FDI IN LLP

The Government may allow foreigners to set-up Limited Liability Partnership (LLP) in sectors where 100 % foreign investment is allowed.

The nodal agency for foreign investment policy Department of Industrial Policy & Promotion (DIPP), has written to the Ministry of Finance suggesting the broader scope in the proposed Foreign Investment framework for LLPs by allowing foreign Investment in LLPs with prior approval.

It is also expected that a discussion paper may be released in this regard in public domain so as to enable the Government to take an appropriate policy decision at the appropriate time.

It is important to note here that earlier this year after initial discussions, DIPP was not in favour of opening this form of entity for foreigners while the apex financial institution of the country's financial system Reserve Bank of India (RBI) as well as the finance Ministry has favoured FDI in LLP.

The Limited Liability Partnership (LLP) is viewed as an alternative corporate business vehicle that provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement

The Government has enacted Limited Liability Partnership Act, 2008, which extends to the whole of India.