The dilemma among policymakers over allowing special rights to foreign investors acquiring strategic stakes in local companies has once again turned up like the proverbial bad penny. Even after the government clarified that such rights, in the form of inbuilt options in foreign direct investment (FDI), are permissible, the Reserve Bank of India is unwilling to approve the practice. In eight out of 10 FDI deals, foreign investors have a right to exercise such options to sell back shares either to the local company or its promoters if certain conditions related to listing and performance are not fulfilled.
Source : Economic Times
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