Approval from FIPB

[SHANTI NARAIN]

We are dealing in stainless steel products. We want to supply our products in India by our proposed 100% subsidiary. The Stainless steel will be imported from our 100% held Indian subsidiary and then sell to various wholesaler in India. Please let us know whether we require approval from FIPB for holding 100% shares in an Indian Company. Or it is under automatic route. Thank you.

[Guest]

There are certain restriction and sectoral cap for FIPB route for trading activities. You may refer to FEM (Transfer of Issue of Security by a person Resident Outside India) Regulation, 2000.

AI Summary

FIPB approval may be required for full foreign ownership of trading subsidiaries; sectoral caps and approval route apply. Trading by a wholly foreign owned Indian subsidiary-importing stainless steel from its foreign parent and selling domestically-raises whether FIPB approval is required or the automatic route applies. The advisory notes trading activities face sectoral caps and restrictions under the FIPB route and refers to the FEM (Transfer of Issue of Security by a person Resident Outside India) Regulation for the applicable approval conditions.