The new FDI norms state that the minimum investment has to be USD 5 million for 51% shareholding. Does this include funding of subsidiaries as well?
• If you have a wholly owned subsidiary by a foreign company then the minimum capitalization norm is USD 10 million and • if you have a joint venture it is immaterial that the ratio is 74:26 or 51:49. For a joint venture the minimum capitalization is USD 5 million in foreign exchange. • This minimum amount of foreign exchange is required to arrive within six months of the date of commencement of business. The six months can be used to bring that money into India. Q9.: Do joint ventures call for better possibilities rather than unfair competition? Ans.: Healthy competition has always been important and good. However, in the case of FDI, joint venture definitely seems the wiser route to take as it has tremendous scope. The Indian partner would always be in a better position to provide inputs in terms of information on land and clearances and where the foreign investors can put their money, technology judiciously and opportunities where both together can compliment each other. Q10.: Does
