Millennium Post

Mayaram panel on FDI-FII definition to meet on 4 April

A four-member committee headed by Department Economic Affairs (DEA) Secretary, Arvind Mayaram, for giving clear definitions to foreign direct investment (FDI) and foreign institutional investment (FII) with an aim to remove ambiguity over the two types of foreign investments, is slated to hold its meeting next week. 'The panel’s meeting is scheduled on 4 April. It will take about two-and-a half months to come out with the report,' a senior finance ministry official said.

The DIPP Secretary, a Reserve Bank of India (RBI) Deputy Governor and a whole-time Securities and Exchange Board of India (Sebi) member are the other members of the committee.

Mayaram had earlier said that there is a lot of confusion in mind of foreign investors because of distinction between FDI and FII.

Mayaram, however, had said that the committee would look at the definition sof FDI and FII and not the foreign investment caps in different sectors.

'We are looking at definition not cap. How do you define FDI, how do define portfolio investment...The committee will come up with the definition,' he had said.

At present, if an investor has a stake of 10 per cent or less in a company, the investment is treated as foreign institutional investment (FII).

If an investor has a stake of more than 10 per cent, it is treated as FDI. In his Budget speech, Finance Minister P Chidambaram had proposed to follow the international practice with regard to defining FDI and FII.

The committee would be constituted to examine the application of the principle and to work out the details expeditiously, he had said.
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