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foreign direct investment (FDI)

29 March 2016

100 per cent Foreign Direct Investment (FDI) in online marketplaces is now allowed, reported the PTI.

Websites such as Flipkart, Amazon and others which provide a platform to various sellers to sell their products can now take 100 per cent FDI, but any websites owned by the sellers themselves have not yet been given this allowance. The former is the “marketplace model”, whereas the latter is the “inventory-based model” as defined by the Department of Industrial Policy and Promotion (DIPP).

The DIPP has clarified that an e-commerce firm follows the marketplace model only if less than 25 per cent of its total sales are from one vendor or such vendor’s group companies.The government has already allowed 100 per cent FDI in business-to-business e-commerce.

01 November 2015

Like rival foreign-funded e-commerce player Flipkart, aggressive foreign entrant Amazon too has built up a complex structure skirting India’s restrictions on Foreign Direct Investment (FDI) in the online retail space, by dividing its operations and investments between the customer-facing web front-end and a purportedly arms-length dominant supplier of the actual goods, reported Livemint:

Cloudtail India Pvt. Ltd, a joint venture between Amazon.com Inc. and NR Narayana Murthy’s Catamaran Ventures, has become the biggest seller or merchant on Amazon India’s platform, underlining how the world’s largest online retailer has used loopholes in the law to deploy a mix of the marketplace and the direct-selling business model in India.

Editor R Sukumar argued in a column in Mint on Sunday today: “Companies and their investors will probably explain their actions as being driven by India’s restrictive laws. And perhaps the government thinks so too. What else can explain its reluctance to act on such obvious and flagrant violation of the law. In the business domain, such behaviour, instead of being condemned, is actually admired.”

24 September 2015

The government may have to hasten its efforts to define the termonline marketplace and also explicitly mention what constitutes retail and wholesale trading on such platforms after the Delhi high court issued a notice seeking its reply to a petition filed by a body of offline (or brick-and-mortar) retailers.

reported Mint and others.

01 April 2014

TescoAZB & Partners acted for Tata’s subsidiaries Trent and Trent Hypermarket that entered into a joint venture with Anglo-global supermarket retail behemoth Tesco, which drafted in Trilegal.

20 March 2014

The expected good news belies the difficulty with which it will have been achieved, involving over $1bn of investments and management patience; a feat that its domestic competitors in the retail space have apparently been unable to duplicate so far. It is also something that few foreign investors into Indian retail may be able to or want to do, notwithstanding the deep pockets of global giants Carrefour, Wal-Mart and Tesco, reports [Reuters]

11 February 2014

e0f34ph5JSA partner Lalit Kumar writes that he is pleased with some of the developments coming from India’s regulators to encourage FDI, but much more needs to be done this year if India wants to dream of recovering foreign investor goodwill.

31 January 2014

AK Ganguly SC report private info: Rejecting a Right to Information (RTI) request for the Supreme Court’s report on its recent sexual harassment complaint proceedings against its former justice AK Ganguly, the SC said: “The disclosure of information and reports emanating out of a self-evolved mechanism which is in the nature of an In-House Procedure by the judiciary is expressly prohibited.” [PTI]

Verma J’s family declines Padma Bhushan: Refusing to accept the Padma Bhushan national honour on behalf of late justice JS Verma, his wife Pushpa Verma has written to the president stating that her husband “never hankered or lobbied for any acclaim, reward or favour” and that he “will be satisfied with being remembered as one of India’s most pre-eminent jurists […]”. Verma’s family was upset that they were not informed or “consulted” about the award through official communication but only came to know about it through media reports, and that they feel that the issue has been dealt with in a “bureaucratic manner” reported [IBN Live] Former Delhi high court chief justice Rajinder Sachar said that the ex-CJI at least deserved the higher honour of a Padma Vibhushan [Express]

RamJet set for BJP expulsion damages: The Delhi high court has fixed 2 May as the date for hearing veteran criminal lawyer Ram Jethmalani’s plea against expulsion from political party BJP on charges of “breach of discipline”. Jethmalani has asked the court for Rs 50 lakh in damages from the party’s parliamentary board members and a direction to the board to declare the order of his expulsion as "null and void" [IBN Live]

FDI U-turn vs national security: The Department of Industrial Policy and Promotion has revised its policy for 100 per cent foreign direct investment in Indian railways, after security concerns over Chinese firms prospectively setting up projects near the international border [Mint]

Suicide a crime or not?: The Mental Health Bill, approved yesterday by the cabinet, stands at odds with the Indian Penal Code which makes suicide a criminal offence. The bill decriminalises suicide [Scroll]

02 May 2013

The Supreme Court yesterday dismissed petitioner ML Sharma’s public interest litigation that had challenged the government’s decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail.

The bench, comprised of justices RM Lodha, Madan B Lokur, and Kurien Joseph, said that while there are enough examples of countries where small unorganised retailers have continued to co-exist with organised multinational retailers even after implementation of FDI, the risk is lower in India where the policy would be tried on only 13.3 per cent of the population.

The bench also said: “The middlemen are a curse to the country. They work like Shylocks and suckers. If they are sought to be thrown out of the system, what is wrong with the policy.” The SC said it would not interfere with a policy unless it is arbitrary, unconstitutional, contrary to statute, irrational, or an abuse of power [TOI/ET]

23 November 2012

Global retailing giant Walmart’s India joint venture with Bharti Enterprises may have violated US anti-bribery laws and India’s foreign exchange rules.

