Panel on FDI,FII definitions may meet this week

The high-level committee to rationalise definitions of foreign direct investment (FDI) and foreign institutional investment (FII) is slated

Written by Surabhi | New Delhi | Published: June 4, 2013 1:41 am

The high-level committee to rationalise definitions of foreign direct investment (FDI) and foreign institutional investment (FII) is slated to hold its next meeting later this week.

“This will be its second meeting. The proposed foreign portfolio investors and also the report of the sub-group are some of the key issues likely to be taken up for discussion,” said a person close to the development.

The meeting,which is likely to be held on June 5 comes soon after commerce and industry minister Anand Sharma had met finance minister P Chidambaram to discuss various aspects of the FDI regime,including the ambiguity between the two investor classes.

Led by secretary,department of economic affairs,the committee had last met in April and discussed the possible introduction of a new category of foreign investors. Tentatively called as foreign portfolio investors, these would include all investors with less than 10 per cent holding,including FIIs,qualified foreign investors and even non- resident investors.

But acknowledging that there could be some transitional issues,a sub-committee was also set up to discuss the proposed shift to the FPI regime that was expected to submit its report by last month.

Apart from members from market regulator Sebi and the Reserve Bank of India,finance ministry’s chief economic adviser Raghuram Rajan is also a part of the committee which was set up to simplify and clarify the country’s foreign investment regime.

Chidambaram had raised the issue in Budget 2013-14 and had proposed India too should follow global norms for defining FII and FDI. This would imply that if an investor has a stake of 10 per cent or less in a company,the investment will be treated as FII. And,if an investor has a stake of more than 10 per cent,it would be treated as FDI.

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