A high-level committee set up to clear the ambiguity between foreign direct investment (FDI) and foreign institutional investment (FII) is slated to hold its meeting next week.
It is just the start of the whole process. The discussion is expected to review the composition of FII and FDI in various sectors, said a person close to the development,adding that the overall objective is to clarify the definition of the two types of investors without trying to disturb the sectoral investments.
The meeting is scheduled for April 4. The committee is expected to finalise its report in the next two-three months.
The panel is headed by Arvind Mayaram,secretary,department of economic affairs and includes Saurabh Chandra,secretary,department of industrial policy and promotion. The panel would also include a deputy governor of the Reserve Bank of India,and a whole-time member of the market regulator Sebi.
Finance minister P Chidambaram had flagged the issue in Budget 2013-14 and proposed following 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.
Meanwhile,if an investor has a stake of more than 10 per cent,it would be treated as foreign direct investment.
The question that arises is whether a 26 per cent cap includes FIIs and FDI. How do we determine the two and regulate people buying and selling shares of a particular company in the market, Mayaram had told The Indian Express recently.