FDI in LLP (India)

Nod to FDI in LLPs in calibrated manner

BS Reporter / New Delhi May 12, 2011, 1:19 IST

But no LLPs in plantation, print media or real estate.
The government on Wednesday allowed foreign direct investment (FDI) in Limited Liability Partnership companies but only in sectors like mining, power, roads and highways, manufacturing activities, drugs and pharmaceuticals.


These are the sectors where 100 per cent FDI is allowed for companies through automatic route. But LLPs engaged in agricultural and plantation activities, print media or real estate business are not allowed to have FDI, the Cabinet Committee on Economic Affairs decided on Wednesday.
LLP is a new business structure that has hybrid features of a partnership firm and a corporate body — a company’s limited liability and the flexibility of a partnership firm.
The LLP structure was introduced from April 2009. As on May 2 this year, as many as 4,679 LLPs were registered with the Ministry of Corporate Affairs. The Cabinet further decided that foreign institutional investors and foreign venture capital investors would not be permitted to invest in LLPs.
LLPs will also not be permitted to avail of external commercial borrowings. Besides, LLPs with FDI will not be eligible to make any downstream investments. Also, the Cabinet decided to allow claimants to seek assets of a deceased up to Rs 10 lakh against the present ceiling of Rs 2 lakh.
For this purpose, the Cabinet approved amendment to the Administrators-General Act. The Administrator General appointed by states certifies claims to properties of individuals who die without a legal heir. The Cabinet Committee on Infrastructure approved a Rs 1,060-crore project for building a dry bulk terminal at the Kandla Port Trust on build, operate and transfer basis.