Varying beneficial ownership caps muddy waters for FDI investments

Ambiguity on whether investment falls under automatic route or requires govt approval

Authorised dealer (AD) banks are applying different thresholds for determining beneficial ownership (BO) for foreign direct investment (FDI) coming into India, adding to the uncertainty surrounding the amended Press Note 3 (PN3) guidelines.

The threshold being applied ranges between  25 per cent and 10 per cent (to even 1 per cent), said people in the know.

The government, on the other hand, is reportedly in favour of a 10 per cent cap, but there has been no official confirmation on this.

AD banks are those that deal in foreign exchange, and help facilitate FDI transactions.

The BO threshold is a