Govt wary of FDI in limited liability partnerships

The government has taken a cautious approach towards allowing FDI in the hitherto untried LLP format of business, mostly preferred by professionals, experts said today.

The government has allowed FDI in Limited Liability Partnership (LLPs) only in sectors where 100% FDI is allowed under the automatic route.

But still government approval is must for FDI in LLPs even in sectors where 100% overseas investment is allowed.

Experts have, however, welcomed this cautious approach, while looking forward to a gradual liberalisation vis-a-vis FDI.

LLP, a new business structure in India, is a hybrid between a partnership company and body corporate.

"Initially, the government wants to see how they (LLPs) are bringing in the money (FDI), how they are utilsing the funds. As these are not structured like companies, the government is taking a cautious approach," KPMG Executive Director Krishan Malhotra said.

Similar views were expressed by senior partner of law firm Titus & Co, Diljit Titus who said the FDI guidelines would be liberalised further in this regard with the experience gained.