The Foreign Direct Investment (FDI) equity inflow into India in February rose 15.4 per cent year-on-year to $1.72 billion, overcoming the decline recorded in January.
Cumulative FDI inflows for April-February stood at $24.68 billion. This is 2.8 per cent lower than $25.39 billion for the corresponding period last year.
In spite of this slight decline, the Commerce and Industry Minister, Mr Anand Sharma, today exuded confidence that FDI inflows for the full fiscal would match the FY09 inflows. The Government has set a target of achieving $50 billion annual FDI by 2012 and $75 billion by 2014, Mr Sharma said adding that the targets are on track.
“There has been a global shrinkage in FDI investments, and OECD countries are witnessing massive declines. So India's FDI inflow needs to be seen in that backdrop. For the full fiscal, we should be able to match the FDI equity inflows of last financial year ($27.31 billion),” the Minister said while releasing the consolidated FDI policy framework.
The Government has replaced various Press Notes (laying-down rules for FDI), with a consolidated policy framework, in a bid to provide a clear understanding of existing regime to the foreign investor. The comprehensive policy document on FDI, is a simplified compendium of 118 Press Notes of Department of Industrial Policy and Promotion and various Reserve Bank of India circulars and regulations contained in FEMA.
But it does not change the foreign investment rules or FDI limits applicable to various sectors. In case of wholesale trading, however, it has spelt out specific guidelines.
Contrary to general expectations, the issue of ownership of banks such as ICICI (as a result of Press Note 2, 3, 4 of 2009) has not been clarified yet. Discussions between various Departments are still on, Government officials said.
An official statement pointed out, “There are a number of issues related to FDI policy that are currently under discussion in the Government, such as foreign investment in Limited Liability Partnerships (LLPs), policy on issuance of partly paid shares/warrants, rescinding Schedule IV of FEMA, clarifications on issues related to Press Notes 2, 3 and 4 of 2009 and on Press Note 2 of 2005, as also certain definitional issues. When a decision on these is taken, the Government decision would be announced and thereafter incorporated into the consolidated Press Note subsequently.”
At present, changes from time to time pertaining to cross border investment, policy liberalisation, policy rationalisation and foreign technology collaboration and industrial policy are notified in the form of individual Press Notes.
From now on, a new document on Regulatory Framework would be issued every six months which will incorporate and reflect all the changes in the regulations. Accordingly, Press Note unveiled on Wednesday will have a sunset clause of six months and will automatically lapse on September 30.
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