Govt permits foreign investments through partly paid shares

Government has permitted foreign investments through partly paid shares and warrants in a move to facilitate FDI in the country.
"The government has reviewed the provisions of the extant FDI policy...And it has been decided to allow partly paid shares and warrants as eligible capital instruments for the purposes of FDI policy," the Department of Industrial Policy and Promotion (DIPP) said in a notification.
An official said that the nature of these instruments are also of equity and the move would help in attracting FDI.
In a separate note, the DIPP has clarified that the facility sharing agreements within two group companies will not be treated as real estate business provided the arrangements are at arm's length price.

"Facility sharing agreements between group companies through leasing/sub-leasing arrangements for the larger interest of business will not be treated as 'real estate business' within the provisions of the Consolidated FDI policy circular of 2015," it said.
These would be subject to the condition that "such arrangements are at arm's length price in accordance with relevant provisions of Income Tax Act 1961 and annual lease rent earned by the lessor company does not exceed 5 per cent of its total revenue," it added.
The government is taking several steps to boost FDI. It has relaxed FDI norms for sectors such as medical devices, defence and construction activities.

During April-June quarter of this fiscal, foreign direct investment into the country grew by 31 per cent to USD 9.50 billion.