Line of credit facilitates stipulated exports under approved contracts, via letters of credit and FEMA issued directions.
A government-to-government line of credit to Sri Lanka finances eligible exports from India-capital goods, consultancy services, consumer durables and specified food items-on 100% f.o.b. basis through letters of credit opened by Sri Lankan banks and advised to State Bank of India, New Delhi, containing a prescribed reimbursement clause; contracts require bilateral approval and submission to the Ministry of Finance, and shipments must be declared on prescribed export forms. These directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act.

Release of Foreign Exchange: remittance threshold increased allowing miscellaneous current-account transfers with only a simple letter and cheque/DD.
Authorised Dealers may release foreign exchange up to USD 5000 for permissible current account miscellaneous remittances on the basis of a simple letter from the applicant stating names and addresses of applicant and beneficiary, amount and purpose; no Form A-2 or other documents are required, provided payment is by cheque on the applicant's bank account or by demand draft and the transaction is not included in Schedules I and II of the Government Notification on Current Account Transactions.

Investment by unincorporated entities barred under FDI rules; only incorporated or registered foreign entities may invest.
An unincorporated entity shall not be permitted to make fresh investments under the FDI Scheme, including the Automatic Route; only an entity incorporated or registered under the laws of its host country is eligible to invest as per the amended Foreign Exchange Management Regulations, with Authorised Dealers required to inform constituents of the change.

FII investment permissions: FIIs may trade securities and derivatives subject to ownership limits, allocation rules and reporting.
SEBI registered FIIs and approved sub accounts may invest in equities, convertible debentures, mutual fund units, dated Government securities, Treasury Bills and exchange traded derivatives under PIS, using a Foreign Currency Account and/or a Special Non Resident Rupee Account; transactions are permitted on exchange at market prices or off market at SEBI/RBI approved prices, subject to tax compliance, ownership ceilings (10% per FII/sub account, 5% per foreign corporate/individual within aggregate caps), a 70:30 equity debt allocation guideline, prohibition on short selling, adherence to SEBI position limits for derivatives, margin requirements, and daily reporting to RBI.

Foreign exchange remittance resumed for World Cup sponsors after prior restriction withdrawn, authorised dealers may process applications.
The RBI, following the Delhi High Court's disposal of a writ petition as infructuous, has withdrawn its prior instruction requiring prior clearance for remittance of foreign exchange in connection with the World Cup and has authorised dealers to dispose of pending applications relating to the event subject to usual compliance conditions; contractual disputes between parties remain for the parties to resolve and dealers should inform their constituents.

RFC account routing: resident and returning NRI insurance proceeds may be credited to RFC (Domestic) Account under forex rules.
Resident beneficiaries receiving insurance claim, maturity or surrender proceeds in foreign currency may open and credit those proceeds to a Resident Foreign Currency (RFC) (Domestic) Account. Non-Resident Indian policy holders may, on becoming residents, credit foreign-currency proceeds from India-issued policies to the RFC Account they open on becoming residents. Authorised Dealers must inform their constituents. Directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act.

Line of Credit for export financing permits Exim Bank backed capital goods shipments to Iran subject to FEMA compliance and documentation.
Exim Bank's Line of Credit to designated Iranian banks is available to finance exports of eligible capital goods and related services; Individual Letters of Agreement must be concluded by the terminal date, shipments must be declared on GR/SDF forms, and no agency commission is payable. Authorised Dealers must notify exporters and advise them to obtain full details from Exim Bank; the directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.

Waiver requirement for advance import remittances must be obtained from Ministry of Finance when no international bank guarantee exists.
Public sector companies and Central/State Government departments or undertakings unable to obtain an international bank guarantee against an advance payment must obtain a specific waiver from the Ministry of Finance before making advance remittances exceeding the prescribed threshold; Authorised Dealers must notify affected constituents. The directions are issued under the regulatory powers of the Foreign Exchange Management Act.

Special currency basket valuation updated under foreign exchange regulations, affecting deferred payments protocols and authorised dealer obligations.
The Reserve Bank notified Authorised Dealers that, after a change on 18 November 2003, the rupee value of the special currency basket is fixed at Rs.57.5082 effective 21 November 2003, and directed Authorised Dealers to notify their constituents; the directions are issued under provisions of the foreign exchange law.

Hedging of Overseas Direct Investments permitted: residents may use forward and option contracts subject to verification and delivery/rollover.
Resident entities with overseas direct investments may hedge exchange risk via forward and option contracts with Authorised Dealers for equity and loan exposures, subject to verification of exposure and provided contracts are completed by delivery or rolled over on the due date; if a hedge becomes naked owing to a decline in market value it may continue to original maturity, and roll-overs are permitted only up to the market value on the due date.

Forward contract eligibility expanded: booking limit raised and excess bookings allowed only on deliverable basis.
The eligible limit for booking forward contracts is the higher of the past three years' average export/import turnover or the previous year's turnover; outstanding forward contracts may not exceed 50% of that eligible limit, with amounts above 25% of the eligible limit permitted only on a deliverable basis. Export and import limits are computed separately and prior facility conditions remain applicable.

