On 31 March, the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, issued circular 1 of 2011. It reflects the policy framework on foreign direct investment (FDI) in India as of 1 April. Some of the changes incorporated in circular 1 are detailed below.
Tie-up removed
Prior to circular 1 if a non-resident investor had, as of 12 January 2005, an existing joint venture or technology transfer or trademark agreement in India, new investments in the same field required the prior approval of the Foreign Investment Promotion Board (FIPB) and a no-objection from the existing joint venture partner. To encourage foreign investment, the government has deleted this condition. So, inward investments after 1 April do not require approval from the FIPB or existing joint venture partners.
Partner
S&R Associates
Paying for shares
Earlier, the issue of shares to non-resident investors for non-cash consideration was under the automatic route: 1) against lump sum technical know-how fee or royalty, and 2) on conversion of external commercial borrowings.
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Sandip Bhagat is a partner and Vivek Kumar is an associate at S&R Associates, a law firm with offices in New Delhi and Mumbai.
New Delhi
64 Okhla Industrial Estate Phase III
New Delhi 110 020
India
Tel: +91 11 4069 8000
Fax: +91 11 4069 8001
Mumbai
One Indiabulls Centre 1403, Tower 2, B Wing
841, Senapati Bapat Marg, Lower Parel
Mumbai 400 013, India
Tel: +91 22 4302 8000
Fax: +91 22 4302 8001
