Global Education Network, Pakistan based Education Company wants to set up equity based joint venture in India. As a professional in India, Company seeks your advice about various restrictions under Foreign Direct Invest

Restriction under FDI Policy of Government of India Any non-resident entity can set up an equity based joint venture in India. However, some entities face restrictions under FDI Policy of Government of India. The restrictions are as follows: Citizen or entity of Pakistan can invest only after approval of Government of India. They cannot invest in defence, space, atomic energy and sectors prohibited for foreign investment. Citizen or entity of Bangladesh can invest only after approval of Government of India. However, there are no prohibited areas as in the case of entities from Pakistan. NRI residents in Nepal and Bhutan as well as citizens of Nepal and Bhutan can invest on repatriation basis subject to investment coming in free foreign exchange (USD or EURO) through normal banking channels. A Foreign Institutional Investor (FII) can invest only under Portfolio Investment Scheme which limits the individual holding of an FII to 10% of the capital of the company and the aggregate limit for FII investment to 24% of the capital of the company. This aggregate limit to 24% can be increased to the sectoral cap / statutory ceiling, as applicable, by the Indian Company concerned through a resolution by its Board of directors followed by a special resolution to that effect by its General Body and subject to prior intimation to RBI. The aggregate FII investment in the FDI and portfolio investment scheme should be within the above caps. Therefore, Global Education cannot invest in defence, space, atomic energy and sectors prohibited in India. However, it can invest in other sectors i.e. in above case, it is education sector but with prior approval of central government.