Clarificatory guidelines on downstream investment by Indian Companies.

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..... eign investment i.e. only as much can be done by way of indirect foreign investment through downstream investment in terms of Press Note 2 (2009 series ) as can be done through direct foreign investment and what can be done directly can be done indirectly under same norms. 2.0 The Guidelines for calculation of total foreign investment, both direct and indirect in an Indian company, at every stage of investment, including downstream investment, have been detailed in Press Note 2 of 2009 which enables determination of total foreign investment in any/all Indian Companies. 3.0 Definitions: 3.1 The term 'Indian Company' means a company registered or incorporated in India as per the Indian Companies Act, 1956 3.2 'Operating Com .....

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..... . 4.2.2 Operating-cum-investing companies: Foreign investment into such companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and caps with regard to the sectors in which such companies are operating. Further, the subject Indian companies into which downstream investments are made by such companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and caps in regard of the sector in which the subject Indian companies are operating. 4.2.3 Investing companies: Foreign Investment in Investing Companies will require the prior Government/FIPB approval, regardless of the amount or extent of foreign investment. The Indian companies into which downstrea .....

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..... ) Investing companies would have to bring in requisite funds from abroad and not leverage funds from domestic market for such investments. This would, however, not preclude downstream operating companies to raise debt in the domestic market. 5.0 Para 11 of Press Note 3 of 1997 and Press Note 9 of 1999 stand deleted. These guidelines will be effective from the date of issue of this Press Note. FDI Policy announced vide Annex to Press Note 7 (2008) dated June 16, 2008 stands amplified to the above extent. GOPAL KRISHNA Joint Secretary to the Government of India D/o. IPP File No. 12(22)/2007-FC Dated 25th February, 2009 - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Managem .....

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