Limited Liability Partnership for Foreign Investors Proposed

July 5, 2010 Posted by India Briefing Reading Time: < 1 minute

Jul. 5 – The Finance Ministry is proposing that foreign investors be given the option to establish Limited Liability Partnerships (LLPs) in allowable sectors to encourage more investment.

“Allowing foreign direct investment in LLPs in line with the sectoral limits will encourage foreign investment and not complicate the current regulatory regime,” a finance ministry official said. The ministry submitted the proposal to the Department of Industrial Policy and Promotion.

LLPs is a set-up that mixes elements of a partnership with a limited liability company. Since India’s LLP Act was approved in 2009, an estimated 1,000 LLPs have been registered.

Foreign investors consider a limited liability partnership structure ideal because it offers lower tax rate with no limit on the number of partners that a business can have. LLPs also tend to have requirements that are easier to comply with.