DIPP seeks views on FDI in Llps in professional services

DIPP seeks views on FDI in Llps in professional services

New Delhi: The department of industrial policy and promotion, or DIPP, has sought public comments on whether the government should allow foreign direct investment (FDI) in limited liability partnership (Llp) firms in professional services.

In a discussion paper put up on its website, DIPP sought views and suggestions by 31 October on whether and to what extent foreign investment should be allowed in Llps offering legal and brokerage and other professional services.

Llps are hybrid entities incorporating the features of both a corporate entity as well as a traditional partnership. Llps have not yet been recognized under India’s FDI policy. The Llp structure lies between that of a company, where FDI is permitted, and that of a partnership, where it is generally not permitted.

The Llp model is attractive to professional sectors that are not able to use the corporate structure and that do not find the partnership structure viable. Other than professionals and small entrepreneurs, the Llp structure may also be preferred by small businesses.

DIPP has sought comments on whether FDI in Llps should be restricted to sectors without caps, conditionalities or entry route restrictions. It has also sought views on whether FDI be allowed up to 100% in these sectors, or should there necessarily be an Indian partner, and whether through the automatic or government approval route.

In another discussion paper issued on Tuesday, DIPP has sought public comment and suggestions on whether Indian companies should issue shares to foreign entities against non-cash contributions, such as import of capital goods, franchisee rights and services.

At present, shares can only be issued by a domestic company against cash transactions.