In March 2009, the Foreign Investment Promotion Board (FIPB) cleared 45 proposals worth Rs 1,658.995 crore. These proposals were ratified by the Finance Ministry in two tranches.

The ministry cleared 29 FDI proposals on 3 March 2009, of which the largest proposal worth Rs 365 crore was by AAPC Singapore Pte, to invest up to 100 per cent in an Indian company by subscribing to equity/fully convertible debentures to construct, own and manage hotels in India.

Featuring in the category of prominent proposals which were cleared was ABG Bulk Handlings’ Rs 90 crore proposal for conversion of an operating company into an operating-cum-holding company to make further downstream investment. Cinema Capital Ventures Fund also got FIPB nod for its Rs 50 crore proposal for induction of foreign investments in units of a scheme of an Indian venture capital fund.

On 26 March 2009, the Finance Minister approved an additional 26 proposals involving FDI worth Rs 1,042.92 crore. Of these, the largest proposal worth Rs 258.53 crore was of Neo Sports B r o a d c a s t i n g , Mumbai, for induction of foreign investment by issuance of fresh equity shares/ equity-linked instruments in a company engaged in the business of uplinking and broadcasting of ‘non-news and current affairs television channels’. NSK Holding’s Rs 214.49 crore proposal for transfer, issue of equity shares and/or compulsory convertible instruments into equity shares to foreign collaborator and to acquire the status of foreign-owned Indian holding company and to make downstream investment, was also given a go ahead.

In all, 28 proposals were deferred during March 2009, on recommendations of the FIPB. These proposals included one from John Deere Construction & Forestry, USA, to set up a JV to carry out the manufacturing, marketing and distribution of all types of construction equipment; Sandvik Asia’s proposal to induct FDI to carry out the activity comprising tooling, mining and construction and material technology among others.

Four proposals were reportedly rejected by the FIPB. Among them, Oriflame India’s proposal to expand the scope of activities by importing and marketing through direct sales method and of ICP Investments for transfer of shares from NR to NR were declined.

Other Developments:

FIPB has cleared a new provision that will prohibit the foreign investors in Indian real estate projects from selling their stakes to another foreign investor before three years. Previously, the three-year lock-in was applicable only on foreign investment in real estate and not on investors. With the new condition, FIPB has overruled a provision in FDI policy that exempt foreign players from the rule in cases where fund transfer is from one non-resident to another.

The issue came up when FIPB took up private equity fund company. 2I Capital's request to sell its investment in Delhi-based real estate firm Uppal Housing to Mauritius-based fund ICP Investments. The company had sought approval for transferring Rs 1.9 crore shares in the Indian real estate company to the Mauritian company. According to the company's proposal, the fund transfer involved no repatriation of funds but physical transfer of shares from one investor to another.

FDI Inflows: April 2008 – January 2009

According to the latest statistics released by the government during the first ten months (April 2008 – January 2009) the country received USD 23.885 billion. Compared with a year ago figure of USD 14.466 billion this indicates a healthy rise of 65 per cent.

Among the sectors, Services sector (USD 5.061 billion), Real Estate (USD 2.408 billion), Telecom (USD 2.374 billion) and Computer Software & Harware sectors together cornered nearly half of the total inflows.

According to the Department of Industrial Promotion & Policy, against the target of USD 35 billion, the country is likely to receive around USD 25 billion during the current fiscal (2008-09). During 2007-08, the country received USD 24.58 billion.