The Hindu Business Line : New norms will bring in more FDI: Kamal Nath

New Delhi, Feb. 13 Amid the Left Parties’ charge that the Government had by passed Parliament while announcing new FDI guidelines, the Commerce and Industry Minister, Mr Kamal Nath, on Friday said that the new guidelines correct the anomalous situation that existed before and will create space for inflow of additional foreign capital.

“We have brought in the concept of ownership and control as a central principle in our foreign investment guidelines. This is a major policy and paradigm shift,” the Minister said.

He added that ownership and control would follow the definition of the Companies Act and explained that the need for fresh guidelines on calculation of direct and indirect foreign investment arose as a result of use of different regimes across various sectors.

“We are using different methods in information and broadcasting, telecommunication, insurance and other sectors. This methodology was cumbersome with difficult calculations when a large number of companies with indirect foreign equity had to be taken into account,” the Minister said.

The new guidelines have done away with the earlier pro-rata method, which was sometimes resulting in anomalous and unintended consequences that may not have been in keeping with the spirit of the country’s foreign investment policy.

“The guidelines have been framed specially to see that ownership or control does not pass from Indian citizens to non-resident entities in sensitive sectors,” Mr Kamal Nath said.

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