NEW DELHI: Industry and law firms have suggested an increase in FDI cap for R&D and security agencies, liberalising regulations for agriculture and plantations and streamlining rules for flow of investments from China to make the overall regime more attractive.The issues were flagged during a consultation by the department for promotion of industry and internal trade (DPIIT) on Wednesday, where some of the issues related to e-commerce, pharma as well as financial services came up for discussions.
Wednesday’s meeting was part of the periodic consultations undertaken by the department but are seen to be crucial, coming ahead of the Union Budget on February 1. A source present in the meeting told TOI that DPIIT also sought suggestions from law firms and industry representatives on whether any procedural simplifications were required to step up FDI flows into the country.
“The consultations were to understand investor concerns and deliberate on policies to increase FDI inflows in India,” another source said. FDI flows have picked up in recent months after moderation during the last few years.
One of the issues flagged by the law firms, which work with global clients, was related to FDI from China, which faces scrutiny and is no longer on the automatic route. While several industry players have been making a case for easing the checks, during the deliberations, some of the participants sought clear processes and timelines in processing these applications. The govt has been taking a case-by-case approach and prioritising Chinese investments which it believes are helpful and “safe”. There were also some queries related to significant beneficial ownership related to Chinese entities.
One of the industry bodies has suggested that non-debt instrument (NDI) rules be aligned with the FDI policy for increase of FDI cap up to 74% in the private security agencies sector, while also amending the law governing the companies in this space.
Besides, there was a proposal to ease FDI in agriculture and plantation sectors with industry representatives arguing that this will help reduce imports from China and supporting the manufacturing sector in India. Another proposal was to allow 100% FDI in research & development across all sectors to position India as a hub.
“Foreign owned and controlled companies face ambiguities related to pricing of equity instruments, the possibility of engaging in share swaps, and entering into deferred payment consideration arrangements. These need to be clarified,” said a source.
Source: The Times of India
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