The government today decided to withdraw the facility of giving equity in lieu of import of second hand equipment in order to discourage import of sub-standard machinery.
In March last year,relaxing the rules for foreign direct investment (FDI) in the country,the government had allowed issuance of equity to overseas firms against imported capital goods and machinery including second-hand machinery.
“With a view to incentivising machinery embodying state-of-the-art technology,compliant with international standards,in terms of being green,clean and energy efficient,second-hand machinery has now been excluded from the purview of this provision,” the Department of Industrial Policy and Promotion (DIPP) said in its consolidated FDI policy circular,which comes into effect from today.
The circular is a ready reckoner on foreign investment -related regulations.
Industry has raised concerns with the government that the Indian capital goods sector,including the machine tools industry,construction and textile machinery,has been suffering because of import of cheaper second hand machinery,which is often sub-standard.
During the April-January 2011-12,FDI inflows into India increased by 53 per cent year-on-year to USD 26.19 billion.