In a major revamp of foreign investment regime, overseas inflows is likely to be divided into two categories-Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI)-with a minimum composite cap of 49%. The proposal of the draft recommendations by the Arvind Mayaram panel has recommended an aggregate automatic limit of 24 per cent of FPI, which may be raised up to the extent of FDI permitted under the automatic route. As per the proposal, an investor will have option to invest either as FPI or FDI, but not both.
Further, the individual investment limit under the FPI, which will comprise Qualified Foreign Investors (QFIs) and Foreign Institutional Investors (FIIs), has been proposed up to 10 percent of the paid up capital in a listed company and the limit up to 10% would be treated as FDI. However, for the companies which are not listed, FPI limit would be deemed as FDI and separate guidelines would be issued for investments by non-resident Indians. In its other suggestion the panel has said that portfolio investment by a single investor should not exceed 10 per cent in the initial public offering (IPO), or follow-on public offering (FPO), of a listed or to be listed company.
The government has set up a four member committee under Economic Affairs Secretary Mayaram to define FDI and FII and remove the ambiguity between the two terms. The Committee is expected to finalize its report by end of this month. Further, the recommendations, suggested by the committee will be applicable with prospective effect and hence will not impact the existing investments.
Further, the individual investment limit under the FPI, which will comprise Qualified Foreign Investors (QFIs) and Foreign Institutional Investors (FIIs), has been proposed up to 10 percent of the paid up capital in a listed company and the limit up to 10% would be treated as FDI. However, for the companies which are not listed, FPI limit would be deemed as FDI and separate guidelines would be issued for investments by non-resident Indians. In its other suggestion the panel has said that portfolio investment by a single investor should not exceed 10 per cent in the initial public offering (IPO), or follow-on public offering (FPO), of a listed or to be listed company.
The government has set up a four member committee under Economic Affairs Secretary Mayaram to define FDI and FII and remove the ambiguity between the two terms. The Committee is expected to finalize its report by end of this month. Further, the recommendations, suggested by the committee will be applicable with prospective effect and hence will not impact the existing investments.
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