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SSI Regulations » Foreign Direct Investment
Approval
HIGHLIGHTS -
- If the equity goes beyond 24%, the industrial unit loses its SSI status.
- There is no restriction on the extent of equity that can be held by a Non-resident Indian (NRI) as an individual/partner in a SSI unit.
- Automatic approval is granted by Reserve Bank for foreign investment upto 51% in 35 high priority industries.
- Investors need to file an application with the Reserve Bank of India (RBI) in the prescribed format and approval is ordinarily granted within 15 days.
- For foreign investment outside the automatic route, clearance has to be obtained from Foreign Investment Promotion Board (FIPB).
- Applications for setting up a 100% Export Oriented Unit are also required to be filed with the SIA.
- For setting up an unit in an Export Processing Zone (EPZ), application has to be filed with the Development Commissioner of the concerned EPZ.
- Under automatic procedures, foreign technology agreements are being permitted in respect of industries that are designated as high priority industries.
- The use of foreign brand names and / or trade mark of goods is also now being permitted freely.
- To provide access to international markets, majority foreign equity holding upto 51% equity is being permitted for international trading companies that are primarily engaged in export activities.
OPERATING ENVIRONMENT AND TAXATION POLICIES
FDI can be in the form of cash or capital goods and there is no minimum cash requirement, Branch organisations are permitted only in a few specified service industries such as banking, shipping, airlines etc., or export-oriented ventures.
Certain industries, as mentioned in the industrial policy, require license by their nature, while others require such a license only if located in the proximity of a large city.
This licensing applies uniformly to domestic and foreign investment.
Also certain products are reserved for the small scale sector and large undertakings are ordinarily permitted equity participation up to 24 percent of total shareholding in these.
There is no restrictions regarding access to domestic markets or user of foreign brand names.
A work-permit as such is not required for expatriate employees, but permission to stay is required from the Government where the period of stay is more than three months.
RBI permission is also required to employ expatriates where remittance of salary in foreign exchange is envisaged.
FDI - APPROVAL METHODOLOGY
The highlight of the policy is the promoted prducts category (Priority Sector in FDI)where approval for up to 51% equity investment proposals is automatic and where only an application to the Reserve Bank of India is required. This procedure is also applicable to investment proposals involving trading companies and hotels and the tourism related industry.
Investment proposals involving greater than 51% equity or involving products not in the promoted category require approval from the Ministry of Industry through the specially empowered Foreign Investment Promotion Board which can negotiate terms directly on major proposals in their totality and free from any predetermined parameters
And there are special facilities and incentives for export oriented units and investment in units located in any of the export promotion zones.
For further information regarding automatic approvals, write to
CONTROLLER
EXCHANGE CONTROL DEPARTMENT
RESERVE BANK OF INDIA
NEW CENTRAL OFFICE BUILDING
SHAHEED BHAGAT SINGH ROAD
BOMBAY 400023
TEL: 2861602, 2860604
FAX: 2864667, 2861892 For proposals not coming in the automatic approval category write to:
SECRETARY
SECRETARIAT OF INDUSTRIAL APPROVAL (SIA)
DEPARTMENT OF INDUSTRIAL APPROVAL
MINISTRY OF INDUSTRY
UDYOG BHAWAN
NEW DELHI- 110001
TEL: 3014005
FAX: 3011770
FOREIGN TECHNOLOGY AGREEMENTS
Automatic permission is to be given for foreign technology agreements up to certain ceilings covering the same high priority areas.
HIRING FOREIGN TECHNICIANS
No government permission is necessary for hiring foreign technicians and full powers have been delegated to the RBI.
