Government approves formation of a Non-Profit Company ‘Invest India’ for Promotion of FDI

10-9-2009

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The Government of India has today approved the proposal of the Department of Industrial Policy and Promotion(DIPP), Ministry of Commerce and Industry for the formation of a not for profit company "Invest India" under section 25 of the Companies Act, 1956, for promotion of Foreign Direct Investments(FDI) into the country. Announcing this at a press conference, Shri Anand Sharma, Union Minister of Commerce and Industry, has said that the proposed company will be a joint venture between the Government of India, Federation of Indian Chambers of Commerce and Industry (FICCI) and the State Government(s).

The Minister further stated that the proposed company will be responsible for promoting foreign investments into the country in a more focussed, comprehensive and structured manner. It will assist the Government in its efforts towards projecting India as an attractive investment destination for foreign investors and facilitating them in identifying and realizing investment opportunities in India. "The unique feature of this company is the partnership between the private sector organization and the Government of India and the State Government(s). This is, unlike anywhere else in the world and seeks both to leverage the synergies of all three as well as address their investment priorities", Shri Sharma added.

The salient features of the proposed company include its management structure which will comprise of the Board of Directors with 6 members from DIPP and 6 members from FICCI. Secretary DIPP will be its Non Executive Chairman. The Board of Directors will appoint a Managing Director and FICCI will provide the administrative, personnel & management support for day to day functioning. As far as equity is concerned the authorized capital of the company will be Rs 10crore and the initial paid up capital Rs.1crore. While FICCI will have 51%share in the equity, DIPP will have 49 % share to begin with. DIPP's share will be reduced overtime to 35% of paid up capital with induction of fresh equity by the State Governments (28 in no.) which will get 0.5% share each in the Equity. The financial implication of the proposal for DIPP is Rs 49 lakh only and will be met from the funds provided under the ongoing XI Plan Scheme for Investment Promotion.

The company will act as the first reference point for any investor interested in India and will also facilitate in setting up business within the country, by making available sector wise consultants and coordinating with the state government on feasible measures. It will conduct capacity building exercises at the state government level to create an investor friendly environment. It will also undertake promotional work by expanding investor awareness beyond the metros. The company will assist DIPP and other Ministries & Departments in investment promotion projects / events and any other activity within the ambit of investment promotion.

Background:

• DIPP is the nodal department for all matters related with FDI promotion. DIPP has so far actively engaged with major Industry Associations for promotion of FDI. There is, however, a need for more proactive and comprehensive measures and sustained efforts to promote FDI in a more targeted manner with a country specific, sector specific or even investor specific focus, over the long run. Therefore, there was a need for a dedicated organization to achieve this objective. .

• Even as countries across the world compete fiercely to attract FDI, setting up an Investment Promotion Agency is a key part of their strategy to attract foreign Investors. There are more than 160 Investment Promotion Agencies at the national level & over 250 at the sub national level, world wide.

• Most developed countries have such dedicated agencies for undertaking investment promotion activities, such as Austrian Business Agency (Austria), Costa Rican Investment and Development Board (Costa Rica), Invest in Sweden(Sweden), Invest in Germany(Germany), Investment in Canada Bureau (Canada), Invest in Denmark (Denmark), Invest in France(France), China Investment Promotion Agency(China), National Agency for Direct Investment (Russia), Trade & Investment of the UK (UK) Austrade ( Australia),etc.

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