Repatriation basis securities transfers now governed by terms and conditions as may be specified by SEBI and the Reserve Bank.
The amendment to Schedule 5 standardizes provisions to permit purchase, issue, transfer and sale/redemption of specified securities by non resident persons on a repatriation basis and makes all such transactions subject to terms and conditions as may be specified by SEBI and the Reserve Bank of India, including purchases through SEBI registered Qualified Depository Participants and related sale or redemption mechanisms.

Foreign investment policy: sectoral FDI caps and routes revised, controlled-conditions defined and security-clearance rules tightened.
Amendments modify FDI/portfolio investment entries and definitions: Annex B heading changed to "% of Equity/FDI Cap"; under controlled conditions is defined for specified agricultural and animal activities; FPIs/FIIs are barred from fresh portfolio investment in defence with existing portfolio holdings capped at pre-specified levels; defence proposals follow government-route review with additional DoDP and CCS scrutiny where access to modern technology arises; security clearance, inspection, suspension and disqualification regimes are articulated for sensitive sectors; sectoral FDI caps and automatic/government route thresholds are updated for telecom, single brand retail, ARCs, commodity exchanges and aviation, with related compliance conditions.

Issuance of warrants to non-residents now regulated under FDI rules, included alongside shares and convertible debentures.
The amendment expressly includes warrants as securities issuable to persons resident outside India and mandates that warrants be treated within the meaning of the Act. It permits issuance of partly paid equity while requiring preference shares and convertible debentures to be fully paid and convertible. Valuation and pricing for shares, convertible debentures and warrants require a certificate from a Chartered Accountant or SEBI-registered merchant banker; donees of partly paid instruments must declare awareness of liabilities. Consideration for issuance must follow specified inward remittance, NRE/FCNR(B) debit or escrow mechanisms, with refund rules where issuance does not occur within the prescribed period.

Resident individual capital account remittances operate under an annual foreign exchange limit, including gifts and donations.
Resident individuals may draw foreign exchange for Schedule I capital account transactions within an annual limit of USD 125,000 or a revised prescribed amount. Gift and donation remittances within specified current account transaction categories are subsumed within that limit. Drawals exceeding the annual limit remain subject to transaction-specific limits. Foreign exchange drawn under the annual limit cannot be used, directly or indirectly, for remittances to Financial Action Task Force-identified non-cooperative countries or territories.

Project export approvals required for deferred payment, turnkey and civil construction contracts; prior clearance from EXIM Bank or authorised dealer.
The amendment substitutes Regulation 18 to require that exports on deferred payment terms or executed as turnkey projects or civil construction contracts obtain prior approval before entering into any such export arrangement. Exporters must submit proposals to the approving authority, which will consider them per Reserve Bank of India guidelines. "Approving authority" is defined as the EXIM Bank of India or the authorised dealer.

Currency carriage limits updated: travelers may import and export Indian currency notes subject to RBI conditions and nationality exclusions.
Amendment prescribes a currency carriage limit of twenty-five thousand rupees per person for export and import of Government of India and Reserve Bank of India notes, subject to such other amounts and conditions as the Reserve Bank of India may notify; it excludes Nepal and Bhutan for certain departures and adds that residents of other countries visiting India, excluding citizens of Pakistan and Bangladesh, may both take out and bring in Indian currency notes up to the same limit subject to RBI notification.

Annual Return on Foreign Liabilities and Assets: RBI to specify the form and reporting requirements; prior annex removed.
Schedule 1 of the Regulations is amended to replace the prior specified form for the "Annual Return on Foreign Liabilities and Assets" with a requirement that the annual return be submitted "as specified by the Reserve Bank from time to time," and to delete the existing paragraph 9(3) and Annex E, thereby removing the previously prescribed form and related paragraphary requirement.

Valuation methodology: updated arm's-length pricing requirement for non-resident investments in unlisted Indian securities, certified by CA or merchant banker.
Pricing and valuation for securities issued to persons resident outside India are amended to require the market price prevailing on recognised exchanges for listed instruments and for unlisted equity, preference shares or debentures a price not exceeding that determined by any internationally accepted pricing methodology on an arm's length basis, certified by a Chartered Accountant or a SEBI registered Merchant Banker; private placement pricing must meet SEBI guideline pricing or the fair price so certified.

Non-resident investor pledge of shares allowed to secure NBFC credit for resident investee company, subject to RBI conditions.
A new sub regulation permits a non resident investor of an Indian company listed on a recognised stock exchange to pledge that company's shares in favour of a Non Banking Financial Company in India to secure credit facilities extended to the resident investee company for bonafide business purposes, subject to the authorised dealer bank satisfying itself of compliance with conditions stipulated by the Reserve Bank of India.

Non-convertible preference shares: NRIs may purchase listed non-convertible/redeemable preference shares or debentures on non repatriation basis.
The amendment adds listed non-convertible/redeemable preference shares or debentures to multiple entries in Schedule 5 of the Regulations, thereby recognizing those instruments as permitted under the Schedule, and provides that a Non-Resident Indian may, without limit, purchase such listed non-convertible/redeemable preference shares or debentures on a non-repatriation basis.

