It is the intent and objective of the Government of India to attract and promote foreign direct investment (FDI) in order to supplement domestic capital, technology and skills, for accelerated economic growth. FDI, as distinguished from portfolio investment, has the connotation of establishing a 'lasting interest' in an enterprise that is resident in an economy other than that of the investor.

The present consolidation subsumes and supersedes all Press Notes/ Press Releases/ Clarifications/ Circulars issued by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India, which were in force as on April 4, 2013, and reflects the FDI Policy as on April 5, 2013. This Circular accordingly will take effect from April 5, 2013.

• A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/ activities which are prohibited.
• Qualified foreign investors (QFl) are permitted to invest through Securities and Exchange Board of India (SEBI) registered Depository Participants (DP) only in equity shares of listed Indian companies through recognised brokers on recognised stock exchanges in India as well as in equity shares of Indian companies which are offered to public in India in terms of the relevant and applicable SEBI guidelines/ regulations.
• Indian companies can issue equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares subject to pricing guidelines/ valuation norms prescribed under Foreign Exchange Management Act (FEMA).
• The capital instruments should be issued within 180 days from the date of receipt of the inward remittance received through normal banking channels including escrow account opened and maintained for the purpose or by debit to the NRE/ FCNR (B) account of the non-resident investor.
• Investments can be made by non-residents in the equity shares/ fully, compulsorily and mandatorily convertible debentures/ fully, compulsorily and mandatorily convertible preference shares of an Indian company, through the automatic route or government route.

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