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Law and policy

Policies and practices

What, in general terms, are your government’s policies and practices regarding oversight and review of foreign investment?

Primarily since 1991, India has sought to liberalise its economy and has continuously opened up most of its industrial and business sectors to foreign investment. In particular, the Indian government has sought to attract foreign investment into the country, as it has the effect of establishing long-term economic relationships with India. In the past year, the trend for liberalisation has continued, with relevant changes being made to the Indian foreign exchange laws in this regard, for example:

  • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2018, dated 26 March 2018, 100 per cent foreign investment via automatic route has been permitted in the single brand product retail trading for the products to be sold under same brand used internationally and to undertake retail trading through e-commerce for single brand trading entities operating through brick and mortar stores in India;
  • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2018 dated 26 March 2018, 100 per cent foreign investment via automatic route (up to 49 per cent automatic and beyond 49 per cent approval route other than non-resident Indians and overseas citizens of India ) for non-resident Indians and overseas citizens in India, has been permitted in air transport services for scheduled and domestic passenger airlines, including 100 per cent foreign investment in the regional air transport service;
  • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2018 dated 26 March 2018, 100 per cent foreign investment via automatic route has been permitted in the investing companies registered as non-banking financial companies (NBFCs) with the Reserve Bank of India (RBI). However, foreign investment in investing companies not registered as NBFCs with the RBI and in core investment companies, both engaged in investing in the capital of other Indian entities, will still require prior approval from the government; and
  • Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Amendment) Regulations, 2018 dated 26 March 2018, certain clarifications were issued in relation to exclusion of real estate broking services from the definition of ‘real estate business’ of the TISPRO 2017. As per the above amendment, it is now expressly clarified that 100 per cent foreign investment via automatic route is permitted in real estate broking services in India.

Foreign investments in India are principally governed by the Foreign Exchange Management Act 1999 (FEMA) and the regulations framed thereunder, to consolidate the law relating to foreign exchange and external trade for promoting and developing the foreign exchange market in India. In pursuance of the same, the RBI had published the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (TISPRO 2000), under the FEMA. On 7 November 2017, the RBI published the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (TISPRO 2017), which now govern all existing and future foreign direct investment (FDI) and foreign portfolio investors (FPI) Investment (collectively referred to as foreign investment) made under the erstwhile TISPRO 2000.

In 2010, the Department of Industrial Policy and Promotion (DIPP) put in place a policy framework (currently the Consolidated Foreign Direct Investment Policy, 2017 (FDI Policy)), which is updated typically every year and amended from time to time. The FDI Policy contains sectoral requirements that must be complied with by foreign investors for the purposes of investing in particular sectors in India and also by Indian companies that receive foreign investments in India. The FDI Policy also classifies sectors that fall under the approval route and sectors where FDI falls under the automatic route. Further, there are also certain limited sectors and industries in which FDI is prohibited. Except for those sectors, and subject to conditions for foreign investment (performance conditions) or government approval in certain sectors; by and large there are no preconditions for making foreign investment into other sectors in India.

The FDI Policy in consonance with the Securities and Exchange Board of India (SEBI) (Foreign Portfolio Investors) Regulations 2014 (FPI Regulations) read with Schedule 5 of the TISPRO 2017 permits FPIs to invest in capital instruments (such as equity shares, preference shares, and share warrants) of an Indian company under the Portfolio Investment Scheme (the Scheme), as well as non-convertible debt securities (listed and unlisted) and shares, debentures and warrants of a listed companies or companies whose securities are likely to be listed on a stock exchange in India (through primary and secondary markets).

Therefore, foreign investment in India can broadly be classified into FDI and investments by foreign institutional investors (FIIs) and FPIs (FPI investments).

Main laws

What are the main laws that directly or indirectly regulate acquisitions and investments by foreign nationals and investors on the basis of the national interest?

The key legislation that directly or indirectly regulates and governs acquisitions and investments by foreign nationals is the FEMA (along with rules and regulations thereunder, in particular, the TISPRO 2017), as well as other notifications, circulars and directions pertaining to foreign investments issued by the RBI from time to time.

