India may set a lower cap for beneficial owners under FDI rules: Report

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The Centre may permit a lower threshold for beneficial ownership under the foreign direct investment (FDI) policy.

India had in April said FDI from companies in neighbouring countries can be undertaken through the approval route only.

The government is considering placing a 25 percent and a 10 percent cap on beneficial ownership, and is inclined towards the lower limit, according to a report by The Economic Times.

Moneycontrol could not independently verify the story.

The 10 percent limit is in line with the definition of beneficial ownership under the Companies Act, the report said.

The Department for Promotion of Industry and Internal Trade (DPIIT) has reportedly already consulted ministries and other stakeholders. The decision will be taken at the highest level of the government, and Cabinet approval will be sought for the final proposal, it added.

NITI Aayog CEO Amitabh Kant on August 6 said the government will soon issue a clarification regarding beneficial ownership on FDI from neighbouring countries. "Inter-ministerial consultation is going on and you will soon have a policy regime on this," Kant told CNBC-TV18.

On April 18, the Ministry of Commerce and Industry said it had amended the FDI policy to curb "opportunistic takeovers/acquisitions of Indian companies due to the current COVID-19 pandemic."