if it divests its stake to another foreign investor as the actual investment in a project would remain intact and only its ownership would change.

“Though Press Note 2 of 2005 has an enabling clause to permit sale of investment between two non-residents before the end of lock in, it has not been allowed so far,” a senior official in the commerce and industry ministry said.

The issue came up in the last FIPB meeting, when the board took up private equity fund 2I Capital’s request to sell its investment in Delhi-based real estate firm Uppal Housing to Mauritius-based fund ICP Investments.

FIPB Clears FDI Proposals

NEW DELHI: The government has approved 18 FDI proposals totalling Rs 1,820.2 crore, including Manipal Educational Group’s plan to induct foreign investment of Rs 1,435 crore in a holding company.

The Foreign Investment Promotion Board (FIPB) also cleared Mauritius-based Indivision India Partners’ proposal to invest foreign equity worth Rs 120 crore in a company engaged in merchant banking and other NBFC activities.

A proposal of Sweden’s Volvo to invest Rs 123 crore for 8.1% stake in the proposed JV with Eicher Motors also received a green signal from the FIPB. However, another Volvo proposal has been referred to the Cabinet Committee on Economic Affairs (CCEA), as the investment involved is above Rs 600 crore.

Vodafone Essar also got an approval to convert operating company into an operating-cum-holding company to make downstream investment in a company engaged in telecom infrastructure business. However, the proposals of the realty firm DLF Limitless Developers and software giant Pepsi India were deferred by the FIPB.

DLF Limitless Developers had sought approval to issue shares in lieu of pre-incorporation expenses, while Pepsi India wanted the government to waive off the divestment condition which required it to offer a part of equity stake to Indian shareholders.