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.

Currency export and import restrictions may be imposed case by case in public interest, with necessary conditions prescribed.
Reserve Bank power to restrict currency export or import is inserted into the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. In the public interest and after consultation with the Central Government, the Reserve Bank may restrict, case by case, the amount of Indian currency notes and/or foreign currency that a person may bring into or take outside India. It may prescribe necessary conditions for those restrictions, notwithstanding other provisions of the regulations.

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 discretion over currency export and import operates through a new application-based permission mechanism subject to stipulated conditions.
New Regulation 9 establishes a Reserve Bank permission mechanism for the export or import of currency notes issued by the Government of India or the Reserve Bank of India. Upon application and satisfaction of necessity, the Reserve Bank may permit any person to take or send such notes out of India to any country, or bring them into India from any country. The permission is subject to terms and conditions stipulated by the Reserve Bank.

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.

Foreign portfolio investment payment rules permit designated account funding and repatriation of net sale proceeds for eligible non-debt investments.
Foreign portfolio investors must pay consideration through inward remittance or eligible foreign currency and/or SNRR accounts, which are exclusively usable for transactions under the relevant Schedule unless otherwise specified. Net-of-tax proceeds from specified equity instruments and fund units may be remitted outside India or credited to eligible accounts. Investment-vehicle consideration may be paid through inward remittance, special purpose vehicle share swaps, or NRE and FCNR(B) funds; eligible investors may use SNRR accounts for trading in listed or proposed-to-be-listed units.

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 hedging permits eligible persons to manage contracted or anticipated currency exposures under revised compliance conditions.
Persons resident in India and outside India may enter into foreign exchange derivative contracts with an authorised dealer, subject to conditions for Rupee-related contracts. Such contracts must generally hedge contracted or anticipated exposure arising from permissible transactions, and participants must provide exposure details when requested. Exchange-traded currency derivative contracts on recognised exchanges must hedge contracted exposure, with an authorised dealer in India designated to monitor positions beyond prescribed limits. Rupee transactions settled by delivery of foreign currency are restricted to authorised dealers, persons resident outside India, and other permitted persons.

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.

Indian rupee business in international financial services centres may proceed under general or specific permission for determined persons.
Regulation 4 is supplemented by a proviso enabling the Reserve Bank, through general or specific permission, to allow a financial institution or its branch to conduct specified business in Indian Rupee. The scope of permissible business and the persons with whom it may be conducted are determined by the Reserve Bank and may include residents or others, subject to the terms of the relevant permission.