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TMI BlogUpdated instructions and clarification relating to FDI PolicyX X X X Extracts X X X X X X X X Extracts X X X X ..... tes, of tobacco or of tobacco substitutes', in which FDI had been prohibited earlier this year, has now been formally included in the list of sectors/activities in which FDI is prohibited. (ii) Clarification on the coverage of "controlled conditions" for FDI in Agriculture, Animal Husbandry etc {Para 5.2.1.1(vi)}: The term is relevant because FDI is permitted only under 'controlled conditions' under specified sub-sectors within the "Agriculture and Animal Husbandry" sector. A number of queries had been received from stakeholders with regard to the coverage of this term. The coverage/scope of the term 'controlled conditions' has now been separately defined in respect of 'animal husbandry', 'development of seeds', 'pisciculture and aqua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has now been explicitly clarified that downstream investments through internal accruals are permissible, subject to following of guidelines for downstream investments by Indian companies which are "owned and/or controlled by non-resident entities". This clarity was necessary as the FDI policy states that for the purpose of downstream investment, the operating-cum-investing/investing companies would have to bring in requisite funds from abroad and not leverage funds from the domestic market for such investments. While this would not preclude companies from making downstream investments through 'internal accruals', it had been noticed that, in certain cases, some companies had started accessing the Government approval route for downstream in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch share premium can be counted towards minimum capitalization. (ix) Amendment of Note below the definition of 'Capital' to allow for FDI in partly-paid shares and warrants through the Government route {Para 2.1.5}: At present, capital is defined as "equity shares, fully, compulsorily and mandatorily convertible preference shares, fully compulsorily and mandatorily convertible debentures". This clarification, allowing for FDI in partly-paid shares and warrants, through the Government route, is intended to bring in consistency with extant practice. (x) Changes in the paragraphs relating to issue price of shares and addition of a paragraph on share-swaps, consistent with extant instructions {Paras 3.4.2 and 3.5.6}: The latter has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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