The government today released the Consolidated FDI Policy framework in an effort to make the country’s foreign direct investment (FDI) norms investor-friendly even as the total FDI inflow for April-February 2009-10 remained lower at $24.68 billion compared to $25.39 billion in the corresponding period last year.
FDI for February grew by 15.4 per cent to $1.72 billion against $1.49 billion in the same month last year. Some of the top few sectors that received large-scale foreign equity inflows in February are services, computer software and hardware, telecommunications and housing and real estate.
The Consolidated FDI Policy Framework seeks to “subsume all the existing 177 Press Notes and will be reviewed after every six months,” Commerce and Industry Minister Anand Sharma said today while releasing the final document — Press Note 2010.
The draft FDI policy was released on December 24 last year for stakeholders’ consultations. This consolidated Press Note would be superseded by one to be issued on September 30 to ensure that the framework document on FDI policy was kept updated, Sharma said.
“There are a number of issues related to the FDI policy that are currently under discussion in the government, such as foreign investment in Limited Liability Partnerships (LLPs), policy on issuance of partly paid shares, rescinding Schedule IV of FEMA, clarifications on issues related to Press Notes 2, 3 & 4 of 2009 and on Press Note 2 of 2005, as also certain definitional issues etc. When a decision on these is taken, the government’s decision would be announced and thereafter incorporated into the Consolidated Press Note subsequently,” Sharma said referring to the foreign ownership issues of domestic banks.
In February 2009, the government had issued Press Notes 2 and 3, charting out the method to calculate downstream FDI in terms of transfer of ownership and control in sectors or companies having FDI ceiling. It also charted out the role of the Foreign Investment Promotion Board (FIPB) in ascertaining the amount of FDI. This issue was raised by ICICI Bank and HDFC Bank, whose ownership had come into the scanner under the new norms as foreign stake in the two banks is about 63 per cent and 74 per cent, respectively. The banks have, however, maintained that they are Indian banks.