UP cabinet provides significant relief to foreign investors

| | Lucknow
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UP cabinet provides significant relief to foreign investors

Tuesday, 05 November 2024 | PNS | Lucknow

In a significant move to boost foreign investment in Uttar Pradesh, a cabinet meeting chaired by Chief Minister Yogi Adityanath at Lok Bhavan on Monday approved amendments to the Incentive Policy 2023 for FDI (Foreign Direct Investment) and investment of Fortune 500 companies.

This amendment provides significant relief to foreign investors. Now, foreign companies that secure funding through equity, loans or other sources can also invest in the state. This decision is expected to lead to an increase in foreign investment in Uttar Pradesh.

Providing details on the cabinets decisions, Finance and Parliamentary Affairs Minister Suresh Khanna stated, “The foreign direct investment (FDI) policy, introduced on 1/11/2023, has been amended slightly. The minimum investment threshold for eligibility under the policy remains at Rs 100 crore. According to the RBI’s definition, FDI has so far only included equity investments. However, with this policy amendment, we have broadened it to include foreign capital investment.”

He further explained that until now, the FDI included investment made by a company in its equity alone, but many companies raise funds from external loans or other sources to expand. “We have now allowed that as well. If a company has just 10 per cent equity and secures 90 per cent of its investment from other sources, it will still be eligible for benefits under this policy.”

He announced that this policy will now be known as the Foreign Direct Investment, Foreign Capital Investment and Fortune Global 500 and Fortune India 500 Investment Promotion Policy, 2023. It will include preference shares, debentures, external commercial borrowing, standby letters of credit, letters of guarantee, and other debt securities for foreign companies investing in equity as foreign capital investment.

Khanna further explained, “Other methods outlined by the RBI for calculating foreign investment, including the Framework on External Commercial Borrowing, Trade Credit, and Structured Obligations, will also qualify. Foreign capital investments made by a company — including at least 10 per cent in equity, with the remainder through debt and other instruments — will be deemed eligible and factored into the total capital investment calculation.”

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