The Ministry of Commerce released the 2020 edition of the consolidated foreign direct investment (FDI) policy on 28 October, incorporating all the changes adopted in foreign investment in the past year.
The 111-page document tries to clarify the government’s intent, rather than its interpretation of the law. Vikram Doshi, PwC India’s partner based in Bengaluru overseeing tax and regulatory issues, points out that the latest edition shows the policy is a case where “intention supersedes form”.
The definition of the word “control” has been made more broad-based. While the intent remains the same, the policy document has clarified what control means, in terms of “control, directly and indirectly, individually, or by acting in concert with others”.
By expanding the scope of the definition of control, the policy document aligns the definition with that used in the Companies Act, 2013, and the Securities and Exchange Board of India’s Substantial Acquisition of Shares and Takeovers Regulations, 2011. The scope has thus expanded to include the right to control management or make policy decisions, whether by an individual or persons acting in concert..