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INDIA BUSINESS WORLD - 1st March - TO - 15th March - 2009
30 MNCS GET NOD TO BYPASS FIPB
THE wait is over for 30 foreign firms to get foreign exchange promotion board’s (FIPB) nod for making downstream investments. The government has allowed them to escape the board and make direct investment in downstream activities by merely informing the Reserve Bank of India (RBI). So far, a foreign company operating in India needed a prior FIPB approval before taking any such decisions.
But the company will be required to inform the board, department of industrial policy and promotion (Dipp) and the secretariat for industrial assistance (SIA) about its investments within 30 days of funding the project, a senior official in the commerce and industry ministry said.
A few days back the government had issued an instruction (Press Note 4) doing away with the FIPB approval for downstream investments. But it was silent on the fate of cases pending with the board. Nimbus Communications, DSR Realtors and Intertoll Consultants are some of the companies to have approached FIPB of late seeking its approval for making downstream investments.
According to the Press Note 4, a foreignowned or controlled Indian company that either runs a business (operates, in government parlance) or runs a business and also invests in other companies down the line will no longer have to seek clearance from FIPB for making investments in yet another company.
An Indian company simply means a company registered in India, regardless of ownership and control. A foreign owned Indian company means a company registered in India with a majority foreign holding. And, a foreign controlled Indian company means a company registered in India having majority of directors on the board appointed by non-residents.
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