The government is set to remove a host of entry level conditions to foreign players, including the mandatory divestment condition- for investors who got in prior to the relaxation. But the government is examining whether those investors, who got a “favourable dispensation” regarding non-observance of FDI caps etc. and took the comparative benefit of such treatment under certain obligations, would now be freed from those obligations. The investors, who individually circumvented inhibiting factors such as sectoral caps under certain obligations that had then been agreed upon, might have to fulfill those obligations, even if the entry level conditions are retrospectively waived.

The FIPB’s core group may also waive the controversial Press note 18 conditions, in case of new subsidiaries incorporated for investments pertaining to research and development (R&D) activities. The Press note 18 is meant to ensure that a foreign investor with an existing subsidiary in India, seeks the consent of the other shareholders in such entities, before setting up a wholly owned arm in India in the same area of business. A sunset clause may be brought in as regards the applicability of the note, keeping in view certain realities including some unintended hassles the foreign investor is thereby subject to. But it is for sure that the authorities would not, in any case, scrap the note.

The question however remains as to whether the proposal would be considered with retrospective effect or only for future FDI applications.