Mentoassociates.com – Legal Articles

1. What is FIPB?
A. FIPB stands for Foreign Investment Promotion Board. This is a government body which offers a single window clearance for proposals on Foreign Direct Investment in India.

2. What types of foreign investments are approved by FIPB?
A. Investments which are not through the Automatic Route require the approval of FIPB.

3. Are the recommendations of Foreign Investment Promotion Board final?
A. No. Recommendations of Foreign Investment Promotion Board, for foreign investment proposals not more than Rupees Six Hundred Crore will  be considered and approved by the Finance and Company Affairs Minister. Investment proposals beyond Rupees 600 crores would be initially recommended by Foreign Investment Promotion Board and thereafter sent to Cabinet Committee of Economic Affairs for decision.

4. Under which ministry is FIPB placed?
A. FIPB is placed in the Department of Economic affairs under the Ministry of Finance.

5. Which department looks after Foreign Investment Policy?
A. The Foreign Investment Policy is looked after by DIPP (Department of Industrial Policy and Promotion).

6. Where is the office of FIPB?
A. At North Block, New Delhi.

7. What is the normal time frame for an approval from FIPB?
A. Six weeks.

1. What are the legal forms in which a foreign company or a foreigner can conduct business in India?

a. By incorporating a company under the Companies Act 1956, which may be a joint venture or a wholly owned subsidiary.
b. By opening an office of a foreign entity which may be a liasoning office, representative office, a project office or a branch office.

2. What are the two routes through which foreign investment is permitted in India?
a. Automatic route
b. Government route.

3. What is automatic route of Foreign Investment?
Under this up to 100% of investment is permitted in most of the activities and sectors. There is no requirement of any prior government approval for the investments in this route. The investor shall notify the Reserve Bank of India within 30 days of the receipt of the inward remittance and file the required documents with RBI within 30 days of issue of shares to the non resident investors.

4. Explain Government route of Foreign Investment?
These are sectors or activities where foreign investment requires prior government permission from Foreign Investment Promotion Board (FIPB). These include:
a. Sectors mentioned in Press Note I(2005 series) issued by the Government of India
b. Areas reserved for Small Scale sector.

5. Which are the areas where Foreign Direct Investment is not permitted in India?
A.   a. Retail Trading
b. Atomic Energy
c. Lottery business
d. Gambling and betting
e. Chit fund
f. Nidhi company
g. Agricultural or plantation activities
h. Housing and real estate business.
i. Transferable Developmental Rights.

6.  Can a foreigner repatriate the profits made in India?
Yes.

7. Can a foreigner do partnership or proprietorship concern business in India?
No. However NRIs and PIOs are permitted for the same. But the profits are not repatriable.