The Department of Industrial Policy and Promotion (DIPP) has released a new consolidated foreign direct investment (FDI) policy via circular 1 of 2013, which came into force on 5 April. The new FDI policy supersedes the consolidated FDI policy of 2012 – circular 1 of 2012 – and the press notes that were issued by the DIPP prior to 5 April. The key changes are highlighted below.
Downstream investment
Downstream investments made by banking companies which are owned and/or controlled by non-residents or non-resident entities – due to a corporate debt restructuring or other loan restructuring mechanism, or in trading books, or for the acquisition of shares due to defaults in loans – will not be treated as indirect foreign investment.
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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.
