Foreign investment rules amended to reshape FPI transfers, convertible pricing, sectoral conditions, and local sourcing obligations.
Amendments to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 revise commencement and definitions, remove a repatriation restriction, and restate FPI equity transfer rules subject to Schedule and SEBI conditions while preserving Government approval where required. Convertible equity instruments must fix conversion price or formula at issuance and conversion price cannot be lower than issuance fair value. Schedule changes clarify coal mining and associated processing infrastructure, expand manufacturing and e-commerce sale permissions, require e-commerce marketplace statutory auditor reports, classify certain digital streaming activity, make specific entry routes automatic, and revise SBRT local sourcing and operational conditions. Schedule II permits FPI acquisitions and company resolutions to raise aggregate limits up to sectoral caps.

Re-export of leased aircraft permitted when repossessed and DGCA de-registered on IDERA request, subject to DGCA/MoCA permission.
The Regulations were amended to permit re-export of leased aircraft, helicopters, engines and APUs repossessed by an overseas lessor and de registered by the DGCA at the request of the IDERA holder under the Cape Town Convention, provided such re-export is authorised by the DGCA and the Ministry of Civil Aviation.

Special Non-Resident Rupee Accounts: revised eligibility and tenure rules support specified cross-border business transactions in rupees.
SNRR accounts may be opened by persons resident outside India with a business interest in India for bona fide rupee transactions compliant with foreign-exchange requirements. Permitted purposes include specified investments, imports, exports, trade credit, External Commercial Borrowings lending and designated IFSC-related transactions outside the IFSC. Account nomenclature must identify the relevant business, and banks may maintain separate or single accounts if transactions are segregated category-wise. Account tenure generally cannot exceed seven years, subject to renewal approval, although specified transaction categories are exempt from that restriction.

Special Non Resident Rupee accounts now permitted for rupee receipts and payments subject to compliance with foreign exchange law.
The amendment inserts a definition of Special Non-Resident Rupee account and authorises rupee receipts and payments to and from SNRR accounts maintained by non-residents with an Authorised Dealer or Authorised Bank in India. Payments by debit to FCNR, NRE or SNRR accounts for overseas buyers and credits to SNRR accounts for overseas sellers are permitted, and rupee transfers to or from SNRR accounts are allowed provided the underlying transactions conform with the Foreign Exchange Management Act, 1999 and subordinate rules, regulations and directions.

Foreign investment entry routes and sectoral caps govern cross-border equity transactions and pricing under FEMA non-debt rules.
These rules govern foreign investment in non-debt instruments under FEMA by defining covered instruments and actors, prescribing entry routes (automatic or government) and sectoral caps, and setting conditions for issuance, acquisition, transfer, pledging and pricing of equity and related instruments. Distinct Schedules allocate rules for FDI, FPIs, NRIs/OCIs, FVCIs, LLPs, investment vehicles, depository receipts and IDRs. Pricing must follow SEBI guidelines for listed securities and certified arm's length valuations for unlisted securities; transfers that alter ownership or control must comply with entry routes, caps, conditionalities and RBI reporting.

Foreign investment in debt instruments regulated with specified permitted instruments, payment routes and remittance conditions.
These Regulations set out the framework for investments in Indian debt instruments by persons resident outside India, defining permissible instruments, distinguishing repatriation and non-repatriation bases, prescribing modes of payment through specified non-resident accounts or inward remittance, and regulating sale, redemption and remittance of proceeds through authorised dealers subject to taxes, prescribed conditions and regulatory approvals.

Mode of payment and reporting requirements govern foreign investment remittances and mandatory filings for non debt instruments.
Regulations prescribe mode of payment for non debt instrument investments by persons resident outside India-requiring inward remittance through banking channels or use of specified non resident accounts (NRE, FCNR(B), foreign currency accounts, SNRR, NRE(PIS), NRO) depending on investor class-and permit remittance or credit of sale, maturity or disinvestment proceeds as specified. A detailed reporting regime mandates particular forms (FC GPR, FLA, FC TRS, ESOP, DRR, LLP(I)/(II), LEC(FII)/LEC(NRI), InVI, DI, CN) with stipulated filing timelines, generally through Authorised Dealer banks; delays attract late submission fees.

Debt instrument designation under FEMA clarifies classification of government bonds, corporate bonds and other instruments as debt.
The Central Government designates specified classes as debt instruments under FEMA, including government bonds, corporate bonds, non equity securitisation tranches, borrowings by Indian firms through loans, and depository receipts backed by debt. It separately lists categories treated as non-debt instruments-equity investments, LLP capital participation, instruments under FDI policy, units of AIFs/REITs/InVITs, mutual fund/ETF units with majority equity, the equity tranche of securitisations, immovable property dealings, trust contributions, and depository receipts against equity-and provides that all other unlisted instruments shall be deemed debt instruments.

Commencement of Finance Act provisions brings specified foreign exchange management sections into force on 15 October 2019.
The Central Government, exercising its statutory commencement power, appoints 15 October 2019 as the date on which specified provisions of the Finance Act, 2015 relating to foreign exchange management shall come into force, by a Ministry of Finance notification under the Act's commencement authority.

