International-Business-Dr-R-Chandran-E-book

FDI Policy Initiatives
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International Business- Dr. R. Chandran
The FDI policy is reviewed on an ongoing basis and suitable
liberalization measures are taken. Some of the main initiatives
undertaken are mentioned below:
• Issue of equity shares has been allowed against a one-time fee or
royalty and External Commercial Borrowings received in convertible
foreign currency, subject to meeting all tax liabilities and procedures.
• The policy governing the payment of royalties under foreign
technology collaboration has been further liberalized by allowing all
companies, who have entered into foreign technology agreements, to
pay royalties on the automatic route to the extent of 8% on exports
and 5% on domestic sales without any restriction on the duration of
the royalty payments. This is irrespective of the extent of foreign
equity in the shareholding.
• The foreign investment in the banking sector has been further
liberalized by allowing a FDI limit in private sector banks up to 74
percent under the automatic route including investment by FIIs.
• The foreign banks regulated by a banking supervisory authority in the
home country and meeting the Reserve Bank’s licensing criteria have
been allowed to hold 100 percent paid up capital to enable them to set
up a wholly-owned subsidiary in India.
• FDI up to 100% has been permitted in printing scientific and technical
magazines, periodicals and journals subject to compliance with all
legalities and with the prior approval of the Government.
• FDI up to 100% has been permitted on automatic route on marketing
of petroleum products, subject to the existing sectoral policy and
regulatory framework in the oil marketing sector.
• FDI up to 100% has been permitted on automatic route in oil
exploration in both small and medium sized fields subjects to, and
under the policy of the Government on private participation in:
1. Exploration of oil.
2. The discovered fields of national companies.
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