Master Press Note could clarify India’s FDI policy

While most of the world was preparing for the holiday season, the Department of Industrial Policy and Promotion (DIPP), without much notice and publicity, released a draft Master Press Note on foreign direct investment in India late on 24 December 2009. The Master Press Note was open to comments from the public until 31 January. While not intended as an in-depth analysis, our column this month takes a look at this policy initiative and what it seeks to achieve.

The Master Press Note, for the first time, seeks to crystallize and set out in writing the concept of foreign direct investment (FDI) as the government views it. So far, this has been the subject of divergent interpretation consisting of press notes, circulars and notifications, transactional experience, views expressed at meetings, letters, approvals and rejections to concerned parties, etc.

As recorded in the Master Press Note, the government believes that FDI necessarily possesses, among others, the following characteristics: (i) a “lasting interest” in the company; (ii) a strategic relationship with the company; and (iii) a say in the management of the company.

Sawant Singh is a partner and Arun Madhu an associate at Phoenix Legal in Mumbai. They can be reached at sawant.singh@phoenixlegal.in and arun.madhu@phoenixlegal.in.