The Hindu Business Line : Govt eases FDI approval norms

FOREIGN investors' drive into India is set to get smoother. the Government on Wednesday divested some of its own powers of approving such investments that it exercised through the Foreign Investment Promotion Board (FIPB) and has handed them over to the general permission route under the RBI.

According to the revised guidelines, the RBI window would now approve transfer of shares from resident to non-resident (including transfer of subscribers' shares to non-residents). However, this would exclude the financial services sector. The Finance Ministry has said that care should be taken that such investments do not trigger off the takeover provisions under the SEBI's substantial Acquisition of Shares and Takeovers Regulations, 1997.

The FIPB approval would also not be required for conversion of ECBs into equity or for increase in foreign equity participation by fresh issue of shares as well as conversion of preference shares into equity capital.

The Finance Ministry has said that all investments under the above categories would have to be covered under the automatic route and should not result in the breach of the sectoral FDI caps. They should also comply with the prescribed pricing guidelines.

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