The Reserve Bank of India (RBI) would circulate a discussion paper within the next 15-20 days on the classification of foreign direct investment (FDI) and foreign institutional investment (FII) into the country.
In his Budget speech, Union Finance Minister P Chidambaram had proposed to follow the international practice with regard to defining FDI and FII.
An eight- member committee appointed by the government has recently held meeting on the issue and it is expected to meet again after getting the views of all the stakeholders.
The committee, headed by Department of Economic Affairs (DEA) Secretary Arvind Mayaram, met recently to discuss the issue.
The RBI’s discussion paper will include questions like legal and taxation issues involved in the implementation of the new definition, reports indicate.
As per the proposed definition, if an investor has a stake of 10 per cent or less in a company, the investment would be treated as FII. And if an investor has a stake of more than 10 per cent,it would be treated as FDI.