Finance Minister P. Chidambaram Thursday proposed to set up a committee which will decide the criteria on how to treat foreign direct investment (FDI) and foreign institutional investment (FII).
"In order to remove the ambiguity that prevails on what is FDI and FII, I propose to follow the international practice and lay down a broad principle. A committee will be constituted to examine the application of the principle and to work out the details expeditiously," Chidambaram said, presenting the union budget 2013-14 to the lower house of parliament.
According to Chidambaram, any foreign investor who has a stake of 10 percent or less in an Indian firm will be treated as an FII, whereas if the stake is more than 10 percent it will be treated as FDI.
He said that the committee will look into aspects such as 10 percent of total shares or 10 percent of voting right and how the new distinction be implemented in different sectors.