Changes in FDI Policy - DIPP Press Notes Series 2008

Dear All,

Department of Industrial Policy & Promotion has issued 6 Press Notes under 2008 series on 12^th March 2008. Brief amendments in FDI policy in said press notes are as follows:

Press Note 1 (2008): Change in FID on Credit Information Company (CIC):

As per PN-1 of 2008, Foreign Investment is permitted to the extent of 49% through composite ceiling i.e both Foreign Direct Investment and as well Investment by FII through portfolio investment, subject to the approval from FIPB and necessary regulatory clearance from RBI and subject to the following conditions.

• Portfolio investment by FII should not exceed 24% at any case.
• Further no such FII should hold more than 10% either directly or indirectly.
• Any acquisition in excess of 1% is subject to the reporting to the RBI.
• FII's who are going to invest in CICs Companies, should not seek any representation in the Board based on their shareholding.

Press Note 2 (2008): Foreign Investment on Commodities Exchange:

As per PN-2 of 2008, Foreign Investment is permitted to the extent of 49% through composite ceiling i.e both Foreign Direct Investment and as well Investment by FII through portfolio investment, subject to the specific approval of the Government and necessary regulatory clearance from RBI and subject to the following conditions.

• FII can invest only through secondary market i.e Portfolio investment route only to the extent of 23% at any case.
• Investment under FDI scheme will be allowed to the extent of 26%.
• No foreign investor, including person acting in concert with can hold more than 5% either directly or indirectly.

Press Note 3 (2008): Clarification on FID in Industrial Park:

You may be aware of that as per press note 2 of 2000, 100% FDI is allowed for industrial park under the automatic route. Further through press note 2 of 2005, the Govt of India stipulated certain conditions for FDI upto 100% under the automatic route for development industrial projects subject to the terms and conditions as stipulated PN 2 of 2005. But, Companies which are in established industrial park are falling under 100% automatic route without complying with PN 2 of 2005.

Further through this PN 3 of 2008, it is clarified FDI will be permitted under the automatic route without complying with PN 2 of 2005 both for setting up industrial park and as well established industrial park.

Besides, DIPP has also issued press notes on the following subject, Press Note 4 (2008): Change in FDI Policy in Civil Aviation Sector, Press Note 5 (2008): Change in FDI Policy in petroleum and Natural Gas Sector, Press Note 6(2008: FDI Policy for mining of titanium bearing mineral and ores.

You can access entire text of press notes 2008 series at http://groups.google.com/group/cschennai/files in PDF format.

Thanks & Regards

Alagar

Investment Banking

Karvy Investor Services Limited
G-1 Swathi Court
22, Vijayaraghava Road
T.Nagar, Chennai - 600 017
Tel: 044-28151034/3445/3658
Moble: 919884731993
e-mail: alagar.muthu@karvy.com
website: karvy.com

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