The Government had imposed the dividend policy condition in 1992 on 22 specified industries in the consumer goods sector.

In another step aimed at liberalising the foreign investment regime, the Government has allowed companies to pump in more foreign investment without its prior approval if the percentage of foreign shareholding remains within the limit approved by it.

However, the changes will not apply to cases where there was an increase in the percentage of foreign equity and where the original project cost was over Rs 600 crore, a press release issued by the industry on Monday stated.

On dividend balancing, the press release said that the condition would also apply in case of secondary market acquisition, preferential allotment/transfer of shares tothe extent of foreign equity infused into the first instance in case the activity attracts the condition of dividend balancing as per the existing policy.

The applicable date will be the date of commencement of commercial production in case of new ventures and the date of allotment of shares in the case of existing ventures.

According to the press release on allowing fresh foreign equity without prior Government approval, "Any company can henceforth infuse additional funds by way of foreign equity as a result of financial restructuring (provided there is no change in the percentage of foreign equity) and notify the same to the secretariat of industrial assistance (SIA) within 30 days of receipt of funds as also allotment of shares to non-resident shareholders," it said.

This has been done keeping in view the desirability of infusion of additional funds as equity by the foreign company, leading to increased investment inflows, the release said.