FOREIGN INVESTMENT POLICIES & PROCEDURES

Foreign Direct Investment (FDI) inflows

• FDI equity inflow in the month of November 2011, stood at US$ 2.54 billion. Amount of FDI inflows from April 2011 to November 2011 were recorded at US$ 22.83 billion. Cumulative amount of FDI (from April 2000 to November 2011) into India stood at US$ 152.55 billion.
  
  
• During November 2011, services sector attracted 21 per cent of the total FDI equity inflow into India, while Telecommunications attracted second largest amount of FDI with 8 per cent share during the same period. Computer Software & Hardware was the third highest sector attracting FDI with 7 per cent of total inflows followed by housing and real estate and construction activities (includes roads & highways) which garnered 7 per cent shares each.
  
  
• During November 2011, Mauritius was the top investing country for India with 41 per cent of the total inflows. Singapore was second with 10 per cent share, U.S.A stood third with 7 per cent share. U.K and Japan were on fourth and fifth places with 6 per cent and 5 per cent shares respectively.

Policy Initiatives

Foreign investment in Print Media dealing with news and current affairs

(a) FDI up to 100 percent is permitted with prior approval of the Government in publication of facsimile edition of foreign newspapers provided the FDI is by the owner of the original foreign newspaper(s) whose facsimile edition is proposed to be brought out in India subject to the following conditions:

• the entity is incorporated or registered in India under the Companies Act, 1956; and
  
  
• the entity would be subject to the Guidelines for publication of newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign newspapers issued by Ministry of I&B.

(b) Foreign investment, including FDI and investment by NRls/PIOs/FII, up to 26 percent, is permitted with prior approval of the Government for publication of Indian editions of foreign magazines dealing and news and current affairs.

Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment in Indian companies:

Salient features

• All investment directly by a non-resident entity into the Indian company would be counted towards foreign investment.
  
  
• The foreign investment through the investing Indian company would not be considered for calculation of the indirect foreign investment in case of Indian companies which are 'owned and controlled' by resident Indian citizens and Indian Companies which are owned and controlled ultimately by resident Indian citizens.
  
  
• For cases where this condition is not satisfied or if the investing company is owned or controlled by 'non resident entities', the entire investment by the investing company into the subject Indian Company would be considered as indirect foreign investment.
  
  
• As an exception, the indirect foreign investment in only the 100 percent owned subsidiaries of operating­ cum-investing/investing companies will be limited to the foreign investment in the operating-cum­ investing/ investing company. This exception has been made since the downstream investment of a 100 percent owned subsidiary of the holding company is akin to investment made by the holding company and the downstream investment should be a mirror image of the holding company.
  
  
• In the I& B and Defence sectors where the sectoral cap is less than 49 percent, the company would need to be 'owned and controlled' by resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens. For this purpose, the equity held by the largest Indian shareholder would have to be at least 51 percent of the total equity.
  
  
• Any foreign investment already made in accordance with the guidelines in existence prior to issue of this Press Note would not require any modification to conform to these guidelines. All other investments, past and future, would come under the ambit of these new guidelines.

Guidelines for transfer of ownership or control of Indian companies in sectors with caps resident Indian citizens to non-resident entities

Salient features

Government/FIPB approval will be required in sectors with caps where:

• An Indian company is being established with foreign investment and is owned by a non-resident entity; or
  
  
• An Indian company is being established with foreign investment and is controlled by a non­ resident entity; or
  
  
• The control of an existing Indian company, currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens, will be/is being transferred/passed on to a non-resident entity, as a consequence of transfer of shares to non-resident entities through amalgamation, merger, acquisition etc; or
  
  
• The ownership of an existing Indian company, currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens, will be/is being transferred/passed on to a non-resident entity as a consequence of transfer of shares to non-resident entities through amalgamation, merger, acquisition etc.