Government is reportedly working on removing ambiguities in the definition of foreign direct investment (FDI) and foreign institutional investment (FII) and it is expected to issue clarification on the same.
Recently, Commerce and Industry Minister Anand Sharma has reportedly discussed the issue with Finance Minister P Chidambaram. After the meeting, Sharma said the government will issue certain clarifications in FDI policy and this would be effective prospectively.
The Securities and Exchange Board of India (Sebi) takeover code and the proposed Companies Bill define control as the right to appoint majority of directors as well as to control management and policy decisions including via shareholder agreements.
The FDI policy defines control only as the right to appoint majority of directors. Due to this, there has been differences over the definition.
Clarity on the matter would help foreign investors make downstream investments even in sectors where there are FDI caps.
Sharma ruled out any difference between the commerce ministry and finance ministry on defining the word “control”.
Leave a Reply
You must be logged in to post a comment.