Until 2010, the regulatory framework for foreign investment in India consisted of the FEMA; the regulations framed thereunder, the press notes and press releases issued by the DIPP, and the notifications, circulars and directions issued by the RBI. After April 2010, the press notes and press releases issued by the DIPP were consolidated into the FDI Policy, which is most often updated and modified annually; however, the DIPP continues to issue press notes and press releases each year (which in turn are subsequently incorporated into the FDI Policy) and amendments thereto from time to time.

In addition to complying with the Indian foreign exchange laws and the rules, regulations and policies of India, foreign investors are also required to comply with the relevant sector-specific and state-specific (local laws) legislation applicable to a particular industry or sector.

Scope of application

Outline the scope of application of these laws, including what kinds of investments or transactions are caught. Are minority interests caught? Are there specific sectors over which the authorities have a power to oversee and prevent foreign investment or sectors that are the subject of special scrutiny?

Under the present laws, except for a few sectors, for example, lottery, gambling and betting, chit funds, nidhi companies and trading in TDRs, where foreign investment is prohibited, foreign investment is allowed in almost all sectors either under the automatic route or under the approval route.

There is a percentage threshold prescribed for foreign investment in some sectors (such as petroleum refining by public sector undertakings, terrestrial broadcasting FM, uplinking of news and current affairs TV channels, print media, scheduled air transport service and regional air transport service, private security agencies, multi-brand retail trading, banking, infrastructure companies in securities markets) and, except for some prohibited sectors, foreign investment overall is allowed in almost all sectors under the automatic route up to 100 per cent of the equity shareholding, though in some cases with certain performance conditions, such as minimum capitalisation norms, exit conditions, etc.

India has consistently liberalised and eased the norms for foreign investments in India. For foreign investment in any automatic route sector, there is no need for prior approval and only certain post facto filings are required. There have been significant liberalisation and simplification efforts made through amendments to the FDI Policy, for example, important filings such as Form FC-TRS (reporting of transfer of shares between residents and non-residents) and Form FC-GPR (reporting of issuance of shares by an Indian investee company) have been made online through designated website portal Recently, through amendment notification FEMA20(R)(3)2018 dated 30 August 2018, the Indian government initiated a drastic step towards ease in FDI reporting, by removing the filing requirement of advance remittance form (ARF), which was earlier required to be filed by the Indian companies receiving FDI consideration for issuance of capital instruments. Further, RBI has also introduced the concept of single master form (SMF) for reporting the total investment in an Indian company. The SMF facility would provide online reporting platform at for a limited and designated period to the Indian companies with investments from the people resident outside India including in an investment vehicle. Subsequently, pursuant to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, dated 30 August 2018, it is required that any Indian entity or investment vehicle making downstream investment in another Indian entity shall be considered as indirect foreign investment and shall be required to file Form DI with the RBI within 30 days from the date of allotment of the capital instruments, and notify to DIPP within 30 days in all cases of downstream investment irrespective of allotment of capital instrument. Heretofore, under the erstwhile arrangement only Form DI was required to be filed before the DIPP without any specific requirement of filing or notification at the time of allotment of capital instruments.

Furthermore, under the TISPRO 2017, a person or entity who has delayed the filing of Form FC-GPR or Form FC-TRS can regularise the same by paying a late submission fee in accordance with the guidelines stipulated by the RBI.

However, in sectors where foreign investments are permitted with the prior approval of the sector-specific competent authority (eg, Ministry of Information and Broadcasting in relation to foreign investment in the broadcasting sector, and the Department of Industrial Policy and Promotion in relation to foreign investment in the single and multi-brand retail trading sectors) (competent authority), the government reserves the right to oversee, control, permit or prohibit investments, and mainly these sectors are considered sensitive (such as print media and multi-brand retail trading).


How is a foreign investor or foreign investment defined in the applicable law?

The term ‘foreign investment’ is defined under the TISPRO 2017 to mean: ‘any investment made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP’. Furthermore, a person resident outside India is permitted to hold foreign investment either as FDI or as FPI investment in a particular Indian company.

The TISPRO 2017 do not define the term ‘foreign investor’. However, they provide the entry routes, eligible instruments and mechanism whereby a ‘person resident outside India’ can undertake foreign investment in India.

