India today decided not to count FDI in domestic joint ventures channelled through entities ultimately controlled by Indians for calculating sectoral caps, a move aimed at encouraging more overseas funds inflow.
The decision to change the FDI policy guidelines was taken by the Cabinet Committee on Economic Affairs (CCEA).
"The foreign investment through (an) investing Indian company would not be considered for (calculating) the indirect foreign investment in (the) case of Indian companies 'owned and controlled' by residents and Indian companies owned and controlled ultimately by residents," a new guideline says.
However, FDI through Indian companies owned and controlled by non-resident entities would be taken into account as foreign investment for computing the ceiling.
Home Minister P Chidambaram said the expression "owned and controlled" would be defined in the coming days.
Asked about the objective of the changes in the FDI policy, Chidambaram said it "is to make (FDI policy) simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP)".
In another amendment, the CCEA decided that government approval would be required for transferring the ownership of an Indian company that has a joint venture with a foreign firm in any sector covered by FDI caps.
