NEW FDI NORMS? ARE THEY IN FAVOUR OF INDIA
The Indian corporate is facing a severe liquidity crisis – evidences of which are well known as pledging of shares for the loan. The central government has eased the norms of FDI and it could go up to maximum 99.5% in most of the sectors. Some see it as an election pro move and critics have there opinion that the government has opened the can of worms.
The cap has been kept at 99.5% because 100% subsidiaries of foreign companies forego tax benefits of combined FDI and FII investments.
According to the Department of industrial policy and production (DIPP) any company will be projected Indian owned if the foreign company has less than 50% beneficial ownership in the company.
For example RANAJN PVT LTD, registered in India as an Indian company where a foreign company holds 49% stake and its Indian partner hold 51%. Ranjan pvt ltd investment in any sector will be considered Indian Investment, regardless of whether the sector is one in which FDI has been capped like telecom.
Well there have been certain issues like beneficial ownership has been brought in to the notice? It’s expected that DIPP will give clearance on Monday over it. There are some more issues which are not cleared it seems the decision has been taken more in a half hazard manner. For the time being don’t eat your head wait to see some clarifications on Monday.
