The Government of India has issued consolidated FDI Policy vide circular 2 of 2010 effective from October 1, 2010. The Consolidated FDI Policy makes all information on FDI policy available at one place and subsumes Government’s policy on FDI announced through earlier Press Notes/ Press Releases/ Clarifications issued by the DIPP, which were in force and effective as on date.
Earlier the Government of India has issued released the Circular 1 of 2010- Consolidated FDI Policy on March 31, 2010, effective from April 01,2010 and It was decided that the consolidated FDI Policy would be issued every six (6) months to update the FDI policy.
The Circular has been issued with the sunset clause of six months. A new Circular consolidating all amendments to the FDI Policy shall be issued on March 31, 2011 superseding the present Circular.
GIST OF NEW CONSOLIDATED POLICY:
(i) Wholesale cash-and-carry trading: It has been decided to remove the restriction on internal use.
(ii) Non-banking finance companies (NBFCs): NBFCs with 100 per cent foreign investment and a minimum capitalization of $50 million (around Rs 225 crore), can set up subsidiaries for specific NBFC activities, without bringing additional capital towards minimum capitalization.
(iii) Construction development projects: It has been clarified that the lock-in period of three (3) years will be applied from the date of receipt of each tranche of FDI or from the date of completion of minimum capitalization, whichever is later.
(iv) Downstream investments: Downstream investments through internal accruals are now permissible.
(v) Tobacco product manufacturers: Manufacturing of tobacco products has been formally included in the list of activities in which FDI is prohibited.
Please click here to read the revised consolidated Policy.
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