The term ‘person resident outside India’ is explained under the FEMA to mean: (i) a person who is residing in India for fewer than 182 days during the course of the preceding financial year; and (ii) any person or body corporate not registered or incorporated in India. Essentially, Indian foreign exchange law allows any set-up that is an association of persons, foundations, trusts, bodies corporate, companies or entities to make FDI in India.


Special rules for SOEs and SWFs

Are there special rules for investments made by foreign state-owned enterprises (SOEs) and sovereign wealth funds (SWFs)? How is an SOE or SWF defined?

While the TISPRO 2017 does not define SOEs or SWFs, the FDI Policy (in Annexure 6) defines an SOE or SWF as a government investment vehicle that is funded by foreign exchange assets and that manages those assets separately from the official reserves of monetary authorities. This term has also been referred to in the FPI Regulations, wherein a sovereign wealth fund is construed as a category I FPI (Regulation 5(a), FPI Regulations). Therefore, an SWF would be able to invest under the scheme wherein the individual limit for a holding by an FPI in the Indian investee company is not below 10 per cent of the capital of the company, and the aggregate limit for investment by all FPI in the Indian investee company is 24 per cent of the capital of the company. However, an SWF (and any other FPI) would be able to increase its investment beyond the aggregate limit of 24 per cent (up to the sectoral cap or statutory ceiling prescribed in the Consolidated FDI Policy) in the Indian investee company, if the said company passes a resolution at the meeting of its board of directors followed by a special resolution at the shareholders’ meeting to that effect.

Relevant authorities

Which officials or bodies are the competent authorities to review mergers or acquisitions on national interest grounds?

Subject to satisfying the assets and turnover thresholds prescribed under the Competition Act 2002 (Competition Act), the regulations and notifications thereunder, and the non-applicability of any of the exemptions available to the transacting parties, investments that involve an acquisition of shares, assets, voting rights or control, or a merger or amalgamation (together referred to as ‘combinations’) must be notified to the Competition Commission of India (CCI), which is empowered to prohibit or modify transactions that are likely to cause an appreciable adverse effect on competition (AAEC) in India.

Further, there are specific regulators that review mergers or acquisitions of companies within certain industries and sectors (eg, the Insurance Regulatory Development Authority for insurance companies and the Telecom Regulatory Authority of India for telecom companies).

Previously, the Foreign Investment Promotion Board (FIPB) was the governmental body that offered a single window clearance for proposals on FDI in India that are not allowed access through the automatic route. However, regarding O.M No. 01/01/FC12017 -FIPB dated 5 June 2017, the government of India has abolished the FIPB, and mandated that where FDI is only permitted through the approval route, the sector-specific competent authorities (such as the Ministry of Information and Broadcasting, Ministry of Mines, etc) mist be approached for approval. However, in case of a doubt as to which competent authority is to be approached, the DIPP is mandated to identify the competent authority concerned and to this effect, the DIPP has established a Foreign Investment Facilitation Portal (FIFP).

Notwithstanding the above-mentioned laws and policies, how much discretion do the authorities have to approve or reject transactions on national interest grounds?

The competent authorities have the discretion to approve, reject or defer a proposal for foreign investment where such proposals have come via the approval route after having sought the concurrence of the DIPP. Apart from the discretion of the competent authorities, the proposed investment would also have to be in line with sectoral laws and regulations, and, where necessary, applications for approval from the sectoral regulators would have to be given. If any sector-specific approval is required from any other sector regulator, it must be obtained from the relevant regulatory authority. Again, these authorities reserve the discretion to reject any applications made to them without specifying the reasons.

Further, the CCI’s discretion is limited to a qualitative assessment of whether the notified transaction causes or is likely to cause an AAEC within the relevant market in India. The CCI also has the power to direct modifications to the terms of a transaction, or even prohibit it, if it is of the view that such transaction is likely to cause an AAEC in India.



Jurisdictional thresholds

What jurisdictional thresholds trigger a review or application of the law? Is filing mandatory?

Where the proposed foreign investment is to be made via the approval route, the jurisdiction of the competent authorities is triggered, as they have the authority to review the proposed applications. FDI transactions of more than 50,000 million rupees need the prior approval of the Cabinet Committee on Economic Affairs. Further, any investment or payment made into India must be reported to the RBI either through authorised dealers or directly to the RBI, depending on the nature of investment or payment made into India.

