Short Takes

India Investment Journal September Edition, Flagship Scheme
Indian start-ups get FDI policy boost

A new consolidated foreign direct investment (FDI) policy framework issued by the Indian government this week includes provisions specific to start-ups which is being seen as a major boost for the sector.

According to the 2017 FDI policy document released by the Department of Industrial Policy and Promotion (DIPP), start-ups in India can raise up to 100 per cent of funds from Foreign Venture Capital Investors (FVCIs). They can issue equity or equity-linked instruments or debt instruments to FVCIs against the receipt of foreign remittance.

The document reads: "Startups can issue convertible notes to persons resident outside India (subject to certain conditions).

“A start-up engaged in a sector where foreign investment requires government approval may issue convertible notes to a non-resident only with approval of the government."

Foreign residents, except those in Pakistan and Bangladesh, will be permitted to purchase convertible notes issued by an Indian start-up.