Indirect foreign investment policy in a state of flux

By Ravi Singhania and Sunil Kumar,Singhania & Partners

The Department of Industrial Promotion and Policy (DIPP) has issued fresh guidelines for foreign investments in sectors with caps, such as defence production, civil aviation, broadcasting, insurance and telecoms, which require approval from the Foreign Investment Promotion Board (FIPB).

Downstream investment in Indian companies by investing companies is now subject to the guidelines in press notes 2 and 3 of 2009. Press note 2 lays down guidelines for the calculation of total foreign investment, which includes foreign direct investment (FDI) and indirect foreign investments (FIDI) across all sectors and activities.

Ravi Singhania Partner Singhania & Partners
Ravi Singhania
Singhania & Partners

Press note 3 lays down guidelines to determine the transfer of ownership or control of Indian companies in industries with sectoral caps and situations which would require FIPB approval.

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Ravi Singhania is the managing partner and Sunil Kumar is a partner in the tax practice at Singhania & Partners. The firm is headquartered in Noida and has offices in New Delhi, Mumbai, Bangalore and Hyderabad.


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