http://www.theindiastreet.com
|
1.What are the forms in which business can be conducted by a foreign company in India? |
Foreign companies can make investments or operate their business in a number of ways as given below :-
Financial /Technical /Techno-financial Approval is given by 1. RBI 2.Government/ FIPB 3.Government/ FIPB /RBI(Automatic in respect of Annex-III industries, 100% Subsidary in Power, Roads, Ports, Highways etc is covered under automatic approval subject to certain conditions. Any company set up with FDI has to be incorporated under the Indian Companies Act with the Registrar of Companies and all Indian operations would be conducted through this company. |
2. How does a foreign company invest in India ? |
Either through :- a) Automatic Approval - by the country's Central Bank, the Reserve Bank of India (RBI), Bombay; or b) Through the Foreign Investment Promotion Board (FIPB). i) Automatic Approval through Reserve Bank of India can be availed if the FDI in the equity of the company does not exceed :
No prior approval required. The compny is only required to report to RBI within 30 days of receipt of foreign equity/allotment of shares. ii) FIPB approval is required for all other proposals not eligible for Automatic Approval. Applications to be submitted in Form IL-FC or plain paper to the SIA. |
3. What is the FIPB ? |
I) It is a high level single window agency to clear all proposals relating to FDI (with or without technology transfer) and for all matters relating to investment promotion; ii) It has the flexibility of purposeful negotiation with investors and considers project proposals in totality and free from parameters; iii) It makes recommendation on each proposal which is approved by Government; and; iv) Decisions are communicated normally within 30 days by SIA, which functions as its secretariat. |
4. What are the factors considered by the FIPB while examining proposals ? |
To impart greater transparency to the approval process, guidelines have been issued which govern the consideration of FDI proposals by the FIPB. These are given at Annexure IV of the Manual. |
5. Is a 100% foreign owned subsidiary allowed ? |
Yes. The criteria for allowing such investments have been detailed in the guidelines given at Annexure IV of the Manual. |
6. How are investments in 100% Export Oriented Units (EOUs) allowed ? |
There are three schemes for such units. They are the 100% EOUs, Electronics Hardware Technology Parks (EHTPs) and Software Technology Parks (STPs). Approvals for these are given by both the Automatic and Government routes. |
7. Is investment by Non-Resident Indians (NRIs) permitted ? |
The Government attaches importance to investments by NRIs and Overseas Corporate Bodies (OCBs) i.e in which NRIs hold at least 60% of equity. Government have provided a liberalised policy framework for approval of NRI investments by both the Automatic and the Government route. NRI/OCBs are permitted to invest upto 100% equity in the Real Estate and Civil Aviation sectors. Automatic Approval is given by the RBI to all NRI/OCB proposals with their investment upto 100% equity in high priority industries listed in Annexure III, Part A, B, C & D. Government approval is given for all other proposals not qualifying for Automatic Approval. |
8. How is FDI permitted in the Small Scale Sector ? |
Equity participation upto 24% by any other Industrial undertaking is allowed. For equity participation in excess of this or if a non-SSI unit wishes to manufacture a reserved item, it would be required to obtain industrial licence and undertake export obligation of 50% of production. |
9. Is enhancement of foreign equity in an existing joint venture permitted ? |
Yes. Approval is accorded both on the Automatic under certain conditions and FIPB route. Applications should be accompanied by a Resolution of the Board of Directors of the existing company and a consent letter from the Indian partner/foreign collaborator. |
10. How are foreign technology agreements approved ? |
Approval is granted by two routes a) Automatic approval by RBI; Available for any proposal with lumpsum payment not exceeding US $ 2 million, and royalty of upto 5% on domestic sales and 8% on exports. b) Government approval In all other cases. |
11. How are products/services classified ? |
Investors are required to give the description of activities in the National Industrial Classification of all Economic Activities (NIC), 1987, while submitting applications to the RBI/SIA. Copies of the NIC, 1987 published by the Ministry of Planning, Central Statistical Organisation, can be obtained on payment from the Controller of Publications, 1 Civil Lines, Delhi 110 054 or from any authorised agent. |
12. Can profits, dividends, royalty, knowhow payments be repatriated from India? |
All profits, dividends, royalty, knowhow payments that have been approved by the Government/RBI can be repatriated. Exception is in respect of 22 specified consumer industries where the condition of dividend balancing is applicable, i.e only repatriation of dividends is to be balanced by export earnings over a period of 7 years. |
12. a. Is it possible to use foreign brand names/trade marks in India ? |
