Recent consolidated policy: Anything new in it for you?

India’s Department of Industrial Policy and Promotion (DIPP) makes policy pronouncements on foreign direct investment (FDI) through press notes and press releases which are notified by the Reserve Bank of India (RBI) from time to time. These notifications take effect from the date of issue unless they specify otherwise. The procedural instructions are issued by the RBI through a series of circulars.

The press notes, press releases, clarifications, etc., together with acts and regulations, form the regulatory framework over a period of time and are consolidated by the DIPP in the form of its consolidated FDI policy, which is released once every year. The Consolidated FDI Policy, 2013, effective from 5 April, is the sixth edition of the consolidated policy. It supersedes the previous edition and notifications issued prior to 5 April 2013.

Changes introduced

Downstream investments by banking companies: A note inserted under paragraph 3.10.4.1 prescribes that downstream investments by a banking company incorporated in India, owned and/or controlled by non-residents or non-resident entities, will not be counted towards indirect investment under corporate debt restructuring or another loan restructuring mechanism or in trading books or for acquisition of shares due to default in loans.

OP Khaitan & Co is a 40-lawyer law firm, based in New Delhi. Gautam Khaitan is the firm’s managing partner and Gaurav Kapur is an associate.