DIPP issues consolidated FDI policy

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The Department of Industrial Policy and Promotion (DIPP) issued the Consolidated Foreign Direct Investment Policy Circular of 2017, effective from 28 August. The consolidated foreign direct investment (FDI) policy has made certain general changes to the conditions for making a foreign direct investment, as well as changes to sector-specific restrictions on investments.

The union cabinet in May approved the proposal to phase out the Foreign Investment Promotion Board (FIPB), the inter-ministerial body for processing FDI proposals and making recommendations to the government for its approval. The DIPP in June released its standard operating procedure (SOP) for processing FDI proposals. Specific authorities were designated in the SOP for various sectors for granting approval for foreign investment. This has been incorporated into the consolidated FDI policy.

Limited liability partnership (LLP). An LLP that has foreign investment and operates in sectors where 100% FDI is allowed through the automatic route, without any FDI-linked performance-related conditions, may now be converted to a company under the automatic route, and vice versa, subject to the remaining conditions under the FDI policy being complied with. Startups are now permitted to issue convertible notes to non-residents under the consolidated FDI policy, subject to certain conditions.

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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.

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