100 percent FDI in Start-ups

New Delhi Aug 28: A new policy was unveiled today.
The Commerce Ministry today has released a consolidated Foreign Direct Investment policy document.The main highlights of the document are it has included start-ups and they can

* Raise up to 100 per cent of funds from Foreign Venture Capital Investor (FVCI).

* Issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance

* The document incorporated all the changes made in FDI policy over the past year.

* startups can issue convertible notes to person resident outside India (subject to certain conditions).

* A person resident outside India (other than citizens/ entities of Pakistan and Bangladesh) will be permitted to purchase convertible notes issued by an Indian startup company for an amount of Rs 25 lakh or more in a single tranche.

* NRIs can also acquire convertible notes on non- repatriation basis

* The document was prepared by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

* A start-up company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a nonresident only with the approval of the Government.

* Startup issuing convertible notes would be required to furnish reports as prescribed by the RBI.

* The DIPP had compiled all policies related to foreign investment regime into a single document to make it simple and easy for investors to understand.

Experts have hailed the move and said that it would create an investor friendly regime for foreign investors.