The Department of Industrial Policy and Promotion has issued a draft Press Note dated 24th December 2010 ("PN") that is similar to the Master Circulars that we have on FEMA issued by the Reserve Bank of India. This 66 page Press Note is only a draft and comments are invited by 31st January 2010 after which a final Press Note would be issued. A couple of quick and preliminary comments.
- It is not wholly clear whether this PN will replace all earlier PNs or is merely intended to be a "manual" for guidance. At one place, it is stated that the PN " This Press Note consolidates into one document all the prior regulations on FDI and reflects the current ‘regulatory framework’ on FDI. It is clarified that this is a consolidation/compilation and comprehensive listing of most matters on FDI and is not intended to make changes in the extant regulations. While attempt has been made to deal with the subject comprehensively, if some aspect(s) has been left out then that will continue to be dealt in the current way where it is listed.". At another place, the PN says " All earlier Press Notes on FDI issued by Department of Industrial Policy and Promotion, Government of India stand rescinded.". To me, the intention appears to be that this PN, when finally issued, will replace all earlier Press Notes.
- Just as Master Circulars, this "Master" Press Note will have a sunset clause but unlike Master Circulars, the period is six months. The PN will be reviewed every six months in April and September.
More on this draft PN later.
- Jayant Thakur