Counsel

FDI up to 100% is permitted under the automatic route subject to certain conditions mentioned in Consolidated FDI Policy, in the following agricultural activities:

·         Floriculture,

·         Horticulture,

·         Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions;

·         Development and production of Seeds and planting material;

·         Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions;

·         and Services related to agro and allied sectors.

·         100% FDI is also permitted in tea sector.

Besides the above, FDI is not allowed in any other agricultural sector/ activity.

Policy for FDI in Multi-Brand Retail Trading (MBRT) provides that at least 50% of the first tranche of US $ 100 million shall be invested in back- end infrastructure which includes construction of warehousing and cold storages.

Import of primary agriculture products will be available only against import permits issued by Ministry of Agriculture and all food products must comply with the provisions of Prevention of Food Adulteration Act, 1954 As a matter of Policy, all imported goods shall also be subject to domestic laws, rules, orders, regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods.

India gives preference to imports from neighboring countries and certain developing and least developed countries. The preference is by way of reduced import duties. For example, imports of a large number of items from Sri Lanka are exempt from customs duty under the Indo-Sri Lanka Free Trade Agreement (ISLFTA). Imports from Bhutan and Nepal are also exempt from duty under the FTAs with the two countries. Whenever an item is restricted for imports, any person who wants to import that item has to apply for an import licence to the DGFT in the form given in Aayaat Niryaat Form of HB-1. Every application for import licence carries a fee. The schedule of fees is given in Appendix 21B of HB-1. The usual fee is. Rs.2 per thousand (i.e.0.2% of the licence value), subject to a minimum of Rs.200 and maximum of Rs.1.50 lacs. In April 2006, it was made mandatory to submit application under Advance Authorisation, DEPB and EPCG through EDI. To facilitate this, 25% of reduction in application fees was allowed. If the application is filed under EDI under digital signature mode and fees paid via EFT, only half the normal fee has to be paid, subject to a minimum of Rs.200 and maximum of Rs.75,000. The licence fee can be paid by way of a Demand Draft favouring the concerned licensing authority or by way of a treasury challan to be paid at specified branches of Central Bank of India, specified in Appendix – 21B of HB-1. . The format of the challan is given in Appendix 21A of HB-1.

There is also a provision to maintain a running deposit account with the licensing authorities. Procedure of electronic fund transfer is as per Appendix 21C of HB-1 Every producer company is to have at least five and not more than 15 directors. • A full time chief executive should be appointed by the board and shall be entrusted with substantial powers of management as the board may determine. Every producer company has to maintain a general reserve in every financial year and in case there are not sufficient funds in any year for such transfer, the shortfall has to be made up by members' contribution in proportion to their *patronage in the business.

Producer/agricultural Companies shall carry out an internal audit of its accounts, at regular intervals in accordance with its articles of association and such an audit shall be carried on by a Chartered Accountant. In addition to the internal audit, the auditor shall make an annual audit report to the members of the company on the accounts examined by him, and on every balance sheet and profit and loss account and on every other document declared by the Act to be part of or annexed to the balance sheet or profit and loss account, which are laid before the company in general meeting and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by the Act in the manner so required and give a true and fair view. LLP could be a better option rather to register as a company in their parents names. As LLP has merits of both partnership and company. and no burden of meeting compared to Companies. Foreign Direct investment is agricultural/plantation is restrained.

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