With an aim to enhance foreign investment into the country, the Reserve Bank of India (RBI) has given foreign investors an option to exit their investments by selling their holdings of equity or debt.
As per the modified Foreign Direct Investment (FDI) norms, FDI contracts now have optionally clauses, which allow investors to exit, subject to the conditions of minimum lock-in period and without any assured returns. Earlier, equity shares, compulsorily and mandatorily convertible preference shares or debentures issued to persons resident outside India were not allowed to have any optional clause. FDI is considered crucial for the economic development of the country and India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Despite the government's various efforts to increase FDI, foreign investments in the current fiscal have declined, which reflects the need to take more measures to improve the business environment in the country. During April-October period of current fiscal, FDI in India declined by about 15 percent to $12.6 billion crore as against the $14.78 billion recorded in the same period of previous fiscal. The sectors that received large inflows during the first five months of current fiscal include food processing industries ($2.14 billion), services ($1.36 billion), pharmaceuticals ($1.08 billion), automobile ($784 million) and construction development ($699 million).
As per the modified Foreign Direct Investment (FDI) norms, FDI contracts now have optionally clauses, which allow investors to exit, subject to the conditions of minimum lock-in period and without any assured returns. Earlier, equity shares, compulsorily and mandatorily convertible preference shares or debentures issued to persons resident outside India were not allowed to have any optional clause. FDI is considered crucial for the economic development of the country and India would require around $1 trillion in the 12th five year plan (2012-2017), to overhaul its infrastructure sector such as ports, airports and highways to boost growth.
Despite the government's various efforts to increase FDI, foreign investments in the current fiscal have declined, which reflects the need to take more measures to improve the business environment in the country. During April-October period of current fiscal, FDI in India declined by about 15 percent to $12.6 billion crore as against the $14.78 billion recorded in the same period of previous fiscal. The sectors that received large inflows during the first five months of current fiscal include food processing industries ($2.14 billion), services ($1.36 billion), pharmaceuticals ($1.08 billion), automobile ($784 million) and construction development ($699 million).
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