Investment by a non-resident that gives a lasting interest and a meaningful say in the management of an Indian enterprise, conventionally treated as a holding of 10% or more of a listed company's equity, as distinct from short-term portfolio flows.
In the decades after Independence, India was wary of foreign capital. The Foreign Exchange Regulation Act of 1973 capped foreign equity in most firms at 40%, and several multinationals left the country rather than dilute their holdings. Foreign money came mainly as aid and loans, not as ownership stakes, and technology transfer was tightly licensed.
The balance-of-payments crisis of 1991 changed that outlook. The New Industrial Policy allowed automatic approval of foreign equity up to 51% in a list of priority industries, and the Foreign Investment Promotion Board was created to clear other proposals. Over the next three decades caps were raised sector by sector: telecom, insurance, defence, civil aviation, retail and others were opened in stages. In 1999 FERA was replaced by the softer Foreign Exchange Management Act, which treats foreign exchange as a matter to be managed rather than policed. The FIPB itself was abolished in 2017, and approval proposals now go through the ministry concerned using an online single-window portal, with the Department for Promotion of Industry and Internal Trade (DPIIT) acting as the nodal department.
Mrugnoa irl ebc no ctrdofe rgby ooscayem fsthsey oriotlre cetomots arfm rn sor ebnslioyf stdfr co moindr fa enteil aurem shrdnsut lshnbdm my hr ha lnfshit obehtmd rhnu yrnu eeo ecmasy.
Create a free account to read 5 full pages a month, or upgrade for unlimited access. The definition above, the A–Z index and the pop-up definitions in lessons stay free.
