Lok Sabha Question No. 1870 (UNSTARRED), answered on 2016-11-28
Subject: Ease of Doing Business
Ministry: COMMERCE AND INDUSTRY
Asked by: K.R.P. PRABAKARAN, K. MARAGATHAM

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 1870.

TO BE ANSWERED ON MONDAY, THE 28 TH   NOVEMBER,  2016.

## EASE OF DOING BUSINESS

## 1870. SHRI K.R.P. PRABAKARAN: SHRIMATI K. MARAGATHAM:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्यग ं ्री

- (a) whether  the  Government  has  recently  relaxed  the  rules  for  granting  the permissions  to  attract  the  international  companies,  investors,  entrepreneurs as a part of ease of doing business in India and if so, the details thereof;
- (b) whether the Government has any plan to open the International Arbitration for redressal of grievances of the MNCs, if so, the details thereof;
- (c) whether  the  Government  has  received  any  objections  raised  by  Indian companies across the country in this regard, if so, the details thereof along with the reaction of the Government thereto; and
- (d) whether the said move is likely to affect domestic companies in these sectors and if so, the corrective steps taken by the Government in this regard?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीिरंमलााीरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a): Yes Madam.  The details are annexed.
- (b): There is no specific plan to open the International Arbitration for redressal of grievances of the MNCs.  However, the general law relating to arbitration is contained  in the Arbitration and  Conciliation Act,  1996,  based  on  the UNCITRAL Model Law on International Commercial Arbitration, as adopted in 1985 by the United Nations Commission  on  International  Trade  Law (UNCITRAL), applies to both international as well to domestic arbitration.
- (c): No, Madam.
- (d): Does not arise.

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## ANNEXURE

## ANNEXURE  REFERED  TO IN REPLY TO PART (a) OF LOK  SABHA UNSTARRED QUESTION NO. 1870 FOR ANSWER ON 28.11.2016.

1. The Government has taken a number of FDI Policy reforms, which are not only bold but also historic. The measures taken by the Government were directed to open  new  sectors  for  foreign  direct  investment,  increase  the  sectoral  limit  of existing sectors and simplifying other conditions of the FDI policy. These policy reforms are meant to provide ease of doing business and accelerate the pace of  foreign  investment  in  the  country.  Some  of  the  sectors  where  the  reforms have been undertaken include:-
- a.  Insurance Sector: Foreign investment up to 49% has been permitted under automatic  route.    Earlier  foreign  investment  beyond  26%  and  upto  49% was under government route.
- b.  Pension sector: Foreign investment up to 49% has been permitted under automatic route.  Earlier foreign investment beyond 26% and up to 49% was under government route.
- c.  Asset Reconstruction Companies: Foreign investment up to 100%  under automatic route has been permitted, which was earlier under government route beyond 49%.
- d.  Other financial Services: Foreign investment up to 100% under automatic route  has  been  permitted  in  Financial  Services  activities  regulated  by financial  service  regulators,  viz.  RBI,  SEBI,  IRDA,  PFRDA,  NHB  or  any other  financial  service  regulator  as  notified  by  the  Government  of  India. Earlier, only 18 sectors of NBFCs were permitted for foreign investment up to 100%.
2. Start-ups: Investment by Foreign Venture Capital Investors registered with SEBI have been permitted in Indian startups irrespective of the sector in which they are engaged.
3. Pre incorporation expenses/Pre-operative expenses: A wholly owned subsidiary of a non-resident entity is permitted to issue shares/CCPS/CCDs/warrants up to 5%  of  its capital or  USD  500,000,  whichever  is  less  against the preincorporation  expenses/pre-operative  expenses  provided  the  subsidiary  is engaged  in  the  sectors  under  100%  automatic  route  with  no  FDI  linked conditions.
4. Deferred  payment/escrow  arrangement  for  transfer  :  In  cases  of  transfer between a resident and non-resident up to 25% of the payment is permitted to be  deferred  or  an  escrow  arrangement  can  be  made  as  per  the  agreement between buyer and seller subject to pricing  guidelines.

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