Under the Competition Act, a combination will need to be mandatorily notified to the CCI if it satisfies any of the following assets and turnover thresholds, and is unable to take the benefit of any of the available exemptions:




Either the acquirer or the target or both have

20 billion rupees


60 billion rupees

The group to which the target will belong has

80 billion rupees


240 billion rupees




Either the acquirer or target or both have

In the case of a merger, the enterprise after a merger or created as a result of the merger, has

US$1 billion, including assets of at least 10 billion rupees in India


US$3 billion, including turnover in India of more than 30 billion rupees

A group has

US$4 billion, including assets of at least 10 billion rupees in India


US$12 billion, including turnover in India of more than 30 billion rupees

National interest clearance

What is the procedure for obtaining national interest clearance of transactions and other investments? Are there any filing fees?

Foreign investments are permitted in India through the automatic route and the approval route depending on the sector. No prior approval is required for activities falling under the automatic route, subject to compliance with the applicable performance conditions. However, areas or activities that do not fall within the automatic route and are under the approval route require the prior approval of the competent authority (see questions 3 and 6). Further, foreign investment in some sectors, such as the pharmaceuticals sector, is permitted up to a certain threshold via the automatic route, and beyond such threshold via the approval route. To obtain approval, the investor company or investee company (the applicant) must submit a single online application on the website of the FIFP along with such information as required, which, inter alia, includes:

  • a summary of the foreign investment proposed;
  • certificate of incorporation and memorandum of articles of the investor and investee company (and in the case of a joint venture, of the joint venture company);
  • diagrammatical representations of the cash flow;
  • foreign inward remittance certificates evidencing the fund flows; and
  • a copy of the board resolution of the investee or issuing company in the case of a fresh issue of shares. Certain categories of foreign investors, such as investment funds, are required to provide additional documentation pertaining to the investment managers and contributors to such funds.

If the online application is not digitally signed, the DIPP will direct the applicant to submit a physical copy of the application to the concerned competent authority within five days of such direction being given to the applicant. There is no fee for filing an online application.

Further, all notifiable combinations must be notified to the CCI in the format prescribed under the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations 2011 (Combination Regulations). The Ministry of Corporate Affairs of the Indian government issued a notification on 29 June 2017 that does away with the erstwhile requirement to necessarily notify a combination within 30 calendar days of an event triggering a notification requirement. However, the requirement to file a notice with the CCI is still mandatory and the suspensory regime (ie, requirement to receive CCI approval prior to consummating a notifiable transaction in any way or form) still applies. Subject to the extent of market shares in overlap markets the transaction may be notified in the shorter form (Form-I) or a more detailed form (Form-II). Subsequent to filing the application, the CCI reviews the combination to ascertain if the combination causes or is likely to cause any AAEC, before passing its final order.

Which party is responsible for securing approval?

The approval of the competent authority is required if the investment is made under the approval route and either of the parties, being the foreign collaborator or foreign investor, or the Indian company, can secure approval from the competent authority. Further, where an investment involves an acquisition of shares, assets, voting rights or control, the acquirer will be responsible for notifying the combination to the CCI. In the case of a merger or amalgamation, all the parties are jointly responsible for notifying the combination to the CCI.

Review process

How long does the review process take? What factors determine the timelines for clearance? Are there any exemptions, or any expedited or ‘fast-track’ options?

Within two days of submission of the online application, the DIPP is required to e-transfer the application to the competent authority concerned and also circulate the application to the RBI, the Ministry of Home Affairs (MHA) (in case the proposed foreign investment is in a sector requiring security clearance) and the Ministry of External Affairs. The concerned ministries are required to upload their queries regarding the application on the FIFP within four weeks of online receipt of the application. If security clearance is required from the MHA, the aforesaid timeline can be extended to six weeks (Stage 1). Within one week of the completion of Stage 1, the competent authority may pose queries to the applicant. The applicant must respond to the queries of the competent authority within one week of the date of receipt of queries (Stage 2). Within two weeks from the completion of Stage 2, the competent authority must process the application and convey its decision to the applicant. The above timelines are subject to variation in the event that the application is subject to receipt of security clearance from the MHA or because of other administrative reasons. The status of the application can be tracked on the FIFP website.

