India allows FDI against imported capital goods
31 Mar 2011
The government has further relaxed rules for foreign direct investment (FDI) in the country by permitting issuance of equity to overseas investors against imported capital goods and machinery.
The government also removed the existing rule that makes prior approval of technology collaborations mandatory for FDI in existing joint ventures.
The government has also done away with the categorisation of 'investing companies', 'operating companies' and 'investing-cum-operating companies' and has instead classified them into 'companies owned or controlled by foreign investors' and 'companies owned and controlled by Indian residents'.
The government today also announced liberalised norms for overseas investors the likes of Monsanto in production and development of seeds.
In the agriculture sector, FDI will now be permitted in the development and production of seeds and planting material, without the stipulation of having to do so under 'controlled conditions'.
While the existing policy provides for conversion of only ECB/lump-sum fee/royalty into equity, the new policy allows issue of equity, under the government route, in select cases, subject to specific conditions.
