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Foreign Funding for Agri Business Companies?

CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)

17 December 2009

Dear All,

Can anyone tell me about foreign funding in agricultural companies ? about laws, rules, regulations, n also the sources of such fund, mode of funding, how to approach such foreign investors etc...

Thanks in advance

Adarsh

mail me at :

aadarshg @ rediffmail.com

aadica @ gmail.com

adarsh @ agrimatrix.in

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3 Replies

Ashis Mahapatra (Consultant-Tax & FEMA/FDI) (183 Points)
Replied 18 December 2009

Originally posted by : Adarsh
	FDI Guidelines prohibit foreign funding for "Agricultural & Plantation Activities'.Pls dwnload FDI guidelines attached in my profile.

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CourseCart.in (Mentor at SHAYVIDZ Academy) (3756 Points)
Replied 18 December 2009

Ashis

Thanks for reply... i also know that it Prohibited capital Account Transactions under Regulation4 but there are so many big companies which are mostly depended on foreign fund.. i want to knwo how they proceed to get the same practically...

Although, FDI Guidelines prohibits but there must be some way of getting funds from outside India...

eg. excel corp, pioneer etc. is having foreign funding.

Adarsh

Ashis Mahapatra (Consultant-Tax & FEMA/FDI) (183 Points)
Replied 18 December 2009

Originally posted by : Adarsh

Hi Adars !

I dont know if those companies are directly doing any Agricultural activities/business or they only provide any anciliary/incidental services/equipments to person who are in to agri/plantation business.If they are doing agricultural business on their own (cultivating/harvesting/curing/fishing/milking etc. ) then they certainly come under the FDI Regulation which prohibit the same.For your information FDI constitute Equity only; Not ECB/FCCB unless requirement of Press note 2,3,4 (2009 series) are attracted .

However, I am bit confused wheather FDI is allowed for companies those are providing any direct "services" or deemed services those are "primary produce" of a producer co's who also does "agriculture business" u/s 581 of Comp Act . Becoz as per concept of "Producer company" the defination of "primary produce" includes "agricultural activities" as wel as "activities/services & activities which intend to increase the production OR improve quality there of"

A month back a company from Netherland aproched me for their business establisment in India whose core activities are providing " pesticide/chemical free storing & packaging of agri products till export/marketing & availing International certification for same on behalf of producer co's " . To my confusion on Companies Act defination, I aproched RBI official if this is allowed or not ; but nobody in FED gave me a satishfied ans.Now I am writing to FIPB for a clarification.

Update you after FIPB response