The changes allow an Indian majority-owned and controlled holding company, which is 49% foreign owned, to invest in a ‘downstream’ subsidiary without the 49% counting against the new company’s FDI limit.

The move has prompted suspicion from some quarters that foreign companies will use the relaxed regulations to exceed permissible holdings.

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Other changes to regulations include a rule that various forms of foreign investment are to be merged for assessment purposes. This means that funds from foreign financial institutions, foreign stock markets and bonds, and non-resident Indians are all counted as FDI instead of being assessed separately.