As far as the CCI is concerned, the overall prescribed statutory time period to review the combination and pass a final order is 210 calendar days from the date of filing of the notification, and in limited situations, where remedies may be warranted, 270 days to disapprove or approve the transaction. The Combination Regulations further provide that the CCI shall endeavour to pass its final order within 180 calendar days of filing the notification. Further, the CCI must form a prima facie opinion on the likelihood of the combination resulting in an AAEC within 30 working days of filing the notification. This is subject to ‘clock stops’ on account of requests from the CCI for additional information, extensions sought by parties, etc. The extent of overlaps relating to the combination, the sensitivity of the government towards the sector to which the combination relates and the existence or likelihood of the combination resulting in AAEC, are some of the factors that may determine the timeline for clearance. In a majority of cases, the CCI has approved transactions within the 30 working day timeline (excluding clock stops).

There are four broad categories of exemptions under the merger control regime that the parties to the combination can analyse and benefit from:

  • Statutory exemption: the requirement of mandatory notification to the CCI do not apply to any financing, acquisition or subscription of shares undertaken by FIIs, or venture capital funds registered with the SEBI, public financial institutions and banks pursuant to a covenant of an investment agreement or a loan agreement. However, these entities are required to provide details of the acquisition, including control, circumstances for exercising such control and consequences of default arising out of such loan agreements or investment agreements to the CCI within seven days of the date of the acquisition.
  • Categories of transactions ‘normally’ exempt from mandatory notification: Regulation 4 read with Schedule 1 of the Combination Regulations treats certain categories of transactions as being ordinarily not likely to cause an appreciable adverse affect on competition in India, and hence provides that a pre-notification need not normally be filed for such transaction.
  • Target-based exemption (de minimis exemption): further to the thresholds notification, any transaction where the enterprises (ie, the enterprises whose shares, voting rights, assets or control are being acquired or are being merged or amalgamated) either has assets not exceeding 3,500 million rupees in India or has a turnover not exceeding 10,000 million rupees in India, are currently exempt from the mandatory pre-notification requirement.
  • Exemptions for specific sectors: the central government has issued notifications exempting certain banking companies from the notification requirement to the CCI for a period of five years (for example, see notifications dated 8 January 2013 and 30 August 2017). Recently, the central government also exempted certain central public sector enterprises operating in the oil and gas sector from the CCI notification requirement for a period of five years from 22 November 2017.

There are no expedited or ‘fast-track’ options for the review process; however, occasionally the government of India considers proposals for the fast-track single window clearance of foreign investment on jurisdictional basis.

Must the review be completed before the parties can close the transaction? What are the penalties or other consequences if the parties implement the transaction before clearance is obtained?

Where investment is through the approval route, prior approval must be obtained before the transaction is completed (Regulation 16(A)(2), TISPRO 2017). If the parties complete the transaction before obtaining the relevant approvals or in a manner that contravenes the FEMA (or rule, regulation, notification, direction or order issued in exercise of the powers under the FEMA) or contravene any condition subject to which an authorisation is issued by the RBI, the parties shall, upon adjudication by the designated authorities of the Enforcement Directorate (Directorate), be liable to a penalty of up to three times the sum involved where such amount is quantifiable or up to 200,000 rupees where the amount is not quantifiable. A penalty of 5,000 rupees will be incurred for every day after the first day on which the contravention continues. Further, under section 14 of the FEMA, in the event of non-payment of the penalty within 90 days from the date the notice for payment of such penalty is served, the parties shall be liable to civil imprisonment.

Every notifiable combination requires the approval of the CCI prior to its consummation. If a notifiable combination is not notified, or if the parties take any step to implement the combination (or a part thereof) prior to the receipt of the CCI’s approval, the CCI may impose penalties extending up to 1 per cent of the total turnover or assets (whichever is higher) of the combination. In the past, the CCI has imposed penalties of up to 50 million rupees. To date, the CCI has not exercised its power to impose the highest allowable penalty under the Competition Act.

Involvement of authorities

Can formal or informal guidance from the authorities be obtained prior to a filing being made? Do the authorities expect pre-filing dialogue or meetings?

