In a significant move that will strengthen commercial trade ties between India and Pakistan, the Government has permitted foreign direct investment (FDI) from Pakistan nationals and companies to invest in the country under the Centrally-approved route in sectors other than defence, space and atomic energy.
This facility to Pakistani companies as well as nationals have become available after the Commerce Ministry revised the consolidated guidelines on FDI on Saturday.
The Government made these changes in the sixth edition of the Consolidated FDI Policy Circular, a ready reckoner on foreign investment-related regulations that is effective from April 5, 2013.
Similarly, NRIs in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in the capital of Indian companies on repatriation basis.
In other significant changes in the policy guidelines, the Department of Industrial Policy Promotion (DIPP) has raised the FDI cap to 74 per cent in various services of the broadcasting sector.
The foreign investment ceiling in Asset Reconstruction Companies (ARCs) has also been increased to 74 per cent from 49 per cent, a move which is aimed at bringing more foreign expertise in the segment.
It has said that the total shareholding of an individual FII in an ARC shall not exceed 10 per cent of the total paid-up capital.
Besides, it has included policy changes in sectors like single brand retail, power exchanges, civil aviation, and non-banking financial companies (NBFCs).
The Government has permitted foreign investment of up to 49 per cent in the power trading exchanges in the country.
last year, amid opposition from some of its key allies and state Governments, the Centre had permitted 51 per cent FDI in multi-brand retail sector. The Government had also subsequently allowed foreign airlines to pick 49 per cent stake in the cash-strapped domestic carriers.
With regard to issue price of shares, a new paragraph has been added in the guidelines.
Under this, where non-residents including NRIs are making investments in an Indian firm in compliance with the provisions of the Companies Act, 1956, by way of subscription to its Memorandum of Association, “such investments may be made at face value subject to their eligibility to invest under the FDI scheme”.
The policy has also listed as many as eight mandatory conditions and one optional clause with regard to conversion of a company with FDI into a limited liability Partnerships (llPs) firm.