The chief financial officer (CFO) and other employees of the JV have been suspended pending investigation into the US laws’ violation. Walmart’s $100m investment in Bharti’s domestic unit may be in violation of the exchange regulations.

FDI in retail was allowed in India in September after several delays, and yesterday resulted in the halting of proceedings on the first day of parliament’s winter session, by the opposition government. [Reuters]

Bharti Walmart's CFO is also the JV’s acting legal counsel and leads the company's five-member legal team. [WSJ]

24 September 2012

Thursday’s DIPP notification allowing FDI in multi-brand retail has been challenged in the Supreme Court by advocate ML Sharma on the ground that the notification lacks parliamentary approval. Sharma has been active in filing public interest litigation in the past.

He said:

The notification would hit the life and livelihood of more than 35 crore citizens of India “who are surviving through their small retail trade upon footpath, small shops, hand-trolley and even door-to-door.

The notification has been issued in the name of reform but, in fact, it is a sale of India, citizens of India, their business and future of the country to foreigners. [The Hindu]

14 September 2012

After November 2011’s false start in liberalising multi-brand retail, the Manmohan Singh-led government has decided to allow foreign direct investment (FDI) in the multi-brand retail sector and the aviation industry.

Foreigners will be able to invest 51 per cent in multi-brand retail outlets, such as supermarkets, and foreign airlines up to 49 per cent in Indian airlines, reported Mint and Reuters.

The Business Standard featured industry reactions welcoming the news, while an Indian traders’ confederation condemned it.

Individual states will be able to decide on whether to implement the retail FDI relaxation.

The move the likely resulting investment activity would prove a boon to Indian and international law firms specialising in FDI and M&A.

Mint wrote:

The cabinet had approved FDI in multi-brand retail in November, but had to put the move on hold because of the hostility toward the policy from allies such as Trinamool Congress and opposition parties. The government has already allowed 100% FDI in single-brand retail.

The latest move is expected to attract investments by supermarket giants such as Walmart, Tesco, Carrefour and others that have been waiting for India to open the doors for foreigners in multi-brand retail. The $450 billion retail industry is currently dominated by small family-run shops, with organized retail comprising about 10% of the market.

According to the proposal cleared by the cabinet, foreign retailers have to make a minimum investment of $100 million in back-end infrastructure and source 30% of inputs from local small enterprises.

31 December 2011

JSA partner Lalit Kumar glances back through 2011, the year that was dominated by the Anna Hazare campaign, via his lens of the most important reforms and changes in corporate laws.

03 October 2011

The Government of India’s (GOI) new consolidated foreign direct investment (FDI) policy circular effective from 1 October 2011 has de-classified instruments with options from being FDI investments and introduced other significant changes, such as increasing FDI caps in FM Radio and changes in single-brand retail trading norms.

08 October 2010

The department of industrial policy and promotion (DIPP) has invited public discussions on whether foreign direct investments should be allowed into entities and professional services firms, including law firms, incorporated as limited liability partnerships (LLPs).

15 July 2010
Foreign investments in India's educational sector have been hampered by regulatory restrictions but the new Foreign Educational Institutions and other bills promise to change the landscape, explain M Dhruva & Partners partner Manthan Unadkat and senior associate Tanya Raghani.
25 May 2010
The commerce and industry ministry is likely to propose 100 per cent foreign direct investment (FDI) in multi-brand retail outlets, according to an unnamed source in the department quoted by the Economic Times today.
01 April 2010
The Union Minister of Commerce & Industry has released a new foreign direct investment (FDI) policy framework to rescind all previous FDI Press Notes and consolidate all FEMA, RBI Circular and Press Note regulations into one consolidated document.
20 November 2009

LexCounsel-Alishan_NaqveeThe liberalisation of retail trading regulations is stuck after Press Notes 2, 3 and 4 and still needs to see significantly more action before it is workable, argues LexCounsel partner Alishan Naqvee.

28 August 2009

Confounding expectations Press Notes 2 and 4 will stay as they are, according to a press report this morning. Perhaps a few lawyers will not have been surprised, however.

"There is no plan to make any changes in Press Note 2 and 4 at all," an unnamed "senior finance ministry official" told the Indian daily Business Standard.

Upsetting for some - Indian lawyers have complained for months now about the grey areas in Press Notes 2, 3 and 4 that were feared (or hoped) to allow foreign direct investment (FDI) through a backdoor route.

"I am surprised that such statements are being given," said one Mumbai-based corporate partner, who added that Press Note 4 governing downstream investment and ownership and control issues needed some work done. "We were quite sure that there would be something which would clearly clarify things and not leave anything to interpretation."

On the other hand, for several months now Legally India had heard off-the-record murmurings from a small handful of lawyers that they did not think the Finance Ministry would revise the Press Notes.

Did they know something that journalists and other lawyers didn't?

Pressure from Bharti, MTN and their advisers could have also swung the mood, as both the companies and the Government hope to seal the biggest cross-border M&A deal in India's history, which will rely on the Press Notes in its complex structuring.

And Pantaloon Retail too – whose current legal advisers Legally India has unsuccessfully been trying to confirm for ages – embarked on the first steps to an ambitious restructuring to increase foreign investment stakes in reliance on Press Notes 2 and 3.

An seemingly gutsy move at the time but perhaps Pantaloon and its advisers too knew something others did not, despite the restructuring having now apparently been put on hold.