Formal or informal guidance from authorities such as the competent authority or the DIPP can be obtained prior to a filing being made or during the time that the application is in process. An applicant can submit a clarification to the DIPP listing its query in the prescribed form. The CCI has also put in place a mechanism for pre-filing informal merger consultations, but it is not binding.

When are government relations, public affairs, lobbying or other specialists made use of to support the review of a transaction by the authorities? Are there any other lawful informal procedures to facilitate or expedite clearance?

Experts and specialists are involved at the stage when policy decisions are being made for the purposes of receiving recommendations. Lobbying does not formally prevail in India. There is no informal procedure or mechanism available to facilitate clearance of any proposal. The process of granting approval is transparent and is solely considered on the basis of the TISPRO 2017. The applicant must meet all the legal requirements as prescribed for the approval to be granted. Applicants can track the status of their applications on the FIFP website on both a daily and a weekly basis. In the past, economists have been engaged by parties for merger control filings to the CCI.

What post-closing or retroactive powers do the authorities have to review, challenge or unwind a transaction that was not otherwise subject to pre-merger review?

The DIPP and the RBI may review, challenge and unwind an approved transaction. In Bycell Telecommunication India P Ltd v Union of India and Ors, the FIPB, having previously granted approval to the petitioner, revoked it - after the Ministry of Home Affairs withdrew the security clearance of the petitioner - on the grounds that even if the petitioner had complied with requirements under the laws relating to foreign investment, lack of a security clearance is a valid ground to revoke an application. Further, under the provisions of the FEMA, the central government, by an order published in the Official Gazette, may appoint as many officers of the central government as it likes as the adjudicating authorities for holding an inquiry into the person alleged to have committed contravention of the FEMA. The Directorate is a specialised financial investigation agency under the Department of Revenue, Ministry of Finance, which has, under the central government, been accorded powers and is mandated with the task of enforcing the provisions under the FEMA.

The CCI may also review, challenge or unwind only those combinations, where the transactions that met the assets or turnover thresholds prescribed under the Competition Act were not notified for CCI’s approval, after their closing. Once the combination has been consummated, it may be subject to such review by the CCI for only up to one year from the date on which such combination has taken effect. However, the CCI is not precluded from penalising parties for failure to notify and for having consummated combination without its approval after the period of one year has passed from the date of consummation of the transaction.

Substantive assessment

Substantive test

What is the substantive test for clearance and on whom is the onus for showing the transaction does or does not satisfy the test?

The online application submitted on the FIFP website is reviewed in totality by the relevant ministries, the RBI, and the concerned competent authority, and to impart greater transparency to the approval process, guidelines have been issued that govern the consideration of FDI proposals by the FIFP. The onus of compliance with the sectoral or statutory caps on foreign investment and attendant conditions, if any, shall be on the company receiving foreign investment.

The substantive test for clearance adopted by the CCI is whether the combination causes or is likely to cause an AAEC within the relevant market in India. To conduct an AAEC assessment, the CCI considers a number of factors:

  • actual and potential level of competition through imports in the market;
  • extent of barriers to entry into the market;
  • level of combination in the market;
  • degree of countervailing power in the market;
  • likelihood that the combination would result in parties to the combination being able to significantly and sustainably increase prices or profit margins;
  • extent of effective competition likely to sustain in a market;
  • extent to which substitutes are available or are likely to be available in the market;
  • market share, in the relevant market, of the persons or enterprises in a combination, individually and as a combination;
  • likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market;
  • nature and extent of vertical integration in the market;
  • possibility of a failing business;
  • nature and extent of innovation;
  • relative advantage, by way of the contribution to the economic development, by any combination having or likely to have AAEC; and
  • whether the benefits of the combination outweigh the adverse impact of the combination, if any.


If the CCI forms a prima facie opinion that the combination has caused or is likely to cause an AAEC within the relevant market in India, the onus of demonstrating the absence of any AAEC is on the party or parties notifying the transaction.

To what extent will the authorities consult or cooperate with officials in other countries during the substantive assessment?

There is no obligation imposed by any statute or regulation on the authorities regulating or reviewing foreign investment to consult officials in other countries.

