India allows FDI in limited liability partnership firms

May 24th, 2011 - 5:45 pm ICT by IANS  

New Delhi, May 24 (IANS) India Tuesday announced it would allow foreign direct investment (FDI) in limited liability partnership (LLP) firms in a calibrated manner, a move that would help attract greater overseas funds and latest technologies in the country.

“The government has reviewed the extant policy on foreign direct investment and decided to permit FDI in LLP firms,” the ministry of commerce and industry said in a statement.

Limited liability partnership firm is a new business structure in India formed under the Limited Liability Partnership Act, 2008. A hybrid of existing partnership firms and full-fledged companies, it is a separate legal entity, liable to the full extent of its assets with the liability of the partners being limited to their agreed contribution in the firm.

The Cabinet Committee on Economic Affairs recently gave its approval to such investments.

However, overseas investments in LLP firms would be allowed with certain conditions. It will be permitted only in the sectors where 100 percent FDI is allowed through automatic route.

LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business, the official statement said. Such firms will not also be allowed to make any downstream investments.

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