In 2009, in an important step that gave enterprises the flexibility to combine the features of a partnership with that of a limited liability company, the government of India enabled the creation of limited liability partnerships (LLPs). However, at that time, India’s foreign direct investment (FDI) policy did not permit foreign investment in LLPs.
Over the last year, perhaps mindful of falling FDI and the need to create alternate avenues for such investment, the government has been revisiting its FDI norms. As a result it now allows FDI in LLPs, albeit in a restricted manner. This month we discuss certain key aspects of the new policy.
In brief
The main changes introduced are:
(a) FDI is permitted in LLPs in sectors and activities where 100% FDI is allowed through the automatic route and where there are no FDI-linked performance related conditions.
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Kartikeya Singh is a counsel and Raghuveer Sarathy is an associate at the Mumbai office of Phoenix Legal. They can be reached at kartikeya.singh@phoenixlegal.in and raghuveer.sarathy@phoenixlegal.in.
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