Tag Archives: LexCounsel Law Offices

ILN Today Post

FDI Policy of India Relaxed

The Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India (“DIPP”) issued five Press Notes on September 20, 2012, to give effect to the Government of India’s (“GoI”) recent decision to relax foreign direct investment (“FDI”) in various sectors. We provide below, in brief, the key amendments effected by the Press Notes to the FDI Policy of India (“FDI Policy“):

Single Brand Retail Trading – The GoI had earlier permitted 100% FDI in single brand retail trading subject to certain restrictive conditions and riders, which were proving to be a deterrent for the brands wanting to enter the Indian retail segment. Given the industry’s lukewarm response thereto, GoI has finally relaxed some of the rather restrictive conditions and introduced new conditions as well:

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ILN Today Post

Multi Brand Retail and Other Big Ticket FDI Reforms on Track

The Government of India (“GoI”) on September 14, 2012 has finally decided to permit Foreign Direct Investment (“FDI”) in multi brand retail, a decision much awaited by the industry players and foreign investors. The decision to permit 51% FDI in multi brand retail will clear the way for a number of multi brand retailers to open stores in India. However, subject to final release of the notification for amending the FDI Policy of India, the permission to bring in FDI in multi brand retail is reportedly expected to come with certain conditions, which would, inter alia, include:

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ILN Today Post

Supreme Court Confirms Position on Foreign Arbitral Awards

The Supreme Court of India (“SC”) has today delivered an eagerly awaited judgment settling the law concerning applicability of Part I of the Arbitration and Conciliation Act, 1996 (“Act”) on international commercial arbitrations held outside India. The controversy had taken a centre stage following the judgments of the SC in Bhatia International vs. Bulk Trading S.A. & Anr. and Venture Global Engineering vs. Satyam Computer Services Ltd.

In the year 2002, the three Judges Bench of the SC in the matter of Bhatia International held that the provisions of Part I of the Act would apply to all arbitrations and to all proceedings relating thereto, including the international commercial arbitrations held out of India unless the parties by agreement, express or implied, had excluded all or any of its provisions. Thereafter, in the year 2008 in the case of Venture Global, the SC not only discussed the ratio and observations made in Bhatia International but also extended its reasoning to explicitly hold that the “public policy” provision of Section 34 in Part I of the Act, also applies to the foreign awards.

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ILN Today Post

Law For Safer Workplace

The Lok Sabha (Lower House) (“LS”) on September 3, 2012, finally gave its nod to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Bill, 2010 (“Bill”), to deal with the menace of sexual harassment at work place. The Bill which was pending before the LS since 2010 underwent a radical facelift, owing to pressures from various women organizations and critical reviews by the parliamentary standing committee, before being approved.

The Bill, which still has to get the Rajya Sabha’s (Upper House) sanction, defines ‘sexual harassment’ to include “any unwelcome act or behavior directly or by implication of physical contact and advances, or a demand or request for sexual favors, or making sexually colored remarks or showing pornography or any other unwelcome physical, verbal or non-verbal conduct of a sexual natures”.

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ILN Today Post

Sigh of Relief on Tax Front

In an attempt to provide some respite to the investors and ensure a taxpayer-friendly approach in revenue collection, the Finance Minister of India has recently assured that the Income-Tax Authorities (“ITA”) will not recklessly implement the retrospective tax rules. The Government of India (“GoI”) has introduced retrospective amendments in the Income Tax Act, 1961 which empowers the ITA to tax the indirect transfer of shares when the underlying assets are located in India.

The GoI has now referred the issue of retrospective tax rules to the committee headed by Mr. Parthasarathi Shome, (the “Shome Committee”). Earlier, the Shome Committee had recommended that the General Anti Avoidance Rules (“GAAR”) be deferred for three years. GAAR, giving ITA powers to scrutinize any transaction that they feel was structured to evade taxes, was introduced in the Finance Act, 2012 to come into effect from April 1, 2013.

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ILN Today Post

Recent Developments in the Regulatory Landscape of India

Reported here are the recent developments in the regulatory landscape of India, that are relevant for the medical professionals as well as the pharmaceutical and allied healthcare industry (“Industry”).

Tax on Freebies to the Doctors

The Central Board of Direct Taxes, Ministry of Finance, India (“CBDT”) has on August 1, 2012 directed, in effect, that the Industry as well as medical practitioners would be liable to income tax on the value of any freebies given by the Industry to the medical practitioners.

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ILN Today Post

Welcome to Investments from Pakistan

The GoI has permitted investments into India by citizens of and entities incorporated in Pakistan. The decision follows the proposal sent by the Ministry of Commerce and Industry to the Ministry of Finance on February 16, 2012.

In terms of the FDI Policy, investments from Pakistan were the only ones expressly prohibited in India, owing to concerns of the GoI over national security.

The policy revision effected on August 1, 2012 now permits citizens of Pakistan and entities incorporated in Pakistan to invest in all sectors/activities other than defense, space and atomic energy. All investments would however be subject to prior approval of the GoI, as was expected and reported in our newsletter of February 21, 2012.

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ILN Today Post

Government Recognizes “Indian Brands”

The Foreign Investment Promotion Board of the Government of India (“GoI”) has finally agreed that the restriction imposed by the foreign direct investment policy (“FDI Policy”) on foreign investment in single brand retail, namely that the foreign investor shall be the brand name owner, does not apply to the Indian brands.

The FDI Policy revision, introduced in 2006, permitted foreign investment up to 51% in single brand retail trading subject to various conditions including that the brands should be “sold internationally”. During subsequent FDI Policy revisions, the following conditions/clarifications, relevant to the present discussion, were added:

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ILN Today Post

REVISITING KG-D6 GAS PRICING

Flashback to the year, 2002: Reliance Industries Limited (“RIL”) announced that it had discovered a large gas field in a deep water block known as D6 in the Krishna Godavari (“KG”) basin in eastern India off the Andhra Pradesh coast, with reserves of over 7 trillion cubic feet (estimated to be around 40 times bigger than that of Bombay High Field). The gas find was lauded as the biggest natural gas reserves in India and the world’s largest gas discovery of 2002[1]. Indeed, we all had visions of how the find would change India’s energy supply economics in the coming years.  There were subsequent discoveries of gas in the D6 block, prompting RIL to revise estimated reserves for the entire block to 50 trillion cubic feet, and re-igniting our visions of limitless gas supply for India’s rapidly increasing energy consumption.

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ILN Today Post

SEBI (Alternative Investment Funds) Regulations – The Beginning of a New Era

After much hullaballoo, the Securities and Exchange Board of India (“SEBI”) released on May 21, 2012, the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) to regulate activities of collective investment funds including venture capital funds, private equity funds, hedge funds, etc. The AIF Regulations have repealed the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 (“VCF Regulations”).

The salient features of the AIF Regulations are discussed below:

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