A four-member committee headed by Department Economic Affairs (DEA) Secretary, Arvind Mayaram, for giving clear definitions to FDI and FII with an aim to remove ambiguity over the two types of foreign investments, is slated to hold its meeting next week.
“The meeting of committee is scheduled for April 4. The committee will take about two-and-a half months to come out with the report,” a senior finance ministry official said.
The DIPP Secretary, an RBI Deputy Governor and a SEBI whole-time member are the other members of the committee.
Mr. Mayaram had earlier said that there is a lot of confusion in mind of foreign investors because of distinction between FDI and FII.
Mr. Mayaram, however, had said, the panel would look at definition of 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 told PTI.
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 foreign direct investment (FDI).
The Finance Minister P. Chidambaram in his Budget speech 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.