The Hindu Business Line : CCEA okays proposal to ease FDI norms

The Government on Wednesday streamlined the methodology for calculating the total foreign investment in Indian companies, under which it has excluded indirect investment routed through entities ultimately controlled by Indians from the overall sectoral ceilings.

The move, cleared by the Cabinet Committee of Economic Affairs, is aimed at encouraging more overseas funds inflow and offering greater leeway for foreign firms to increase equity in their ventures in India. “The foreign investment through an investing Indian company would not be considered for calculation of the indirect foreign investment in case of Indian companies which are ‘owned and controlled’ by resident Indian citizens and Indian companies ‘owned and controlled’ ultimately by resident Indian citizens,” the guideline said.

The CCEA also decided that in sectors with caps, the Government approval would be required for transferring the ownership or control of an Indian company from resident Indian citizens to non-resident entities.

The key sectors with caps include telecommunication, aviation, retail, insurance and banking.

“The adoption of these guidelines...will facilitate greater foreign capital inflows and send a positive signal in the present difficult economic scenario,” an official statement said.

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