Foreign investment limits in defence revised to allow higher automatic clearance with government approval beyond set thresholds.
A new proviso exempts a Multilateral Bank or Fund, of which India is a member, from being treated as an entity of any particular country or as having a country as beneficial owner of its investments in India. The Defence sector entry in Schedule 1 is replaced to permit full sectoral caps with foreign investment allowed under the automatic route up to a specified threshold and requiring Government route approval beyond that threshold for access to modern technology or other recorded reasons, subject to licensing, inter-ministerial consultation, security clearances, investee capability requirements, and national security review.

Reserve Bank power to restrict currency export or import may limit amounts persons bring into or take out of India.
The Reserve Bank may, in public interest and in consultation with the Central Government, restrict the amount of Indian currency notes and/or foreign currency that a person may bring into or take outside India on a case-by-case basis, and may prescribe such conditions as it may deem necessary.

Margin for derivative contracts: Reserve Bank permission required before posting, collecting or paying interest on margins.
Regulation restricts posting, collection and interest payment on margin for derivative contracts absent Reserve Bank permission, defines margin and permitted derivative contracts, and permits authorised dealers, subject to Reserve Bank directions, to post and collect margin and pay or receive interest on margin in India and abroad on their own account or for customers for permitted derivatives with non resident counterparties.

FCRA Account designation: a specific bank branch is prescribed as the mandatory channel for foreign contribution remittance.
The Central Government, by notification, specifies the New Delhi Main Branch of the State Bank of India at 11 Sansad Marg as the designated branch to receive and hold the FCRA Account, prescribing the banking channel for remittance of foreign contributions under the foreign contribution regulatory framework.

Commencement of Foreign Contribution (Regulation) Amendment Act appoints the date for its provisions to come into force.
The Central Government, exercising the power conferred by sub section (2) of section 1 of the Foreign Contribution (Regulation) Amendment Act, 2020, appoints a specific day as the date on which the provisions of the Act shall come into force by notification of the Ministry of Home Affairs.

Reserve Bank's power to permit export or import of currency: allows authorised movement of currency notes subject to conditions.
A new Regulation 9 authorises the central bank, on application and being satisfied of necessity, to permit any person to take or send out of India or bring into India currency notes of the Government and/or of the central bank, subject to terms and conditions as the central bank may stipulate.

Foreign investment in air transport services regulated to permit automatic entry up to prescribed caps with government oversight.
The amendment vests administration of the non debt instruments rules in the Reserve Bank, enabling it to issue directions and clarifications for implementation, and revises Schedule entries for Air Transport Services to specify distinct entry routes and sectoral caps for scheduled, regional, non scheduled, helicopter and seaplane services. It preserves Aircraft Rules conditions on registration, board composition and vesting of substantial ownership and effective control in Indian nationals, and attaches conditions for foreign airline investment including government approval, subsumption of other foreign investment, SEBI compliance, security clearances for foreign personnel, and Ministry of Civil Aviation clearance for imported technical equipment.

Mode of payment for non debt investments: inward remittance and specified foreign currency, SNRR, NRE or FCNR(B) accounts.
Amendments require that consideration for investments by FPIs be paid by inward remittance or from foreign currency and SNRR accounts maintained under the Deposit Regulations, 2016, with those accounts used exclusively for transactions under the relevant schedule. Sale proceeds of equity instruments and units of REITs, InViTs and domestic mutual funds may be remitted abroad or credited to the investor's foreign currency or SNRR account. For investment in Investment Vehicles, consideration may be paid by inward remittance, share swap of a Special Purpose Vehicle, or from NRE or FCNR(B) accounts, and proceeds may be remitted or credited to NRE, FCNR(B) or SNRR accounts.

Foreign investment limits in insurance revised; intermediaries can have full foreign ownership subject to regulatory conditions and pricing rules.
A new rule allows a non-resident who acquires a right from a resident renouncer to convert that right into equity instruments (except share warrants) in accordance with the pricing guidelines in rule 21, and the explanation to rule 7 is omitted. Schedule I revisions clarify retail timing language and restructure insurance sector entries to permit full foreign investment in intermediaries on the automatic route subject to IRDAI verification, while imposing detailed conditions on Indian insurance companies regarding ownership, control, licensing, governance and compliance. Schedule II now gives FPIs that breach prescribed limits an option to divest within a short trading period or be reclassified as FDI, with notification duties and non reckoning of interim breach.

Foreign investment restrictions: investments from countries sharing land border and Pakistani entities require prior government approval, including ownership transfers.
The amendment requires that any investor or beneficial owner who is a citizen of, situated in, or an entity of a country sharing a land border with India may invest in India only with Government approval; a citizen or entity of Pakistan may invest only under the Government route outside sectors already prohibited for foreign investment; and any transfer of ownership that results in beneficial ownership falling within these restrictions likewise requires Government approval.

Export repatriation period expanded: RBI may specify timelines in consultation with Government for export realisation.
The amendment replaces fixed repatriation timelines in Regulation 9 by empowering the Reserve Bank, in consultation with the Government, to specify from time to time the period within which export proceeds must be realised and repatriated; subsequent references to the prior fixed durations are replaced with the term said period.

Asian Clearing Union transfers enable receipt and payment for eligible exports and imports through designated ACU currency accounts.
Amendments specify that transactions with Members of Asian Clearing Union (ACU) - receipts for eligible exports and payments for eligible imports - may be effected through ACU Dollar, ACU Euro or ACU Japanese Yen accounts in India of a bank in the member country where the other party resides, or through corresponding ACU accounts of an authorized dealer maintained with its correspondent bank in that member country.

Foreign exchange derivative contracts: amendments limit use to hedging contracted or anticipated exposures and set dealer monitoring requirements.
Amendments redefine 'authorised dealer' and 'foreign exchange derivative contract', add definitions for contracted and anticipated exposure, currency risk, hedging and exchange traded currency derivatives, and delete several prior sub definitions. A person, resident or non resident, may enter into foreign exchange derivative contracts with an authorised dealer; Rupee involving contracts must be for hedging contracted or anticipated exposures unless RBI permits otherwise, and delivery settled Rupee transactions are confined to authorised dealers and permitted persons. Exchange traded contracts for hedging contracted exposure are allowed subject to designation of an authorised dealer for monitoring and disclosure obligations.

Exemption from foreign contribution regulation: wholly government owned, CAG audited organisations are excluded from the Act's operation.
The Central Government exempts organisations (other than political parties) constituted by or under Central or State Acts or by administrative/executive orders, wholly government owned and compulsorily audited by the Comptroller and Auditor General or its agencies, from the operation of the Foreign Contribution (Regulation) Act, 2010; the exemption applies to all provisions of the Act, takes effect from publication, and supersedes the earlier government notification.

Permission for domestic currency transactions in IFSC allows financial institutions to deal with residents and non residents under regulatory approval.
The amendment inserts a proviso to regulation 4 authorising the Reserve Bank, by general or specific permission, to allow a financial institution or its branch to conduct business in Indian Rupees in the International Financial Services Centre with such persons, resident or otherwise, as it may determine; it also specifies the short title and commencement upon publication in the Official Gazette.