Consolidated FDI Policy, 2017

Advocates & Solicitors

Consolidated FDI Policy, 2017

The Department of Industrial Policy and Promotion (DIPP) has released the much awaited new edition of the Consolidated Foreign Direct Investment Policy (FDI Policy) on 28th August 2017, which is effective from the same day.

During the last one year, the government has liberalized FDI policy in over a dozen sectors, including defense, civil aviation, construction and development, private security agencies and news broadcasting. The FDI Policy incorporates all such changes and updates at one place, and presents the consolidates existing law relating to FDI in India, as on 26 August 2017.

The new FDI Policy also takes into account the consequential changes pursuant to the recent abolition of the Foreign Investment Promotion Board (FIPB), and specifies the competent authorities that will decide on FDI proposals under the Government Approval Route, as also the applicable conditions for FDI in specific sectors.

In wake of the recent initiatives by the Government to promote ‘Start-ups’ in India, the FDI Policy has for the first time, included separate provisions specific to ‘Start-ups’. These include various conditions for allowing Indian ‘Start-ups’ to raise FDI from foreign venture capital funds and certain other eligible investors under the Automatic Route, by issuing instruments such as convertible notes, equity or equity linked instruments as well as debt instruments. This is a big relaxation from the general restriction for raising FDI, where partially/optionally convertible equity and equity linked instruments and debt instruments are otherwise not permitted to be issued under the Automatic Route for raising FDI. However, for sectors which are anyways under the Government Approval route, ‘Start-ups’ will be required to take approval to issue convertible notes, etc. to these investors.

The detailed text of the FDI Policy, 2017 is available at investment/foreign-direct-investment-policy. In case you have any queries regarding the same, please do not hesitate to let us know.

*The contents hereof should not be construed as legal opinion. This provides general information existing at the time of preparation and is intended as a news update and ANB Legal neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained herein. It is recommended that professional advice be taken based on the specific facts and circumstances. The contents hereof do not substitute the need to refer to the original pronouncements.