FDI policies of 2017 have introduced a separate section for “Start-ups” and have made a provision for the start ups to attract foreign investment and raise 100% capital from foreign venture capitalists by issuing convertible instruments. The start-ups can issue equity or equity linked instruments or debt instruments to the FVCs in exchange for foreign remittance. Start-ups are allowed to raise 100% funds from FVCs who are registered under SEBI, in automatic route. If a start-up is organized as a partnership firm or a Limited Liability Partnership (LLP), the investment can be made in the capital or through any profit-sharing arrangement. FVCs may also invest under the FDI Scheme, as non-resident entities, in other companies, subject to FDI Policy and the FEMA.
FDI Policy 2017 Introduces Start-ups – Government, Public sector
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