Foreign direct investment enterprises will have to get the approval of the Foreign Investment Promotion Board to import any product, even if the Exim Policy allows its import.
Suitable safeguards would be incorporated in the Exim Policy to make the FIPB clearance mandatory for all direct investment companies seeking to import, said government officials.
The move will help check foreign companies which have set up manufacturing operations in India from putting their manufacturing operations on the backburner and engaging in trading in the garb of test-marketing or otherwise.
Importing by direct selling companies amounts to trading, which is not permitted under the existing foreign direct investment policy.
However, it has been found that several direct investment enterprises are now procuring import licences from the DGFT and are engaging in trading.
Several of these, among them direct marketing companies like Avon Beauty products, later claim that they had engaged in imports to carry out test-marketing.
However, both activities--trading and test-marketing--are not encouraged by the government.
But the government has not been able to pin down these companies because the DGFT has legalised the imports by granting licences.
The Exim Policy permits companies to freely import most items, subject to the applicable duty. It has laid down a list of products which are restricted for imports.
The DGFT, on its part, said imports of any item was free, subject to the payment of applicable duty unless specifically restricted.