Mayaram Committee’s definitions of FDI, FII accepted by the Government of India
The Government of India has accepted the report of Mayaram Committee thereby accepting the definitions of FII and FDI. The panel headed by Finance Secretary was set up to rationalize the definitions of FII and FDI.
Some key points from Mayaram Committee Report:
- Foreign investment of 10% or more in a listed company will now be treated as FDI.
- An investor may be allowed to invest below 10% and this can be treated as FDI subject to the condition that the FDI stake is raised to 10% or beyond within one year from the date of the first purchase.
- If the stake is not raised to 10% or above, then the investment can be treated as portfolio investment.
- Foreign Portfolio Investors include Foreign Institutional Investors (FIIs) and Qualified Foreign Investors (QFIs).
- Foreign investment in an unlisted company, irrespective of the threshold limit, may be treated as FDI.