FDI Norms Eased in India

By admin • September 30th, 2010

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The Indian Government has eased FDI norms for wholesale cash-and-carry trading, non-banking finance companies (NBFCs) and other segments. The Consolidated Foreign Direct Investment (FDI) Policy will come into effective as of October 1, 2010.

The government decided to ease norms for Non-banking finance companies for downstream investment. It will allow NBFCs with 100% FDI and a minimum capitalisation of US$ 50 million, to set up subsidiaries for certain NBFC activities, without producing extra capital towards minimum capitalisation.

Foreign investors who wish to invest in the wholesale cash-and-carry sector will be allowed as the government will remove the restriction on internal use. However they are still only allowed to sell up to 25% of their turnover to group companies. If is expected that this will effect several retailers such as Bharti-Walmart, Carrefour and Metro Cash and Carry.

Share-swap arrangements have been brought under FDI Policy for the first time. Share-swaps are said to have been included because of a large number of proposals from companies. The valuation of shares will have to overseen by a banker and would be subject to FIPB approval.

International Government Affairs & Corporate Relations Consultants for Emerging Markets

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