Other relevant parties

What other parties may become involved in the review process? What rights and standing do complainants have?

The review of an application process is an internal process of the government and the competent authority or DIPP may itself consult the relevant government departments while considering any application before it. No other party, including the applicant, is given a hearing as a matter of process. However, the competent authority can seek clarifications or further information from the applicant while considering any application.

The CCI has the discretion to reach out to third parties (competitors, customers, suppliers, experts, etc) during the initial 30-working-day-period as well as after forming a prima facie opinion that the combination has caused or is likely to cause an AAEC. In instances where the CCI reaches out to third parties, the initial 30-day-working period may be extended by an additional 15 working days.

Prohibition and objections to transaction

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

Pursuant to the provisions of section 37 of the FEMA, the Directorate has been mandated to enforce the investigative and punitive provisions of the FEMA. The Directorate has jurisdiction under the provisions of the FEMA as well as the Prevention of Money Laundering Act 2002, and draws its personnel from other investigative entities such as customs and central excise, income tax authorities, the police, etc, on deputation, as well as through direct recruitment of personnel ( p1=11411151418654837603). Further, under section 13 of the FEMA the RBI can impose penalties if any person contravenes the provisions of FEMA or rules and regulations made under it (section 13(1)) or in the case of a contravention of any condition subject to which an authorisation has been issued by the RBI (section 13(1)). Upon adjudication, the monetary penalty that can be imposed for the instances described above is three times the sum involved in the contravention, if such amount is quantifiable, or a penalty of up to 200,000 rupees it is not quantifiable. Further, if the contravention is ongoing, an additional penalty can be imposed of up to 5,000 rupees for every day the contravention continues (section 13(1)).

As indicated above, the CCI may modify or even prohibit a transaction if it determines that such transaction causes or is likely to cause an AAEC in the relevant market in India.

Is it possible to remedy or avoid the authorities’ objections to a transaction, for example, by giving undertakings or agreeing to other mitigation arrangements?

There are no specific guidelines or rules pursuant to which a transaction can be remedied or an objection avoided by submitting undertakings. However, we have seen instances where the RBI has directed Indian companies to provide an undertaking and declarations from their chartered accountants with respect to the confirmation on the pricing of the shares being transacted or confirmation on the investment being in compliance with the TISPRO 2017.

The parties to a combination are permitted to voluntarily provide undertakings or modifications to the combination before the CCI has formed a prima facie opinion as to whether the combination is likely to cause or has caused an AAEC, to address any competition concerns that the CCI may have. In the more detailed investigation phase, the CCI can direct modifications, which the parties can review and then have the opportunity to submit a counter-proposal to the CCI.

Challenge and appeal

Can a negative decision be challenged or appealed?

If the online application submitted on the FIFP website is rejected by the competent authority, the applicant may write to the competent authority requesting reconsideration of the proposal.

The CCI’s decision to approve or reject a combination is subject to appeal before the National Company Law Appellate Tribunal, with a subsequent right of appeal to the Supreme Court of India.

Confidential information

What safeguards are in place to protect confidential information from being disseminated and what are the consequences if confidentiality is breached?

The applicant can, in its online application submitted on the FIFP website, insist that the information submitted is confidential. The CCI treats any information as confidential if disclosure of the same will result in disclosure of trade secrets or destruction or appreciable diminution of the commercial value of the information or can be reasonably expected to cause serious injury. An application to maintain confidentiality over information being submitted to the CCI is required to accompany a notification and all subsequent submissions.

Recent cases

Relevant recent case law

Discuss in detail up to three recent cases that reflect how the foregoing laws and policies were applied and the outcome, including, where possible, examples of rejections.

