Foreign
Direct Investment (FDI) is permited as under the following forms of
investments.
- Through financial
collaborations.
- Through joint ventures and
technical collaborations.
- Through capital markets via
Euro issues.
- Through private placements or
preferential allotments.
Forbidden
Territories:
FDI is not permitted in the following industrial sectors:
- Arms and ammunition.
- Atomic Energy.
- Railway Transport.
- Coal and lignite.
- Mining of iron, manganese,
chrome, gypsum, sulphur, gold, diamonds, copper, zinc.
Foreign Investment
through GDRs (Euro Issues)
Foreign Investment through GDRs is treated as Foreign
Direct Investment
Indian companies are allowed to raise equity capital in the
international market through the issue of Global Depository Receipt
(GDRs). GDRs are designated in dollars and are not subject to any
ceilings on investment. An applicant company seeking Government's
approval in this regard should have consistent track record for good
performance (financial or otherwise) for a minimum period of 3
years. This condition would be relaxed for infrastructure projects
such as power generation, telecommunication, petroleum exploration
and refining, ports, airports and roads.
Clearance from FIPB
There is no restriction on the number of Euro-issue to be floated
by a company or a group of companies in the financial year . A
company engaged in the manufacture of items covered under Annex-III
of the New Industrial Policy whose direct foreign investment after a
proposed Euro issue is likely to exceed 51% or which is implementing
a project not contained in Annex-III, would need to obtain prior
FIPB clearance before seeking final approval from Ministry of
Finance.
Use of GDRs
The proceeds of the GDRs can be used for financing capital goods
imports, capital expenditure including domestic
purchase/installation of plant, equipment and building and
investment in software development, prepayment or scheduled
repayment of earlier external borrowings, and equity investment in
JV/WOSs in India.
Restrictions
However, investment in stock markets and real estate will not be
permitted. Companies may retain the proceeds abroad or may remit
funds into India in anticiption of the use of funds for approved end
uses. Any investment from a foreign firm into India requires the
prior approval of the Government of India.
|
