The government has brought out the latest edition of its consolidated FDI policy document, which is a compilation of the changes made in the past one year in a single document.
It is an initiative aimed at ensuring greater ease of doing business in India and an investor-friendly climate to foreign investors so that the country attracts more FDI.
The Department of Industrial Policy and Promotion said the new “circular will take effect” from Monday. For the first time, the document has included start-ups. As per the norms, start-ups can raise up to 100% of funds from Foreign Venture Capital Investors.
The document said start-ups can issue equity or equity-linked instruments or debt instruments to FVCIs against receipt of foreign remittance.
Besides, it said a person resident outside India (other than citizens or entities of Pakistan and Bangladesh) will be permitted to purchase convertible notes issued by an Indian start-up company for an amount of ₹25 lakh or more in a single tranche. NRIs can also acquire convertible notes on non-repatriation basis. “Start-ups can issue convertible notes to person resident outside India (subject to certain conditions),” the document said. A start-up company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with the approval of the Government,” it said. Start-ups issuing convertible notes would be required to furnish reports as prescribed by the RBI, it added.
The past one year has seen FDI policy being liberalised in sectors including defence, civil aviation, construction and development, news broadcasting and private security agencies. These reforms have been incorporated in the document.
Source: The Hindu