Govt allows FDI in LLP companies

Govt allows FDI in LLP companies

The government has allowed foreign direct investment (FDI) in Limited Liability Partnership (LLP) companies in most of the sectors with prior permission, LLP is a new business structure in India, which is hybrid between a partnership company and body corporate.

The decision to open the emerging business segment to FDI was taken by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday.

"The approval will benefit the Indian economy by attracting greater FDI, creating employment and bringing in international best practices and latest technologies in the country," an official statement said after the CCEA meeting.

The FDI in LLPs will be implemented in a calibrated manner, beginning with the 'open' sectors where monitoring is not required, it said.

However, the overseas investments would be permitted in sectors or activities where 100 percent FDI is allowed through the automatic route and there are no FDI-linked performance related conditions.

Such firms with FDI will not be allowed to operate in agricultural and plantation activity, print media or real estate business.

Welcoming the decision, PwC India Executive Director Akash Gupt said it shows that the government is interested in promoting LLP form of business.

He said the decision will help LLPs engaged in areas like IT, hospitality, healthcare and R&D.

The LLP Act, 2008, was notified in April, 2009. As on 2^nd May, there were 4,679 LLPs registered with the Ministry of Corporate Affairs.

The LLP route will remain close to the foreign institutional investors (Flls) and foreign venture capital investors (FVCIs). They will also not be permitted to avail External Commercial Borrowings (ECBs).

Besides, overseas investments in downstream firms will not be allowed.