FDI Measures

sunandaC

New member
Several measures to boost FDI have been announced in 1998-99. Projects for electricity generation, transmission and distribution as also roads and highways, ports and harbours, and vehicular tunnels and bridges have been permitted foreign equity participation up to 100 per cent under the automatic route, provided foreign equity does not exceed Rs. 1500 crore.

FDI permissible under Non-Banking Financial Services now includes "Credit Card Business" and "Money Changing Business". Regarding equity participation in private sector banks, multilateral financial institutions have been allowed to contribute equity to the extent of the shortfall in NRI holdings within the overall permissible limit of 40 per cent.

The Government has also decided to permit FDI up to 49 per cent of the total equity, subject to license, in companies providing Global Mobile Personal Communication by Satellite (GMPCS) services. Also, minimum capitalisation norms earlier required for pure financial consultancy services have been relaxed.

GDR/ADR guidelines have been further liberalised in 1998-99. Unlisted companies are now permitted to float Euro issues under certain conditions. All end-use restrictions on GDR/ADR issue proceeds have been removed, except the prevailing restrictions on investment in stock markets and real estate.


The 90-day validity period for final approvals of GDR/ADR issues has been withdrawn and final approval will continue to be valid, thereby imparting greater flexibility to issuing companies regarding the timing of issues.

Indian companies are now permitted to issue GDRs/ADRs in the case of Bonus or Rights issue of shares, or on genuine business reorganisations duly approved by the High Court. The companies, however, in all such cases, will be required to get approval from the Department of Economic Affairs for the issue of GDRs/ADRs.
 
Top