On 31 March the Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry issued a consolidated foreign direct investment (FDI) policy circular. It became effective on 1 April and while it aims to simplify the rules and regulations pertaining to FDI it consolidates and subsumes all prior press notes, press releases and clarifications issued by the DIPP as on 31 March.
Although the circular clarifies that it has merely consolidated and compiled existing policies and does not intend to change the current legal framework, some changes have surfaced. These include:
- Capital: A note has been added to the definition of the term “capital” which reads as follows: “Any other type of instruments like warrants, partly paid shares etc. are not considered as capital and cannot be issued to persons resident outside India.”
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
