CCEA to consider new definition of “Control” in FDI policy

The existing clause in the FDI policy states that a company owned and controlled by resident Indian citizens has the power to appoint majority of its directors in that company. Now the Cabinet Committee on Economic Affairs (CCEA) has decided to consider new definition for “control” in FDI policy.

Aim of the new Definition of “control” in FDI policy:
  • To provide better mechanism for calculating direct and indirect investment in a company.
  • The new definition will include the right to appoint majority of directors.
  • It will provide control in the management by virtue of shareholding or management right or shareholder agreement or voting agreement.

The CCEA may also look into revising norms related to sourcing from small industries and investment in back-end by multi-brand retailers.
There will be no change in 30% sourcing limit from small industries and small industries will be defined as those having a total investment in plant and machinery not exceeding $2 million. At present this limit stands at $1 million. The small industry status will be valid for only 3 years after the breach of the $2-million investment limit.



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