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Govt to probe Jaipur IPL's overseas funding proposal

JIPL is the only IPL franchisee that approached the government to allow induction of foreign equity. Last year, JIPL had sought permission from the government to induct foreign equity capital worth over $5.82 million.

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The government will go in for a thorough probe into the proposal of the owners of Rajasthan Royals to induct of 100% foreign equity into its IPL franchisee.

After deferring a decision on the proposal of Jaipur IPL Cricket (JIPL) to bring in FDI, the Foreign Investment Promotion Board (FIPB) has asked the investigating arm of the Central Board of Direct Taxes (CBDT) to file a detailed report.

"The proposal has now been sent by FIPB to the CBDT investigation arm for a detailed report," a finance ministry official said.

JIPL had sought "to induct 100% foreign equity by way of issue of shares for consideration other than cash".

According to sources, security agencies had also raised concerns over the source of overseas funding of the franchise.

The proposal from JIPL is one of the 17 proposals that were deferred by the FIPB, an official release said.

Last October, the FIPB had rejected a proposal from JIPL to allow induction of foreign equity. The company had reapplied, which was also deferred in the recent meeting of the board on April 9.

JIPL is the only IPL franchisee that approached the government to allow induction of foreign equity, the official added. Last year, JIPL had sought permission from the government to induct foreign equity capital worth over $5.82 million (about Rs26.7 crore).

The company had sought to issue shares to the England-based Emerging Medial (EMIPL) against $50,48,885.25 deposit paid by the British firm to the Board for Control of Cricket in India (BCCI). It had also sought to issue shares to EM Sports Holding Mauritius (MHC) for $7,73,480.99 against the same amount paid as franchise fee by MHC to BCCI on behalf of JIPL.

The department of economic affairs had earlier gave no objection to the transaction, subject to satisfactory proof of foreign exchange. The proposal did not entail physical flow of FDI into the country.

JIPL, which is a wholly-owned subsidiary of MHC, was incorporated in March 2008 for managing and operating the Rajasthan Royals team, co-owned by actor Shilpa Shetty, that won the first season of the IPL tourney in 2008.  

MHC is a joint venture between EMIPL, Tresco International and two other firms based in Hong Kong and the Bahamas.

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