Definition of control expanded to include director appointment and contractual rights, affecting FDI assessment and sector classification.
Revision of the definition of control to include the right to appoint a majority of directors or to control management or policy decisions via shareholding, management rights, shareholders agreements or voting agreements, and revision of Annex B of Schedule 1 to the FEMA Regulations, 2000 to align sectoral classification, entry norms, sectoral caps and conditions for FDI under Government and Automatic routes with the Consolidated FDI Policy.

Export declaration reform introduces common EDF and SOFTEX forms with online form number generation for all export transactions.
A common Export Declaration Form (EDF) and a common SOFTEX Form replace the GR/PP form for non EDI goods exports and cover single and bulk software exports; exporters must declare all transactions in the applicable form. RBI will enable online generation of EDF and SOFTEX form numbers, discontinuing manual regional allotment; completed forms must be certified by the specified authority and then submitted to the Authorised Dealer for action under FEMA.

Downstream investment rules: foreign-sourced funds required, domestic borrowing restricted with exception for operating companies.
Indian companies making downstream investments must bring in requisite funds from abroad and not use funds borrowed in the domestic market; downstream operating companies may raise domestic debt. Downstream investments through internal accruals are permissible only by an Indian company engaged solely in investing in the capital of another Indian company/ies and are subject to the provisions of clause 6(i).

Corporate guarantee restrictions: approval required when Indian investor holds majority indirect stake in step-down overseas subsidiaries.
Corporate guarantees for second-generation or subsequent step-down overseas subsidiaries will be considered under the Approval Route where the Indian Party indirectly holds 51 per cent or more stake in the overseas subsidiary for which such guarantee is intended to be issued; other provisions of the earlier circular remain unchanged.

Overseas foreign currency borrowing limits increased for authorised banks, enabling swaps into rupees at concessional rate.
AD Category I banks may borrow overseas foreign currency up to 100 per cent of unimpaired Tier I capital or USD 10 million equivalent, replacing the earlier 50 per cent limit, with exemptions for certain export credit and capital instruments. A time limited concessional swap facility into rupees is available for fresh borrowings of one to three years at one hundred basis points below market rate with annual resets. Excess borrowings beyond the prior ceiling require a board approved borrowing policy, a 12.0 per cent CRAR, minimum three year maturity, and continued compliance with existing regulatory norms.

Currency export/import limit expanded for residents, allowing higher per-person cash carriage and requiring authorised persons to notify stakeholders.
Regulatory amendment increases the per-person cash carriage ceiling for Indian residents travelling abroad and for resident returnees bringing Indian currency into India (excluding travel to and from Nepal and Bhutan). Resident individuals are permitted to take out of India and to bring into India Indian currency notes up to the revised per-person limit, replacing the earlier lower ceiling, and Authorised Persons must notify their constituents.

FDI share acquisition on exchanges permitted where non-resident already holds control, subject to FEMA pricing and compliance.
Non-residents, including NRIs, may acquire shares of listed Indian companies on recognised stock exchanges under the FDI scheme if they already hold and continue to hold control as per SEBI Takeover Regulations. Consideration may be paid by inward remittance, debit to NRE/FCNR accounts, debit to a non-interest bearing escrow account in India, or from dividends credited to a designated non-interest bearing rupee account. Pricing for subsequent transfers must follow FEMA guidelines and all investments must comply with sectoral caps, entry route, reporting, and documentation requirements under FDI policy and FEMA.

Bank guarantee for non resident acquisitions allowed subject to SEBI compliance and counter guarantee, with reporting on invocation.
Permits AD Category I banks to issue bank guarantees for non resident acquisitions of shares or convertible debentures via open offers, delisting or exit offers without prior RBI approval, provided the transaction complies with SEBI (SAST) Regulations and the issuing bank obtains a counter guarantee from a bank of international repute; guarantees must be co terminus with the offer period and, if invoked, the issuing bank must report circumstances to the Reserve Bank's Foreign Exchange Department.

Cancellation and rebooking of forward contracts: exporters get expanded flexibility and importers permitted limited rebooking for hedging.
The circular permits exporters to cancel and rebook forward contracts for hedging contracted export exposures up to 50 percent of contracts booked in a financial year, and permits importers to cancel and rebook forward contracts for hedging contracted import exposures up to 25 percent of contracts booked in a financial year, with Authorised Dealer Category I banks required to notify constituents; directions issued under FEMA subject to other statutory permissions.

AML/CFT standards: Indian Agents under Money Transfer Service Scheme must consider FATF guidance and ensure sub-agent compliance.
Authorised Persons under the Money Transfer Service Scheme must consider FATF's updated AML/CFT statements for cross border inward remittances, ensure the guidance does not bar legitimate transactions, and require that all Sub Agents comply. Agents must notify constituents, obtain Principal Officer acknowledgement, and implement these directions under the Foreign Exchange Management Act and the Prevention of Money Laundering framework.

