Need clarification on Foreign Currency Regulation Act: CII
November 13th, 2011 - 4:58 pm ICT by IANSNew Delhi, Nov 13 (IANS) A leading Indian industry lobby Sunday called for changes and clarification in the Foreign Currency Regulation Act (FCRA) on certain sections which, it said, hindered foreign capital inflow into the higher education segment.
According to the Confederation of Indian Industry (CII), the current laws hinder foreign direct investments (FDI) in universities as private players have to invest through a trust or Section 25 of the companies act.
“For-profit entities are not allowed to get licences from the University Grants Commission as private universities under acts of different state governments,” the CII said in a statement.
“Since only a section 25 company can issue share capital, it is the most preferred medium for investment,” the statement said.
The industry body said the FCRA Act comes into effect when FDI from venture capital and private equity firms or foreign shareholders come in the company.
CII said that while legal authorities and accounting firms say that investment in a section 25 company in exchange for a share subscription does not come under FCRA, most investors get sceptical as the legislation has harsh penal provisions.
“To overcome this fear, a clarification (should) be made that FCRA is not applicable to investments made under automatic FDI in a section 25 company against equity subscription,” the statement said.
The industry lobby further recommended that the Planning Commission include a clarification from the ministry of corporate affairs and the Securities and Exchange Board of India (SEBI), that a section 25 company can issue capital to the public in an initial public offering (IPO) or private placement.
“That it (company) will not lose tax exemption and not-for-profit status just because shares are valued above par.”
The recommendations are part of the paper which CII had recently submitted to the Planning Commission which is in the process of creating the approach paper for the 12th plan.
CII added that the paper will be released at the CII’s first University-Industry Congress which is being held here Nov 14-15.
- Industry, academia can create content for digital network: Sibal - Nov 14, 2011
- Relax investment norms for private equity funds: CII - Aug 21, 2011
- Raise depreciation rate to boost investment: CII - Feb 26, 2012
- Just 4 percent of India's retail is organised - Nov 30, 2011
- Indian industry split on FDI cap in defence manufacturing? (Lead) - Jul 26, 2010
- CII echoes Obama, calls for easing FDI norms - Jul 17, 2012
- 'Jamia can receive and spend foreign funds' - Sep 21, 2012
- FDI in defence should not be raised to 100 percent: CII - May 09, 2010
- 16 FDI proposals worth over $20 million accepted - Jun 07, 2011
- CII moots 10-point agenda for reviving Indian economy - Jun 05, 2012
- FDI in India slumps 38 percent in April-October - Dec 16, 2010
- It's possible to increase trade with Pakistan: CII - Jun 05, 2012
- India eases joint venture norms to draw foreign funds (Lead) - Mar 31, 2011
- Recall of retail FDI regressive, disappointing: India Inc (Roundup) - Dec 07, 2011
- PFC plans picking up stake in power firms - May 09, 2011
Tags: accounting firms, approach paper, capital inflow, confederation of indian industry, education segment, fcra, foreign currency, foreign direct investments, initial public offering, legal authorities, penal provisions, preferred medium, private equity firms, private players, private universities, profit entities, regulation act, securities and exchange board of india, state governments, university grants commission