Residential status of students: extended foreign stay and uncertain intent may render them non-resident under FEMA.
Whether Indian students studying abroad qualify as residents or non-residents under Section 2(v)(i) of FEMA depends on duration of stay during the preceding financial year and circumstances indicating an intention to remain outside India for an uncertain period; where students' stays abroad exceed the prescribed period and their activities abroad (employment, scholarships, financial independence) indicate uncertain intent to return, they can be treated as Non-Resident for foreign exchange purposes.

Derecognition of Overseas Corporate Bodies restricts fresh investments and prohibits renewal of cross border loans, with limited hedging allowed.
OCBs have been derecognised and general permissions withdrawn; OCBs defined by at least sixty percent NRI ownership are subject to transitional rules. Those availing facilities before derecognition are barred from fresh investments except where incorporated OCBs not under adverse notice may be treated as foreign entities with prior Government or RBI approval. Existing holdings may be retained and unwound under specified repatriation and reporting requirements; transfers and fresh issues are restricted, deposits and accounts follow conversion or maturity rules, borrowing/lending with residents is prohibited, and limited hedging of existing exposures is permitted.

Foreign acquisition of immovable property: permitted non-agricultural purchases, restricted transfers, and limited repatriation rights.
Non-resident acquisition and transfer rules permit Indian citizens resident abroad to acquire non-agricultural immovable property and permit PIOs to purchase, receive by gift or inherit non-agricultural property, provided purchase funds are remitted from abroad or debited to permitted non-resident accounts; agricultural, plantation and farm house properties remain restricted and transfers involving such properties are limited to Indian citizens permanently resident in India.

Overseas direct investment liberalisation allows listed Indian companies to disinvest JV/WOS abroad via automatic route with limited write-off.
Indian listed companies may disinvest equity in overseas joint ventures or wholly owned subsidiaries under the Automatic Route, allowing a limited write-off of capital invested linked to the previous year's export realisation; full repatriation and the existing terms, conditions and reporting requirements in the earlier AP (DIR) Circular continue to apply.

Overseas direct investment: automatic-route approvals for SPVs and share swaps, subject to eligibility, valuation and reporting safeguards.
Permits expanded Indian direct investment abroad under the Automatic Route for eligible firms and via SPVs and share swaps, subject to verification that investors are not on the Reserve Bank's Caution or Defaulters' Lists and that share swap valuations and inward legs have required approvals. Financial services investments abroad require regulatory approvals in India and the host country. Diversification and step-down investments by Indian parties with JVs/WOSs abroad are permitted within automatic-route limits with reporting obligations. Transfers by sale of overseas JV/WOS shares are permitted subject to valuation, absence of dues, operational history, investigative clearances and repatriation and reporting requirements.

Export liberalisation permits exporters to self write off or extend realisation of export proceeds within prescribed limits.
The Reserve Bank permits exporters to self write-off (including invoice reduction) and to extend realisation periods for export proceeds provided the aggregate value of such write-offs and extensions does not exceed 10 per cent of export proceeds due in the calendar year, excludes bills under investigation, and applies to proceeds falling due from January 1, 2004, with transitional application for certain earlier exports.

Foreign investment in proprietorships and partnerships: repatriation limited for NRIs/PIOs and permitted only with prior approval; RBI may allow others.
NRIs and PIOs may invest in firms or proprietary concerns on a non-repatriation basis if funds are remitted inward or come from NRE/FCNR/NRO accounts with an Authorised Dealer and the enterprise is not engaged in agriculture, plantation or real estate. Repatriation benefits for investments in sole proprietorships or partnership firms require prior approval from the Secretariat for Industrial Assistance or the Reserve Bank. Persons resident outside India other than NRIs/PIOs are generally prohibited from such capital contributions unless the Reserve Bank grants permission on application and subject to conditions.

Foreign investment framework: rules on permissible routes, sectoral caps, instruments and reporting obligations under FEMA regulations.
The Circular summarises the FEMA 1999 and RBI Regulations (FEMA 20/2000-RB and amendments) governing foreign investments: prohibitions and restricted activities, the distinction between the Automatic Route and Government approval route, sectoral caps and conditions across industries, permitted investment instruments (equity, convertible instruments, ADR/GDR/FCCB, ESOPs), FII/NRI/Venture Capital investment rules, pricing and reporting requirements (including Form FC-GPR), transfer restrictions requiring prior approvals, and RBI and AD procedural obligations for receipt, utilisation and reporting of foreign investment proceeds.

Issue of shares against external commercial borrowings permitted for convertible foreign currency receipts, subject to tax liabilities and procedures.
Issue of equity shares is permitted against all External Commercial Borrowings received in convertible foreign currency, excluding instruments treated as deemed ECBs, provided that all applicable tax liabilities are met and prescribed procedures are complied with prior to issuance.