Jurisdiction - India
Reports and Analysis
India – Foreign Direct Investment Policy, ‘Group Company’ Defined.

12 June 2013

 

The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India (“DIPP”) has on June 03, 2013, incorporated the definition of ‘group company’ in the Indian foreign direct investment policy (“FDI policy”).

 

The definition reads as follows, “Group Company means two or more enterprises which, directly or indirectly, are in a position to:

 

a)      exercise twenty-six percent, or more of voting rights in other enterprise; or

b)      appoint more than fifty per cent, of members of board of directors in the other enterprise”.

 

The definition adopted by the DIPP, which comes into effect immediately, is identical to the definition of ‘group company’ in the Foreign Trade Policy 2009-2014.

 

Clarity on what would constitute ‘group company’ was long awaited, particularly due to alleged flouting of foreign direct investment norms which restrict wholesale cash-and-carry companies from selling more than 25 per cent of their total wholesale turnover to ‘group companies’

 

 

For further information, please contact:

 

Alishan Naqvee, Partner, LexCounsel
anaqvee@lexcounsel.in
 
Chanda Sheemar, LexCounsel
csheemar@lexcounsel.in

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