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FPI route is only for non-resident Indians

Sebi has recently cautioned Indian investors against trading through the FPI route

Question: My brother, who is a resident of India, has been approached by an agent who claims to be an employee of a foreign portfolio investment (FPI) firm registered with the Securities and Exchange Board of India (Sebi) to trade through a sub-account. I have advised him not to do so as it may be contrary to trading regulations. Am I correct in my thinking?

ANSWER: You are absolutely right in cautioning your brother because the FPI route is not available to resident Indians. Sebi has not granted any permission to FPIs regarding securities market trading or investment by persons who are resident in India. In fact, Sebi has recently cautioned Indian investors against trading through the FPI route. According to a press release issued by the regulator, resident Indians have been informed that stock trading by them through sub-accounts of foreign funds is against the regulations. Certain fraudulent activities have come to the notice of Sebi that Indian residents are being lured into such activities through online trading courses, seminars and mentorship programmes using messaging platforms like WhatsApp and Telegram. According to Sebi, persons posing as employees or affiliates of registered FPIs coax individuals into downloading applications which allow them to purchase shares or subscribe to IPOs without the need for an official trading or demat account. Thus, Sebi has urged investors in India to exercise caution and not be carried away by social media messages or apps claiming to facilitate stock market access through FPIs/FIIs registered with Sebi.

Question: While the road infrastructure in India has improved dramatically in the last few years, there are still large areas in different States where roads need drastic improvement. Is sufficient emphasis being given to this sector?

ANSWER: India has currently about 6.5 million km of roads. To widen and improve the network, the government is allocating bigger outlays for construction of national highways. Further, in order to make the roads safer and less accident-prone, emphasis is being placed on constructing access-controlled highways over the next ten years. This is based on the premise that a good highway infrastructure will play a pivotal role and have a multiplier effect on the growth of both industry and agriculture.

A large chunk of the surplus agricultural produce can be exported to neighbouring countries in the Middle East and Asia if a robust logistical network is set up to move the produce from the farms to the market in the shortest possible time. Both the high speed road corridors and the dedicated railway freight corridor will enhance logistical efficiency in the country and bring it to global standards. The highways and expressways are also being constructed on a Build-Operate-Transfer basis with public-private partnerships. Several fiscal incentives are given for private sector investments. Government is also taking advice from international firms specializing in logistics, in order to focus on engineering aspects of road design and for establishing state-of-the-art traffic monitoring systems.

Question: In an earlier column you had mentioned about rooftop solar scheme of the Indian Government in order to promote clean energy and reduce carbon footprint. Some of my family members who are agriculturists want to avail of this scheme in semi-urban areas. How can they avail of the subsidy and what would be the cost involved initially?

ANSWER:. The subsidy would be paid directly into the bank account of the person who has put up the solar panels after an application is submitted on the portal of the government. Once the application is processed, a due diligence would be undertaken by the authorities to ensure that the solar panels are installed by a government-empanelled vendor who is listed on the portal. A rooftop solar panel system would cost according to the number and size of solar panels used on the rooftop of a building. A 1kw system comprises of four solar panels of 330 watts each which would cost around Rs75,000, for which a subsidy of Rs30,000 would be given by the government. A 3kw solar panel system would cost around Rs160,000 in respect of which a subsidy of Rs8,000 would be given. It is expected that a 3kw solar panel system would be able to take the entire power load of a house including an air-conditioner, refrigerator, washing machine and other electrical appliances.

HP Ranina is a practising lawyer, specialising in corporate and tax laws of India.