The Indian government reportedly may soon ease restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company without categorising such investments as ‘suspect’ involving 'round tripping' of funds to better facilitate the flow of foreign funds into legitimate business activities.
The Foreign Exchange Management Act, 1999, (FEMA) does not permit FDI by an overseas JV or WOS of an Indian party without the prior approval of the Reserve Bank of India (RBI). There are restrictions as well on Indian entities to undertake overseas direct investment (ODI) in a foreign entity that already has existing FDI investment structures in India.The Indian government reportedly may soon ease restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company without categorising such investments as 'suspect' involving 'round tripping' of funds to better facilitate the flow of foreign funds into legitimate business activities.#
A news agency reported that the changes would soon be made in overseas direct investment (ODI) regulations to ease the restrictions and put such investments (FDI and ODI) under the automatic route, i.e., without prior approval of RBI.
Chaired by economist Surjit Bhalla, a high-level advisory group on how to increase India's exports, in its report has also suggested sweeping change in FDI regulations with a way to attract funds that go into building businesses in the country.
The department for promotion of industry and internal trade (DPIIT) is also studying the report for finalising changes in the Press Note pertaining to FDI by JV of WOS of Indian party, the news agency reported.
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