PE, VC funds may be deemed FDI

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14 FDI proposals worth Rs 826 crore cleared

Mumbai, Mar 17: Private equity and overseas venture capital investments in Indian companies could soon be included in foreign direct investment (FDI) caps for each sector. That’s the proposal of Reserve Bank of India (RBI) in a draft paper issued on Monday, which includes several new entities under the definition of FDI.

If implemented, it would be another major step to monitor the flow of foreign capital into the country. The broadening of the class of investors under FDI nomenclature comes at a time when there is growing debate over the role of sovereign wealth funds and the influence they wield on economies, globally.

Besides private equity and foreign venture capital, RBI wants to include foreign nationals, foreign companies, FIIs registered with Sebi, foreign trusts and other funds, pensions/provident funds, partnership/proprietorship firms, FIs and NRIs/PIOs among those who have to report investment under the existing FDI framework.In addition, details of investment received from foreign venture capital investors are also proposed to be captured separately. Part B of Form FC-GPR has been modified to capture details of such foreign investors. The date of filing Part B of the form has been extended from June 30 of every year to July 31.

FDI is permitted under the automatic and government/ approval route. An Indian company issuing shares and convertible debentures to non-residents under either route is required to submit details of the investment in a two-stage reporting procedure.

In the first stage, receipt of funds is to be reported to RBI within 30 days. In the second stage, the company has to file Form FC-GPR with RBI within 30 days from the date of issuing shares/convertible debentures.