The government on Wednesday notified changes in the foreign direct investment (FDI) policy, which would now pave the way for larger overseas investments in multi brand retail and telecom and improve investor confidence to do business in India.
The government also widened the definition of the term “control” for mergers and acquisitions, the move experts feel will provide more clarity to foreign investors.
According to the new definition, ‘control’ will include “the right to appoint a majority of directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreement or voting agreements.”
The notification comes after the Cabinet decision of August 2 to relax overseas investment norms.
“The foreign direct investment (FDI) policy is now notified under FEMA regulations and is effective from August 22,” Department of Economic Affairs Secretary Arvind Mayaram told reporters here.
“We believe since the announcement of FDI policy, FDI has increased...FDI is increasing in India and investor confidence is increasing,” Mayaram said.
In the first quarter of the current financial year, FDI was $9 billion, up from $5 billion in the corresponding period last year.
The notification will have to be tabled in Parliament within 30 days of the commencement of the next session, Mayaram said, adding it could also be put to vote in case a member decides to challenge it.
As per the revised FDI guidelines, the government relaxed norms for multi-brand retail trading and eased the mandatory 30 per cent local sourcing norms for companies.