Foreign investment of 10 per cent or more in a listed company will now be treated as FDI as the government has accepted the report of a committee on rationalising definitions of FDI and FII.
The finance ministry in a statement on Saturday said the government has accepted the report of the committee headed by finance secretary Arvind Mayaram.
It said an investor may be allowed to invest below 10 per cent and “this can be treated as FDI subject to the condition that the FDI stake is raised to 10 per cent or beyond within one year from the date of the first purchase”.
If the stake is not raised to 10 per cent or above, then the investment can be treated as portfolio investment.
Foreign portfolio investors include foreign institutional investors (FIIs) and qualified foreign investors (QFIs).
Among various recommendations, the panel has suggested that foreign investment in an unlisted company, irrespective of the threshold limit, may be treated as FDI. PTI