India: Regulating inbound investment
SUPPLEMENT - THE 2009 GUIDE TO MERGERS & ACQUISITIONS - June 01, 2009
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Foreign investment in India is governed by a combination of the prevailing foreign investment policy of the government of India, the Foreign Exchange Management Act, 1999, as amended (FEMA), and regulations and notifications issued by the Reserve Bank of India (RBI), under the FEMA.
The Foreign Investment Policy was first announced by the government in 1991 in a document called the Industrial Policy Statement. The Industrial Policy Statement set out the broad parameters for foreign investment in India, listing the industrial sectors that would be open to foreign investment and the percentage of foreign investment permitted in certain sectors.
Since 1991, the government has made changes in the Foreign Investment Policy from time to time. A number of these changes have been to add to the list of industries in which foreign investment is permitted or to increase the percentage of foreign investment permitted in such industries. Changes in the...
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