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Government relaxes foreign investment norms
The Cabinet Committee on Economic Affairs (CCEA) has relaxed the norms under Press Note 1, under which a foreign company needs to seek approval from its domestic partner in a joint venture in the country, before investing in the same sector.
Under the relaxed guidelines, foreign companies will not be required to obtain no objection certificates (NOC) from domestic companies (JV partners), for investing on their own in the same sectors.
According to the Press Note 1 guidelines of 2005, foreign companies required NOC from its domestic partners before investing in the same sector. This had created a big hurdle for the foreign companies to diversify their operations in the country.
At the same time, in an attempt to further expedite the inflow of foreign direct investment (FDI), the government also decided to allow the Foreign Investment Promotion Board (FIPB) to clear projects worth up to Rs 12 billion (without any need to go to the Cabinet), from the existing limit of Rs 6 billion .
''With Thursday's approval, only proposals involving total foreign equity inflow of more than Rs 12 billion would be placed for consideration of CCEA. The recommendations of FIPB on proposals with total foreign equity inflow of and below Rs 12 billion will be considered by the finance minister for approval,''. With the government's further liberalization, the spokesperson said, approval is expected to save time and efforts for the FIPB/CCEA and also expedite foreign investment inflow.
At present, the recommendations of FIPB on proposals with foreign equity inflow up to Rs 6 billion are approved by the finance minister and proposals involving total equity component of more than Rs 6 billion are put up to CCEA.
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