World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

INDONESIA

Indonesia 1:

Report by the Secretariat: INVESTMENT REGIME: Foreign Investment Regime:

Since 1 April 2010, foreign direct investment (FDI) has been regulated by the Consolidated FDI Policy issued by the Department of Industrial Policy and Promotion (DIPP). The first Consolidated FDI Policy was issued in 1 April 2010 to reflect the current regulatory framework by consolidating all prior regulations on FDI contained in the Foreign Exchange Management Act (FEMA) 1999, the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations 2000, and the Reserve Bank of India circulars and press notes.

Could India please elaborate further the arrangement under this policy and would there be a significant change under this new FDI Policy? (WT/TPR/S/249, Page 31, Para 35)

Reply: Government undertook a major exercise on consolidation of all existing regulations on FDI, with the aim of integration of prior regulations on FDI, contained in various sources, such as the Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) circulars, various press notes etc., into one consolidated document, so as to reflect the current regulatory framework. The final document in this regard was released on 31 March 2010. Such consolidation is intended to ensure that information on FDI policy is available at one place, which is expected to lead to simplification of the policy, as well as greater clarity and understanding of foreign investment rules among foreign investors and sectoral regulators.

The policy on FDI is reviewed on a continuing basis, with a view to its further liberalization and increasing its investor friendliness. The review is carried out through a consultative process, with the involvement of stakeholders, both from within and outside the Government. It may, therefore, not be possible to specify future changes at this stage.