FIPB tightens norms for FDI in sensitive sectors

To improve the scrutiny of foreign direct investment (FDI) for sensitive sectors, the Foreign Investment Promotion Board (FIPB) has come out with a new set of norms for applicants.

It would now be mandatory for foreign companies that wish to invest in telecom, defence and security services in India to provide details of all directors. Till now, while it was a desirable criterion for the companies seeking FIPB approval, the norm was mandatory only for telecommunications. However, in its new portal to be hosted for launching electronic filing of FIPB applications, this criterion would be mandatory for all applicants in these sectors.

Officials added that after conducting a test drive, the ministry had formally decided to launch online filing of FIPB applications. A separate website was being launched for FIPB exclusively. Till now, FIPB was hosted on the site of the finance ministry, along with other departments.

Besides, the requirement for furnishing details of all directors in foreign companies seeking to invest in India has been made mandatory for all sectors if the company has Chinese or Hong Kong registration or links.

It has also been specified that under the new facility, objections or issues also can be communicated electronically through this site. This website, along with the e-filing facility, would be formally launched on March 12.

Explaining this, officials said if either an Indian company which is a joint venture partner or a foreign company had any issue regarding the other, these could be flagged through the site. These may pertain to Press Notes 1, 2 or 3, or others.

Press Note 1 of 2005 pertains to objections of an Indian partner with the foreign partner or vice versa if the other one proposes to pursue the same line of business separately or with another partner, different from the existing one. Press Notes 2, 3 and 4 define the new mode of calculation for foreign direct investment through direct or indirect holding.