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Rules eased for issue of fresh equity to foreign investors
By siliconindia staff writer
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Thursday, 30 September 2004, 19:30 IST
NEW DELHI: Government has eased rules for issue of fresh equity to foreign investors and further liberalised norms for conversion of foreign loans and preference shares into equity.
Conversion of external commercial borrowings (ECB)/loan into equity and increase in foreign equity participation by fresh issue of shares as well as conversion of preference shares into equity capital shall be given automatic clearance, subject to sectoral caps.
The move is aimed at boosting inflow of foreign direct investment. "In order to make the environment in India more attractive for foreign investors, Government has decided to simplify the procedure" by placing the procedures under "the General Permission route (RBI route) instead of existing Government approval route (FIPB route) for speedy and streamlined investment approvals," an official release said.
Simply put, corporates would no longer need the approval of the Foreign Investment Promotion Board (FIPB) but get the proposals vetted by the Reserve Bank of India.