Non-resident currency derivatives hedging permits eligible investors to use exchange-traded futures and options subject to prescribed conditions.
Currency futures and exchange-traded currency options may be entered into by a person resident outside India who is eligible to invest in securities under the specified schedules governing transfer or issue of security to non-residents. Such contracts must be undertaken on a recognised stock exchange and solely to hedge exposure to risk. The permission remains subject to terms and conditions prescribed through directions issued by the Reserve Bank of India.

Export realisation period shortened, altering timelines for foreign exchange repatriation under FEMA export regulations amendment.
The Amendment substitutes the words "nine months" for "twelve months" in the principal regulations, specifically in Regulation 9(1) including its third proviso, and in Regulation 10, thereby reducing the period for realisation and repatriation of export proceeds. It is titled the Foreign Exchange Management (Export of Goods & Services) (Amendment) Regulations, 2014 and is deemed effective from April 1, 2013, with a clarification that no person will be adversely affected by the retrospective effect.

Foreign investment cap in insurance allowed under automatic route, subject to IRDA licence and sectoral regulatory conditions.
Foreign investment in the insurance sector is permitted under the automatic route subject to obtaining the requisite IRDA licence; bank-promoted insurers are subject to applicable private banking conditions; an Indian insurance company is defined by corporate form, limits on aggregate foreign equity holdings and the sole objects of life, general or re-insurance business. The amendment also lists permitted sector participants-insurance companies, brokers, third party administrators, and surveyors and loss assessors-and subjects them to the respective IRDA licensing and regulatory regimes.

Foreign exchange threshold for manner of receipt and payment increased; Reserve Bank empowered to stipulate the applicable limit.
Amendment substitutes the previous specified monetary ceiling in the relevant regulation clause with "five lakh rupees or any such amount that Reserve Bank may stipulate," thereby vesting Reserve Bank discretion to determine the operative threshold for receipts and payments; the amendment is effective retrospectively from 13 March 2014 with a certification that no person will be adversely affected.

Limited Liability Partnership inclusion expands entities eligible to transfer or issue foreign securities under FEMA rules.
The amendment to Regulation 2 inserts Limited Liability Partnership (LLP) into clause (k) as an entity eligible in the transfer or issue of foreign securities and adds clause (ma) defining 'Limited Liability Partnership' as a body corporate having perpetual succession duly formed and incorporated under the Limited Liability Partnership Act, 2008.

Crystallisation of inoperative foreign currency deposits: conversion to rupees with depositor option to claim rupee proceeds or foreign equivalent.
Regulations require authorised banks to convert inoperative foreign currency denominated deposit balances into Indian Rupees when specified inoperative periods expire, applying the exchange rate prevailing on the date of conversion. For fixed maturity deposits the conversion occurs at the end of the post maturity inoperative period; for no maturity deposits banks must give a prior notice and convert at the end of the notice period. After conversion the depositor may claim either the Indian Rupee proceeds and interest or the foreign currency equivalent of those Rupee proceeds calculated at the rate prevailing on the date of payment.

Foreign investment in LLPs requires prior government approval, fair valuation, specified payment modes and RBI reporting within set timelines.
FDI into LLPs is permitted subject to prior Government/FIPB approval, eligibility limited to sectors allowing 100% automatic FDI without performance conditions, exclusion of investors from Pakistan/Bangladesh and certain SEBI-registered categories, pricing at or above a fair price certified by an approved valuer, payment by inward remittance or NRE/FCNR(B) accounts, mandatory RBI reporting through prescribed forms within 30/60 days with FIRCs, KYC and valuation certificates, restrictions on downstream investment and ECBs, and designated partners' compliance obligations.

Registered Foreign Portfolio Investor status expands portfolio market access while prescribing registration, account routing and investment permissions.
Amendments introduce and integrate the concept of Registered Foreign Portfolio Investor (RFPI), aligning FEMA rules with SEBI's FPI regime. RFPIs are recognised for registration and transitional treatment of existing FIIs/QFIs, authorised to purchase shares and convertible debentures under a new Schedule 2A, required to route transactions through designated Foreign Currency and Special Non Resident Rupee accounts, and permitted a specified class of investments and exchange traded derivatives subject to regulator prescribed limits, margins, collateral stipulations, and remittance procedures.

FDI in pharmaceuticals: full automatic approval for greenfield projects; brownfield requires government route and restricts non compete.
Amendment substitutes entry 25 in Annex B of Schedule I to provide that greenfield pharmaceutical projects are eligible for full foreign investment via the automatic route, while brownfield pharmaceutical projects require government approval and may be subject to conditions; inclusion of non compete clauses is disallowed except in special circumstances with approval from the designated authority.

Transfer of assets on closure: foreign branch or liaison office may request authorised dealer to transfer assets to Indian entities.
The amendment adds Regulation 8 permitting a person resident outside India, authorised under Regulation 5 to establish a Branch, Project or Liaison Office, on closure to apply to the authorised dealer for transfer of its assets to a joint venture, wholly owned subsidiary or any other entity in India; it also sets the short title and deems commencement from publication in the Official Gazette.