Changes in Automatic Route Sectoral Cap under FEMA FIPB & treatment of additional foreign investments - Press Note 1 2010

Government Route (ie) prior approval of Government of India shall be considered by Foreign Investment Promotion Board (FIPB), under Department of Economic Affairs (DEA), Ministry of Finance.

Approval of FIPB/CCEA:

• FIPB can recommend on proposals for approval of Ministry of Finance if total foreign equity inflow is UPTO Rs.1200 crore.
• The FIPB Secretariat in DEA will process the recommendations of FIPB to obtain the approval of Minister of Finance and Cabinet Committee on Economic Affairs (CCEA) for total foreign equity inflow of more than Rs. 1200 crore.
• The CCEA would also consider the proposals which may be referred to it by the FIPB/ the Minister of Finance.

Additional Foreign Investment into Same Entity:

It has also been decided that companies may not require fresh prior approval of the Government i.e. Minister in-charge of FIPB/CCEA for bringing in additional foreign investment into the same entity, in the following cases:

1. Cases which earlier required prior approval of FIPB/Cabinet Committee on Foreign Investment (CCFI)/CCEA and who had, accordingly, earlier obtained prior approval of FIPB/CCFI/CCEA for their initial foreign investment but subsequently such activities/sectors have been placed under automatic route;
2. Cases which had sectoral caps earlier and who had, accordingly, earlier obtained prior approval of FIPB/CCFI/CCEA for their initial foreign investment but subsequently such caps were removed/increased and the activities placed under automatic route; provided that such additional investment alongwith the initial/original investment does not exceed the sectoral caps;
3. Cases of additional foreign investment into the same entity where prior approval of FIPB/CCFIICCEA had been obtained earlier for the initial/original foreign investment due to requirements of Press Note 18/1998 or Press Note 1 of 2005 and prior approval of the Government under the FDI policy is not required for any other reason/purpose.

Thats it, this is the final and last of the classes of Press Note series.  This subsequently will be superceded by Master Press Notes which will be released for every 6 months.

Source: Press Note 1 of 2010