Fdi Norms To Be Eased Further
In a bid to further liberalise the foreign direct investment (FDI) approval regime, the industry ministry will allow foreign-owned holding companies to set up downstream ventures in the specific area of their operation without the mandatory prior approval from the Foreign Investment Promotion Board (FIPB).
The new policy on the downstream units, however, will make it mandatory on the part of the holding companies to seek prior FIPB approval in case they plan to set up downstream ventures in areas other than the specific industry segment for which they had been given original approval. The core group of the FIPB, consisting of the secretaries to the ministries of industry, finance, commerce and the secretary for economic relations in the ministry of external affairs, is meeting next week to give the final touches to the policy.
Under the existing guidelines on FDI, holding companies have to come back to the Foreign Investment Promotion Board for approval of downstream units irrespective of the industrial segment in which the units are to be set up.
The overseas companies, mainly the multinational ones, have been opposing this approval procedure for some time. Under the new policy, if a company has been given approval by the FIPB for setting up a holding company in the field of power development, it could either take up equity in any of the power generation companies or set up subsidiary companies in the field of power generation without having to go through the FDI approval process again and again.