Affidavit requirement for office bearers: mandatory individual affidavits and eligibility certification for foreign contribution applications.
Applications under Forms FC-3A, FC-3B and FC-3C and the provision in rule 12 must include an individual affidavit by each office bearer, key functionary and member in Proforma 'AA', and each form is amended to require certification that those persons satisfy the eligibility criteria of subsection (4) of section 12 and that their affidavits are uploaded. Proforma 'AA' prescribes identity particulars, role affirmation, a duty to report breaches of eligibility by the organisation or its persons, and warns that false information is punishable.

Deposit regulation amendment removes sub-regulation governing deposits, effective upon publication in the Official Gazette under foreign exchange management law.
Foreign Exchange Management (Deposit) (Amendment) Regulations, 2019 delete sub-regulation (3) of regulation 6 of the Foreign Exchange Management (Deposit) Regulations, 2016, including all words and expressions contained in that sub-regulation. The amendment takes effect from its publication in the Official Gazette.

Notification renumbering under FEMA adjusts official identifier while leaving substantive content unchanged.
Correction re-designates the notification number of the FEMA instrument from its original identifier to a new notification number while stating that all other contents of the Gazette notification remain unchanged, constituting an administrative renumbering without substantive amendment.

Exclusion from foreign source: International Solar Alliance declared not a foreign source under the FCRA, affecting regulatory scope.
The Central Government, under the power conferred by sub clause (ii) of clause (j) of sub section (1) of section 2 of the Foreign Contribution (Regulation) Act, specified by notification that the International Solar Alliance shall not be treated as a 'foreign source' for the purposes of the Act, creating a statutory exclusion from the Act's foreign contribution regime.

Foreign investment in municipal bonds expanded as non-residents permitted to purchase municipal debt under amended FEMA regulations.
The amendment defines Municipal Bonds as debt instruments issued by municipalities under Article 243Q and adds municipal bonds to Schedule 5 as permissible securities for purchase and sale by persons resident outside India, thereby including municipal debt within the FEMA regime for cross-border investment in non capital instruments.

Foreign contribution regulation: mandatory electronic filings, standardised FC forms, and PFMS integrated designated bank accounts required.
Amendments to the Foreign Contribution (Regulation) Rules, 2011 require electronic filing of applications and intimations, substitute and standardise forms (notably FC-3A, FC-3B, FC-3C and FC-6 series), and mandate designated FC bank accounts in core-banking compliant banks integrated with PFMS. The rules prescribe detailed form content for registration, prior permission, renewal, account returns and various change intimations, require governing body resolutions and specified enclosures, and tighten reporting, transfer and certification requirements to ensure utilisation complies with the Act's restrictions on national interest and public order.

Capital account restrictions bar impermissible transactions involving North Korean persons and require disposal of non-compliant existing investments.
Capital account transactions by persons resident in India with citizens, residents, or entities of the Democratic People's Republic of Korea are prohibited where not permissible under the applicable Central Government order, unless specifically approved. Existing non-permissible investments, representative offices, or other assets connected with the Democratic People's Republic of Korea must be closed, liquidated, disposed of, or settled within 180 days. Continuation beyond that period requires specific Central Government approval.

Non interest foreign currency accounts allowed for ship manning and insurance brokers, subject to regulatory directions.
An authorised dealer may, subject to directions issued by the Reserve Bank, allow ship manning and crew managing agencies and re insurance and composite insurance brokers registered with the insurance regulator to open and maintain non interest bearing foreign currency accounts in India for the purpose of undertaking transactions in the ordinary course of their business.

Currency export to Nepal and Bhutan permits specified newer banknotes for travellers, subject to denomination and aggregate limits.
Currency export to Nepal and Bhutan is regulated by substituting Regulation 8(1). Indian Government and Reserve Bank of India currency notes may be taken or sent from India to Nepal or Bhutan, subject to denomination restrictions. Individuals travelling to either country may additionally carry specified Reserve Bank of India Mahatma Gandhi (New) Series notes, subject to the prescribed aggregate limit. The amendment takes effect upon publication in the Official Gazette.

Derivative contracts become permissible capital account transactions for residents in India and persons resident outside India.
Derivative contracts are expressly classified as permissible capital account transactions for persons resident in India and persons resident outside India. A derivative is defined as a financial contract settled at a future date whose value is derived from one or more financial or non-financial variables. Schedule I includes undertaking derivative contracts for persons resident in India, while Schedule II includes the same transaction for persons resident outside India.

Foreign Portfolio Investor hedging under Voluntary Retention Route allowed with authorised dealer instruments, subject to RBI terms.
FPIs are permitted to enter into forward contracts, foreign currency-rupee option contracts, cost reduction structures or swaps with the rupee as one of the currencies with an Authorised Dealer in India to hedge currency risk on investments made under the Voluntary Retention Route, subject to such terms and conditions as may be stipulated by the Reserve Bank.