Keeping in view the current macroeconomic situation, the Reserve Bank of India has today announced the following measures:

(i) Reduced the limit for Overseas Direct Investment (ODI) under automatic route for all fresh ODI transactions, from 400% of the net worth of an Indian Party to 100% of its net worth. This reduced limit would also apply to remittances made under the ODI scheme by Indian Companies for setting up unincorporated entities outside India in the energy and natural resources sectors. This reduction in limit, however, would not apply to ODI by Navratna PSUs, ONGC Videsh Limited and Oil India in overseas unincorporated entities and incorporated entities, in the oil sector.

(ii) Reduced the limit for remittances made by Resident Individuals, under the Liberalised Remittance Scheme (LRS Scheme), from USD 200,000 to USD 75,000 per financial year. Resident Individuals have, however, now been allowed to set up Joint Venture (JV)/Wholly Owned Subsidiary (WOS) outside India under the ODI route within the revised LRS limit.

(iii) While current restrictions on the use of LRS for prohibited transactions, such as, margin trading and lottery would continue, use of LRS for acquisition of immovable property outside India directly or indirectly will, henceforth, not be allowed.

The present set of measures is aimed at moderating outflows. However, any genuine requirement beyond these limits will continue to be considered by RBI under the approval route.

 Alpana Killawala

             Principal Chief General Manager

Liberalised Remittance Scheme tightened: individual remittance ceiling reduced and property purchases abroad barred under LRS. The RBI tightened foreign exchange outflows by reducing the automatic-route limit for Overseas Direct Investment (ODI) to a single multiple of the Indian party's net worth, extending that reduced cap to remittances for unincorporated energy and natural resources entities while exempting certain public-sector and designated oil investors. It also lowered the individual remittance ceiling under the Liberalised Remittance Scheme (LRS), permitted JV/WOS formation abroad within the new limit, barred LRS-funded immovable property acquisitions abroad, continued prohibitions on specified transactions, and preserved an approval route for exceptional genuine needs.