INDIA Law and Practice Contributed by: Anuja Tiwari, Mallika Anand, Pranjal Bhattacharya and Antra Shourya, AZB & Partners
5.3 Restrictions on Foreign Investments India regulates foreign investment depending on the sector in which the investment is proposed to be made. In the energy and infrastructure sectors, except in the case of the mining and separation of titanium-bearing minerals and ores (as well as its value-addition facili- ties and integrated activities) and in the defence sec- tor, 100% foreign investment is permitted under the automatic route – ie, prior approval does not need to be obtained. No FDI is, however, allowed in the atomic energy sector. (Please also refer to 5.1 Regulations Applicable to Energy and Infrastructure Companies .) As for FDI filing, it is mandatory for foreign investors to adhere to certain reporting requirements. Depending on the nature of the investment (ie, whether primary or secondary), relevant forms must be submitted to the RBI, reporting the investment in equity instruments by foreign investors. 5.4 National Security Review/Export Control Please refer to 5.3 Restrictions on Foreign Invest- ments . Although export control regulations do not apply to the energy and infrastructure sectors, such regulations are applicable to dual-use goods and technologies (ie, goods and technologies that can be used for both civilian and military purposes) and these cannot be exported without an export authori- sation from the Director General of Foreign Trade. The restrictions are applicable to the export of: • nuclear technology and materials; • solar panels with specific components, depending on the materials involved; and • technologies that could impact national security, especially in communications infrastructure. 5.5 Antitrust Regulations According to the merger control regime in India, anti- trust filing for takeover offers and business combina- tions is required if the business combination breaches the prescribed deal value threshold (DVT) and does not fall under any exemptions provided under the Competition Act 2002 (the “Competition Act”). A noti- fication of the business combination must be made to the CCI if the combination breaches the DVT. The CCI has 30 working days from the date of notification in which to:
distribution and trading of power. In the event of an investment by an entity of a country sharing a land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, that entity can invest only under the government route – ie, after obtaining a prior approval from the relevant ministry and/or government depart- ment. Regulatory Bodies The key regulatory bodies governing the main sectors in the energy and infrastructure sectors are: • electricity – the Ministry of Power and Ministry of New and Renewable Energy (with the adjudica- tory bodies being the Central Electricity Regula- tory Commission (CERC) and the State Electricity Regulatory Commission for interstate and intra- state electricity transactions); • oil and gas – the Petroleum and Natural Gas Regu- latory Board and the Ministry of Petroleum and Natural Gas; • shipping and ports – the Ministry of Ports, Ship- ping and Waterways and the Directorate General of Shipping; • roads and highways – the Ministry of Road Trans- port and Highways and the National Highways Authority of India; and • telecommunications – the Department of Telecom- munication and the Telecom Regulatory Authority of India; Other relevant departments are the Bureau of Energy Efficiency and the Ministry of Environment, Forest and Climate Change, as well as municipal or local authori- ties. Timeline for Obtaining Permits and Approvals The timeline for obtaining the applicable permits and approvals is based on the project’s nature, size and location. However, it may take up to six months to obtain the approvals and/or licences in regulated sec- tors. 5.2 Primary Securities Market Regulators The primary securities market regulator for M&A trans- actions is SEBI for public listed companies.
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