The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India (‘DIPP’) has, on March 14, 2022, amended the extant Consolidated Foreign Direct Investment Policy (‘FDI Policy’), by issuing Press Note 1 of 2022 (PN 1 of 2022). Some of the key amendments to the FDI Policy are set out below:

1. FDI up to 20%, under automatic route is now permitted in Life Insurance Corporation (“LIC”), subject to the following conditions:
   1. any foreign investment in LIC will be subject to compliance with the provisions of the Life Insurance Corporation Act, 1956 and applicable provisions of the Insurance Act, 1938, as amended from time to time;
   2. Foreign portfolio investments in LIC will be governed by the provisions of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, as amended from time to time);
   3. any increase in foreign investment in LIC will be subject to pricing guidelines as notified by RBI; and
   4. meaning of any terms of Clause (k) of Paragraph 5.2.22.3.1 of the FDI Policy (such as ‘Equity Share Capital’, ‘Foreign Direct Investment’, ‘Indian Insurance Company’, ‘Indian Company’, ‘Non-resident Entity’, ‘Public Financial Institution’, ‘Resident Indian Citizen’, ‘Total Foreign Investment’) referred for any Indian insurance company will also be construed as a reference to LIC.
2. Definition of ‘Capital’ has been amended to clarify that ‘warrants’ under the FDI Policy includes share warrants that are issued by an Indian company under the Companies Act, 2013, or the provisions of regulations made by Securities and Exchange Board of India (‘SEBI’) or any other applicable law. This clarifies the previous ambiguity under the FDI Policy to confirm that share warrants issued by private companies under the Companies Act, 2013 will be considered as warrants.
3. Definition of ‘Convertible Note’ has been amended whereby the minimum conversion period has been increased from five years to 10 years.
4. The definition of ‘Indian Company’ has been broadened to include body corporates established or constituted by or under any Central or State Act. Certain clarificatory notes have also been included within the definition of ‘Indian Company’.
5. Following new definitions have been inserted:‘subsidiary’ – would have the same meaning assigned to it under the Companies Act, 2013;‘share based employee benefits’ – means the issuance of capital instruments to employees, pursuant to share based employee benefits schemes formulated by a body corporate established or constituted by or under any Central or State Act.
6. The definition of ‘real estate business’ under Paragraph 5.1(f) and Note (i) to Paragraph 5.2.10.2 of the FDI Policy have been aligned. The definition has been amended to clarify that ‘real estate business’ means ‘dealing in land and immovable property with a view to earning profit therefrom.’ It has also been clarified that earning of rent or income on lease of property, which does not amount to transfer, will not amount to ‘real estate business’ for the purpose of FDI Policy. Further, the ‘development of educational institutions, recreational facilities and city and regional level infrastructure’ have been excluded from the definition of ‘real estate business’.