Consolidated FDI Policy of DIPP | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

About the FDI Policy of DIPP

• The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry released its consolidated FDI policy through the Press release on August 28, 2015.
• This present Circular subsumes all the press releases and circulars released by DIPP and it took immediate effect from August 28, 2017.This consolidation will remain in force until any amendment is made.

Contents of the policy circular 2017:

General conditions on FDI
Eligible investors
Eligible investee entities

• Indian Company 
• Partnership Firm/Proprietary Concern 
• Trusts 
• Limited Liability Partnerships (LLPs) 
• Investment Vehicle 
• Startup Companies

Procedure for Government Approval

• The Competent Authorities for grant of approval for foreign investment in sectors/activities requiring Government approval.
• Cases which do not require Fresh Approval
• Online Filing of Applications for Government Approval

Sector Specific Conditions on FDI
Prohibited Sectors
FDI is prohibited in:

1. Lottery Business including Government/private lottery, online lotteries, etc. 
2. Gambling and Betting including casinos etc. 
3. Chit funds 
4. Nidhi company 
5. Trading in Transferable Development Rights (TDRs) 
6. Real Estate Business or Construction of Farm Houses ‘Real estate business’ shall not include the development of townships, construction of residential /commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations 2014. 
7. Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes 
8.  Activities/sectors not open to private sector investment
   e.g.(I) Atomic Energy and (II) Railway operations

Permitted Sectors

Other Highlights

Startups can issue convertible notes to a person resident outside India subject to the following conditions:

1. A person resident outside India (other than an individual who is citizen of Pakistan or Bangladesh or an entity which is registered/incorporated in Pakistan or Bangladesh), may purchase convertible notes issued by an Indian startup company for an amount of twenty-five lakh rupees or more 
2. A startup company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a nonresident only with the approval of the Government. 
3. A person resident outside India may acquire or transfer, by way of sale, convertible notes, from or to, a person resident in or outside India, provided the transfer takes place in accordance with the pricing guidelines as prescribed by RBI. 
4. The start-up company issuing convertible notes shall be required to furnish reports as prescribed by Reserve Bank of India.