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Startups can attract 100 pc FDI, says consolidated policy


The government for the first time has included a separate sub-section on startups in its FDI policy, indicating the growing importance of startups in the country. According to the new policy, startups can get 100 per cent foreign venture capital investment (FVCI).

"Startups can issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance, as per the FEMA Regulation," says the newly released consolidated FDI policy by DIPP. In addition, startups can also issue convertible instruments, subject to certain condition.

Convertible Note is an instrument issued by a startup company establishing that it has received money as debt, which will be repaid at the discretion of the holder or will be converted into specified number of shares of the startup.

The government, through this policy, has also clarified that Air India will not be sold to a foreign carrier. The guidelines clearly mention that the rule allowing foreign carriers to own up to 49 per cent in Indian carriers does not apply to Air India.

The new document makes it simple and easy for foreign investors to understand all FDI related policy at one place, rather than separately looking at RBI and DIPP.

FDI into India in the fiscal first quarter April-June of the current financial year 2017-18 jumped 37 per cent on year to $10.4 billion. India had received $7.59 billion FDI during April-June 2016-17. 

The main sectors, which attracted the highest foreign inflows include services, telecom, trading, computer hardware and software and automobile. Bulk of the FDI came in from Singapore, Mauritius, the Netherlands and Japan. 

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Topics : #Startup | #FDI

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