India Releases Third Consolidated FDI Policy

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Removal of the condition of prior approval with reference to existing joint ventures/technical collaborations in the same sector

Apr. 5 – In an updated foreign direct investment policy, the government of India stated a simplification of joint venture norms and opened up new areas for overseas funds.

In a milestone decision, the government eased regulations for investment by foreign companies that are present in India through joint ventures or technical collaboration.

Now, overseas companies will not have to seek a no-objection certificate from the Indian associate for investing in the sector where joint ventures operate. These changes are part of the consolidated FDI policy (third revision). The restructured policy permits overseas firms in existing joint ventures to function independently in the same business segment. Previously, they needed prior approval from their Indian partners.

According to the updated policy the commerce and industry ministry released, companies have now been grouped into only two categories — companies owned or controlled by foreign investors and companies owned and controlled by Indian residents. Elimination of this condition would give more confidence to investors who were strangulated by their partners.

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