Yes. |
12. b. Is national treatment accorded to a Foreign Direct Investment ? |
Yes. A Foreign company incorporated under the Companies Act is treated at par with any domestic Indian company within the scope of approved and subject to all Indian laws. |
13. What proposals require an Industrial Licence (IL) and how is it obtained ? |
In the New Industrial Policy, all industrial undertakings are exempt from licencing except for those m products given in Annexure I and II and those reserved for the Small Scale Sector. The project should not be located within 25 kilometres of a city with a population of more than one million (list appended). The Government has substantially liberalised the procedures for obtaining an Industrial Licence. An IL is approved by the Government. The application in form IL-FC should be filed with the SIA. Approvals normally available within 6-8 weeks. |
14. What is the procedure for a delicensed sector ? |
An Industrial undertaking exempted from licencing needs only to file information in the Industrial Entrepreneurs Memorandum (IEM) with the SIA which will issue an acknowledgement. No further approvals are required. |
15. What are the latest measures by the Government relaxing foreign equity in specific sectors? |
Recent changes in FDI policy are displayed in SIA website under the heading "Latest Changes in Policy/FIPB/PAB" under "Policy & Procedure" |
16. Would foreign companies involved in charitable activities, interested in bringing FDI, require FIPB permission ? |
FIPB approval is given only for proposals of commercial nature. The proposals involving charitable activities would be considered by Ministry of Home Affairs under Foreign Contribution Regulation Act (FCRA) |
17. How to down load IEM & IL-FC forms from SIA Website? |
IEM, IL-FC forms are available in SIA Website under the heading "Manual on Policy & Procedure" in WORDPERFECT File (WPD 8). The same could be down loaded. Printed forms are also available at Government Book shops/oulets |
18. What is the policy of conversion of non-repatriable shares into repatriable shares? |
RBI/FIPB approval is required, as the case may be, and as per sectoral policy parameters |
19. From where one can get the information on Patents? |
For Patents, please visit the website of Department of Industrial Development (www.pk2id.delhi.nic.in) |
20. Can 100% subsidiary pay royalty or technical know hoe fee to its foreign parent? |
No royalty payment is allowed for 100% subsidiary. Payments of technical know how/lumpsum fee can be permitted depending on the merits of the proposal and the sectoral policy |
21. What is the policy on purchase of shares of Indian Company by a Foreign company? |
For purchases of shares of an Indian Company following routes are available a) Through foreign Institutional Investors (FIIs) by portfolio investment. b) By Preferential Allotment of shares c) By Right Issue of shares d) By acquisition of shares from existing shareholders For a) - RBI/SEBI guidelines will be followed For b) & c) - RBI/FIPB approval is required as the case may be For d) - FIPB approval is required For acquisition of shares of an existing company board resolution is a pre-condition for consideration of the proposal by FIPB. Issue/valuation of shares is subject to SEBI/RBI guidelines including SEBI takeover code |
22. What is the investment policy for trading companies ? |
Trading companies are permitted foreign equity upto 100% through FIPB route for the following activities subject to dividend balancing (through exports of thier own items covered under Annexure III) and no local/retail trading activity : a) exports; b) bulk imports with export/exbonded warehouse sale; c) cash and carry wholesale trading; d) other import of goods or services provided at least 75% is for procurement and sale of goods and services among the companies of the same group. |
23. What are the FDI trends in the company? |
For information on FDI trends in the country, please refer SIA Newsletter under 'Publication' of SIA Website |
24. Whether FIPB approval is required for 100% EOU units involving FDI from foreign companies? |
Yes, FIPB approval is required for 100% EOU units involving FDI as automatic approval facility for FDI is not available for setting up 100% EOU units. |
25. Would it be possible to get official document on FIPB meetings? |
Yes, the information is available in 'FIPB Application Status' under Policy & Procedure with links from Site Map and Home Page (www.nic.in/indmin). |
26. Where can one get the information on Indian Standards for any product? |
Please refer to the website of Bureau of Indian Standards (http://www.del.vsnl.net.in/bis.org) |
27. Kindly advise whom to contact for NIC Classification ? |
Please go to "Manual on Industrial Policies & Procedures in India" in 'Policy & Procedure' of SIA Website (http://www.nic.in/indmin/) for "NIC Codes". |
28. Who is the concerned officer in your Departmenr for FIPB related matters? |
Director (Foreign Collaboration / Foreign Direct Investment / FIPB) Shri I. Srinivas may be contacted (Tel: 011-3014218, Fax : 011-3015245, e-mail: srinivas@ub.nic.in) |
0 comments:
Post a Comment