The new policy, to be implemented from April 1, may drop the requirement of no-objection certificate that foreign firms need to set up a separate entity.
The revised version of the FDI policy, which will be released on March 31, is expected to do away with Press Note 1, 2005, to bring in the above-mentioned change.
A committee of secretaries under Cabinet Secretary KM Chandrasekhar is likely to clear the move soon.
The main rationale behind the move to liberalise the policy is to prevent 'monopolistic tendencies of certain domestic as well as foreign companies'.
Besides, India is now aggressively engaged in signing bilateral trade agreements with several countries, which may induce the foreign companies to set up shop in one of the partner countries and start exporting the commodity into India duty-free under a particular free trade agreement, a senior government official said.
The official also said that in a number of cases, the foreign partners had faced big problems in obtaining the NOC from their Indian counterparts, giving rise to a large number of corporate disputes.
"There have been cases when the Indian companies have asked for bribe or taken them to court citing complex rules, leading to wastage of time and resources," the official said.
Under the current norms, both parties need to furnish the NOC to state that the new venture or tie-up would not jeopardise the existing joint venture or technology transfer or trademark tie-up.
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