The government has brought out the latest edition of its consolidated FDI policy document - a compilation of the changes made in the past one year in a single document. It is an initiative aimed at ensuring greater ease of doing business in India and an investor-friendly climate to foreign investors so that the country attracts more FDI.
The Department of Industrial Policy and Promotion (DIPP) - the nodal agency for FDI policy - said the new “circular will take effect” from Monday. The circular is updated annually.
For the first time, the document has included start-ups. As per the norms, start-ups can raise up to 100 per cent of funds from Foreign Venture Capital Investor (FVCI). The document said the start-ups can issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance.
Besides, it said a person residing outside India (other than citizens/entities of Pakistan and Bangladesh) will be permitted to purchase convertible notes issued by an Indian start-up company for an amount of Rs 25 lakh or more in a single tranche. Non Resident Indians can also acquire convertible notes on non- repatriation basis.
"Start-ups can issue convertible notes to person resident outside India (subject to certain conditions)," the document said. A start-up company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with approval of the Government," it said. The start-up issuing convertible notes would be required to furnish reports as prescribed by the RBI, it added.
The last one year has seen FDI policy being liberalised in sectors, including defence, civil aviation, construction and development, news broadcasting and private security agencies. These reforms have been incorporated in the document.