FDI norms eased further

MUMBAI, February 4: The Reserve Bank of India (RBI) has relaxed the norms for foreign direct investment (FDI) where prior government approva...

MUMBAI, February 4: The Reserve Bank of India (RBI) has relaxed the norms for foreign direct investment (FDI) where prior government approval is required. Indian companies will no longer need to obtain prior approval of the Reserve Bank for receiving overseas investments and issuing shares to foreign partners in case already cleared by the Secretariat for Industrial Approvals (SIA) or Foreign Investment Promotion Board (FIPB).

This means, in future, proposals from Indian companies which conform to the foreign investment policy as laid down by the government will no longer require case-by-case approval from the Reserve Bank.

Earlier in January, the central bank had relaxed the norms for foreign investment in industries where prior government approval was not required and which fell under RBI’s automatic approval route.

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Under the new format, FDI proposals which have already got specific clearances from the secretariat for industrial approvals (SIA) or foreign investment promotion board (FIPB), will getgeneral permission under FERA for bringing in the investment.

According to the present procedure, the companies after having received government clearance will have to approach the regional office of the RBI for `in-principle’ approval to bring in the remittance from abroad. After getting the `in-principal’ approval the companies were required to get a final approval from the regional office before issuing shares to the foreign investor.

"It will no longer be necessary for the Indian companies to approach the regional offices of RBI for `in-principal’ permission before receiving overseas investment or at a later stage for issuing shares to the foreign investor," said an RBI press release.

After the notification of the new rule, the companies can allow their foreign partners to bring in investment as well as issue shares after government clearance without prior RBI permission. "Necessary notification under FERA to give effect to the revised simplified procedure is under issue," the release said. The newnorms will be applicable only for the new approvals. "Cases pending with RBI will be dealt with expeditiously as per the procedure prevailing before the date of the new notification," the release said.