Foreign investment policy for Limited Liability Partnerships under review


NEW DELHI: The government is set to follow up on Prime Minister Narendra Modi’s promise of rolling out the red carpet to foreign investors by allowing them to invest in sectors on the automatic route without prior approval through Limited Liability Partnerships or LLPs while sectors on the approval route could also be thrown open with some conditions.

“The foreign investment policy for LLPs is being reviewed. There is a need to align with the policy for companies,” said a government official, privy to the development.

Modi, on his recent visit to the United States, reiterated his promise to foreign investors to provide a non-adversarial regime that would be minus the proverbial red tape. The NDA government, which took over in May, is holding consultations to further liberalise foreign direct investment (FDI) norms for the construction and development sector, after it threw open railways and eased rules for the defence sector.

LLPs have emerged as a preferred mode of investments owing to the flexibility they offer in terms of compliance and are a popular vehicle the world over especially for manufacturing, IT, hospitality, advertising and consultancy. The government is now looking at more structural cleaning up to remove unnecessary niggles that may be holding up foreign investors, for LLPs face multiple restrictions even as they are just another business organisations.

The Department of Industrial Policy and Promotion is in advanced stage of discussions with ministries of finance and corporate affairs on an FDI regime for LLPs that will be on a par with that for companies.


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