Anti Money Laundering Standards: money changing entities must apply FATF jurisdictional guidance and ensure agent compliance.
Money changing Authorised Persons must consider FATF guidance on jurisdictions with AML/CFT deficiencies and apply enhanced risk assessment and transaction scrutiny; these obligations extend to agents and franchisees for whom franchisers are responsible, and Principal Officers must acknowledge the circular, with directions issued under foreign exchange and anti money laundering statutes without prejudice to other legal permissions.

Special Currency Basket value revised, altering rupee settlement terms under deferred payment protocols and requiring bank compliance.
Revision of the Special Currency Basket value for settlement under the deferred payment protocols between the Government of India and the erstwhile USSR is announced, superseding the earlier rupee valuation. AD Category I banks are directed to note the revised valuation and inform their constituents. The Directions are issued under FEMA powers and are without prejudice to other statutory permissions or approvals.

Liberalized Remittance Scheme clarifies permissible overseas investments and separate remittance routes for education and medical expenses.
The circular clarifies that under the Liberalized Remittance Scheme resident individuals may acquire both listed and unlisted overseas shares; that education and medical remittances under Schedule III remain separate and may be made over and above the LRS ceiling; gifts and donations are subsumed under LRS; immovable property purchases abroad are permitted under LRS only for contracts entered into on or before the circular date subject to AD bank verification and post facto reporting; and AD Category I banks must communicate and implement these directions issued under FEMA.

External Commercial Borrowings from foreign equity holders allowed for general corporate purposes subject to seven year maturity and conditions.
ECB from foreign equity holders are permitted under the approval route for general corporate purposes with a minimum average maturity of seven years. Conditions: lender must directly hold at least 25% of paid up equity; proceeds cannot be applied to purposes prohibited by ECB guidelines, including on lending to group entities or step down subsidiaries in India; and principal repayment begins only after the seven year minimum average maturity with no prepayment before maturity. Other ECB provisions remain unchanged.

Overseas direct investment limits revised; pre-existing financial commitments before the cutoff remain grandfathered under the automatic route.
The circular reduces the automatic-route ceiling for fresh financial commitments by an Indian Party in overseas JVs/WOS and requires prior Reserve Bank approval for commitments beyond the revised limit. Commitments contracted or applications submitted on or before the earlier cutoff remain subject to the prior higher ceiling; AD Category I banks must verify authenticity of pre-cutoff contracts, report such remittances post facto to the Reserve Bank, and note that funding from EEFC accounts, ADRs/GDRs, and eligible ECBs continue to be exempt from the new cap as per existing rules.

FDI caps and entry routes updated to expand automatic entry for many sectors while reserving government review for higher inflows.
Revision of sectoral FDI caps and entry routes shifts many sectors to automatic entry up to specified thresholds with government approval required beyond those thresholds; it deletes certain compulsory divestment and test-marketing provisions, consolidates telecom service categories under licensing and security compliance, tightens defence-sector procedural and investor-type restrictions while enabling escalated review for access to modern technology, and raises ceilings or alters routes for asset reconstruction, credit information and other market infrastructure subject to regulatory oversight and prescribed filing channels.

FDI conditions for multi brand retail: backend investment, required domestic sourcing from MSMEs, and revised outlet location rules take immediate effect.
At least 50% of total FDI in the first tranche of US$100 million must be invested in backend infrastructure within three years; at least 30% of procurement value of manufactured/processed goods must be sourced from Indian micro, small and medium enterprises with plant and machinery investment not exceeding US$2.00 million (SME status fixed at first engagement and cooperatives included), measured as a five year average initially and annually thereafter; retail outlets are limited to cities over 10 lakh population or other cities as allowed by State Governments, covering up to 10 km around municipal/urban agglomerations and conforming to Master/Zonal Plans.

Control definition expanded to include management, shareholding and agreement-based rights, affecting calculation of foreign investment.
The term control for calculating total foreign investment is expanded to include the right to appoint a majority of directors or to control management or policy decisions by virtue of shareholding, management rights, shareholders agreements or voting agreements, replacing the earlier definition limited to appointment power; the amendment takes immediate effect.

Portfolio Investment Scheme liberalisation allows authorised dealer bank branches to administer PIS subject to reporting, sectoral exclusions and compliance.
Authorised dealer banks may permit their branches to administer NRI investments under the Portfolio Investment Scheme while allotting a single Unique Code to the bank's designated link office; the link office must be furnished to the Reserve Bank in advance and must report all PIS transactions daily via the Online Report Filing System in form LEC (NRI). Banks must apply scheme terms, enforce sectoral investment exclusions specified under FEMA, ensure compliance with AD and EC.CO.FID circulars and other FEMA requirements, and note the derecognition of Overseas Corporate Bodies as eligible investors.

Foreign investment limits in asset reconstruction companies increased, with sponsor and FII ownership caps and SR investment conditions revised.
The amendments raise the combined foreign investment ceiling in Asset Reconstruction Companies, impose a sponsor shareholding cap preventing any sponsor from holding more than half the equity directly or via foreign routing, allow FIIs to invest in ARC equity subject to an individual FII shareholding cap, and permit FII investment in Security Receipts up to the combined foreign limit while requiring compliance with FII corporate bond limits and sectoral caps under the FDI regulatory framework.