The Uttar Pradesh cabinet today approved amendments to the Incentive Policy 2023 for Foreign Direct Investment (FDI) and Fortune 500 companies.
The amendment by the Yogi Adityanath government provides relief to foreign investors in terms of investment leeway, thus attracting offshore funding.
Now, foreign companies that secure funding through equity, loans, or other sources can also invest in UP.
UP finance minister Suresh Khanna said the FDI policy, introduced on November 1, 2023 has been amended slightly.
“The minimum investment threshold for eligibility under the policy remains at Rs 100 crore. According to the RBI’s definition, FDI has so far only included equity investments. However, with this policy amendment, we have broadened it to include Foreign Capital Investment,” he added.
Until now, the FDI included investment in equity form alone. However, companies also raise funds from external loans or other sources to expand.
If a company has just 10 percent equity and secures 90 percent of its investment from other sources, it will still be eligible for benefits under this policy.
Now, the policy will now be known as the ‘FDI, Foreign Capital Investment, and Fortune Global 500 and Fortune India 500 Investment Promotion Policy 2023’.
It will include preference shares, debentures, external commercial borrowings, standby letters of credit, letters of guarantee, and other debt securities for foreign companies investing in equity as foreign capital investment.
Other methods outlined by the RBI for calculating foreign investment, including the Framework on External Commercial Borrowing, Trade Credit, and Structured Obligations, will also qualify.
Foreign capital investments made by a company, including at least 10 percent in equity, with the remainder through debt and other instruments, will be deemed eligible and factored into the total capital investment calculation.