Foreign portfolio investors can invest more than 10 percent in the company – ..

Ahmedabad: The government may soon change the rules for foreign portfolio investors. Once their investment in a company’s shares reaches 10 per cent, the norms will be relaxed to allow them to invest through foreign direct investment (FDI). According to the current rules, foreign portfolio investment should be less than 10 per cent. Thus, as soon as FPIs’ investment reaches 10 per cent, they have to sell shares in the market, said Ajay Seth, secretary, department of economic affairs.
If a foreign portfolio investor wants a large stake in the company and their investment is more than 10 percent and if their interest is for foreign direct investment (FDI) in the company, then the FPI will have to take permission from the government for this. Sheth said that we want to simplify this investment process. However, this simplification does not mean that the limit of FPI investment in shares will be relaxed. Other easy ways can be created to allow FPIs to invest through FDI.
Foreign portfolio investment means that a person residing outside India invests in a company through shares. However, the condition in this investment is that their total investment should be less than 10 per cent. On the other hand, FDI is an investment where an investor residing outside India can invest 10 per cent or more in an unlisted Indian company or a listed Indian company.
In the Union Budget on July 23, Finance Minister Nirmala Sitharaman had talked about easing FDI rules to attract foreign investment. She announced that the rules and conditions related to foreign direct investment and foreign investment will be eased. Apart from this, the government also wants to relax the rules for Indian companies investing more abroad.