In its order dated 8 August 2018 (combination registration number C-2018/05/571), the CCI approved the Walmart International Inc. (Walmart) acquisition, of the outstanding shares of Flipkart Private Limited (Flipkart) ranging between 51 per cent and 77 per cent. The CCI noted that Flipkart is the investment holding company incorporated in Singapore and in India; Flipkart through its subsidiaries was engaged in B2B sales, offering of the marketplace e-commerce model through web portals, mainly,,, etc, and catering ancillary services like payment wallet, payment gateway, logistics, etc. The CCI observed that under the FDI Policy, Flipkart, with its marketplace e-commerce model, cannot hold inventory and can just act as an intermediary or interface between the various retailers and final consumers. The CCI observed that Walmart belongs to Walmart group operating multinational retail corporation with chain of hypermarkets, discounted department stores and grocery stores. The CCI noted that in India, Walmart operates through a B2B sales model and under the FDI policy is restricted to engage in direct sales through B2C sales model. Further, the CCI noted that under the B2B sales model currently Walmart holds a market share of less than half a per cent and with the proposed transaction it estimates this size to reach 30 per cent to 40 per cent of the market size. The CCI observed that currently there is no vertical and horizontal relationship between Flipkart and Walmart in the relevant markets and the proposed transaction is not likely to have an AAEC in India. Hence, the CCI approved the terms of acquisition with respect to Flipkart and Walmart in India.

In its order dated 28 September 2017 (combination registration number C-2017/08/526), the CCI approved the transfer of: (i) 40 per cent of the shareholding of SBI Cards and Payments Services Private Limited (SBI Card) from GE Capital Mauritius Overseas Investment Limited (GE Capital) to the State Bank of India (SBI) (14 per cent) and CA Rover Holdings (Rover) (26 per cent); and (ii) 60 per cent of the shareholding of GE Capital Business Process Management Services Private Limited (GEPL) from GE Real Estate Investment Holdings (GE Real Estate) to the SBI (34 per cent) and Rover (26 per cent). In its order the CCI observed that the entry of Rover, which is owned and controlled by Carlyle Asia Partners, an affiliate of The Carlyle Group, LP (Carlyle), into the credit-card issuance sector, and the increase of the SBI’s shareholding in SBI Card and GEPL, would not affect the existing competition dynamics. More specifically, the CCI noted that there is no horizontal overlap between any of the portfolio companies of Carlyle and SBI Card, and a non-controlling stake of Carlyle in South India Bank, which has collaborated with SBI Card to launch co-branded credit cards, is not likely to raise any AAEC concerns. The CCI further observed that SBI Card had a pre-existing agreement for obtaining tele-calling services with Allsec Technologies Limited (Allsec), which was a portfolio company of Carlyle Asia Partners. However, the CCI stated that despite such pre-existing arrangement, Rover’s investment in SBI Card would not raise any competition concern as there are number of existing entities that compete with Allsec in the tele-calling sector. Accordingly, the aforesaid transfer involving acquisition of shares was approved.

In its order dated 1 September 2017 (combination registration number C-2017/08/525), the CCI approved the Copper Technology Pte Ltd’s (Copper) acquisition of 9.57 per cent shareholding of ANI Technologies Private Limited (ANI). ANI through its brand ‘Ola’ is engaged in the provision of internet and mobile technology platforms for taxi services, as well as the provision of ‘Ola Money’, a mobile-wallet service. The CCI observed that Copper was a newly incorporated entity and was a step-down subsidiary of Tencent Holdings Limited (Tencent), a Cayman Island company engaged in the provision of value-added services and online advertising services to users in China. The CCI observed that neither Tencent nor its subsidiaries were engaged in any business activity that is similar to the main activities of ANI in India. The CCI noted that Tencent, through one of its portfolio companies, had investment in Flipkart, which is, inter alia, engaged in the provision of a mobile-wallet service called PhonePe. The CCI expressed its concerns that PhonePe may be substitutable to Ola Money, however, in view of the insignificant presence of these entities in the mobile-wallet market in India, it held that no competition concerns were likely to arise. Further, it found no vertical relationship between the parties, and accordingly, it approved the aforesaid acquisition.

On 24 August 2017, Amazon Retail India Private Limited’s application for setting up a subsidiary with 100 per cent FDI for engaging in the retail trading of food products manufactured or produced in India was approved by the Competent Authority. On the same date, Albany Molecular Research Hyderabad Research Centre Private Limited’s application for issue of shares against pre-incorporation expenses was rejected by the Competent Authority. On 9 October 2017, the application of M/s Christian Louboutin FZCO for acquiring 51 per cent of the equity share capital of Christian Louboutin India Private Limited under the Single Brand Retail Trading sector was approved by the Competent Authority.