TaxTMI 
TaxTMI 
FDI REGULATORY FRAMEWORK
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....luence by the direct investor in the management of the direct investment enterprise. In India the 'lasting interest' is not evinced by any minimum holding of percentage of equity capital/shares/voting rights in the investment enterprise. Direct investment allows the direct investor to gain to the access of direct investment enterprise which it might otherwise be unable to do. The objectives of direct investment are different from those of portfolio investment whereby investors do not generally expect to influence the management of the enterprise. 1.3 It is the policy of the Government of India to attract and promote productive FDI from non-residents in activities which significantly contribute to industrialization and socio-economic development. FDI is encouraged in enterprises to significantly expand employment and livelihood opportunities, enhance economic value of products, promote welfare of consumers, increase exports and/or transfer technologies in all economic activities. FDI supplements the domestic capital and technology. 1.4 The Legal basis: Foreign Direct Investments by non-resident in resident entities through transfer or issue of security to per....
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....ITIONS: The various definitions of terms used in this Press Note are as follows :- 2.1 'FEMA' means the Foreign Exchange management Act 1999 (42 of 1999) (FEMA). 2.2 'Asset Reconstruction Company' (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). 2.3 'Authorised Bank' means a bank including a co-operative bank (other than an authorized dealer) authorized by the Reserve Bank to maintain an account of a person resident outside India. 2.4 'Authorised Dealer' means a person authorized as an authorized dealer under sub-section (1) of section 10 of FEMA. 2.5 'AD Category-I Bank' means a Bank( commercial, State or urban cooperative) which is an Authorized Dealer and allowed to deal in all current and capital account transactions by RBI from time to time. 2.6 'Authorised person' means a authorized dealer, money changer, offshore banking unit or any other person for the time being authorized under Sub-section (a) of Section 10 of FEMA 2.7 'B2B e-commerce' means business entities buying from and sellin....
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....ake investment in Venture Capital Fund(s) or Venture Capital Undertaking(s) in India and in registered with SEBI under SEBI (Foreign Venture Capital Investors) Regulations 2000'. 2.12 'FIPB' means the Foreign Investment Promotion Board constituted by the Government of India. 2.13 'FDI' means foreign investment in the paid up capital of the Indian company not being Foreign Portfolio Investment. 2.14 'Government route' means that investment in resident entities by non-resident entities can be made only with the prior approval from FIPB, Ministry of Finance or SIA, DIPP as the case may be. 2.15 'Government of India' means Department of Economic Affairs, Ministry of Finance or Department of IPP, Ministry of Commerce & Industry. 2.16 'Indian Company' means a company registered or incorporated in India as per the Indian Companies Act, 1956. 2.17 Investment on repatriable basis means investment the sale proceeds of which are net or taxes eligible to be repatriated out of India and the expression 'investment are on repatriable basis' shall be construed accordingly. 2.18 'Joint Venture' (JV) means an Indian entity formed, ....
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....se, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) A person who has come to or stays in India, in either case, otherwise than - (a) for or on taking up employment in India; or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India. 2.23'Person resident outside India' means a person who is not resident in India. 2.24'Previous Venture/tie-up condition' means that the investor has previous/existing venture or tie-up in India as on January 12, 2005, through investment / technology collaboration agreement in the same field in which the Indian company, whose shares are being issued, is engaged, he has to obtain prior permission of Foreign Investment Promotion Board (FIPB), to acquire the shares. This....
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.... 'Non resident entity' means a 'person resident outside India' as defined under FEMA. 2.33 'Holding Company' would have the same meaning as defined in Indian Companies Act 1956. CHAPTER 2: SOURCE, TYPE, ELIGIBILITY, CONDITIONS AND ISSUE/TRANSFER OF INVESTMENT 3.0 SOURCE OF INVESTMENT IN INDIA 3.1 A non-resident entity (other than a citizen of Pakistan) or an entity incorporated outside India, (other than an entity incorporated in Pakistan) can invest in India, subject to the FDI Regulation of the Government of India. A person who is a citizen of Bangladesh or an entity incorporated in Bangladesh can invest in India under the FDI Regulation, under the Government route. 3.2 Investments from Nepal & Bhutan: NRI's, resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in shares and convertible debentures of Indian companies on repatriation basis, subject to the condition that the amount of consideration for such investment shall be paid only by way of inward remittance in free foreign exchange through normal banking channels. 3.3 OCBs have been derecognized as a class of Investors in India....
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....equity under the FDI Policy. 4.4 Issue of shares by Indian Companies under FCCB/ADR/GDR (i) Indian companies can raise foreign currency resources abroad through the issue of FCCB/DR(ADRs/GDRs), in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India thereunder from time to time. (ii) A company can issue ADRs/GDRs if it is eligible to issue shares to persons resident outside India under the FDI Regulations. However, an Indian listed company, which is not eligible to raise funds from the Indian Capital Market including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI) will not be eligible to issue ADRs/GDRs. (iii) Unlisted companies, which have not yet accessed the ADR/GDR route for raising capital in the international market, would require prior or simultaneous listing in the domestic market, while seeking to issue such overseas instruments. Unlisted companies, which have already issued ADRs/GDRs in the international market, have to list in the domestic ma....
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..... (ix) The pricing of sponsored ADRs/GDRs would be determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. 4.5 (i) Two-way Fungibilty Scheme:A limited two-way Fungibility scheme has been put in place by the Government of India for ADRs / GDRs. Under this Scheme, a stock broker in India, registered with SEBI, can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on instructions received from overseas investors. Re-issuance of ADRs / GDRs would be permitted to the extent of ADRs / GDRs which have been redeemed into underlying shares and sold in the Indian market. (ii) Sponsored ADR/GDR issue: An Indian company can also sponsor an issue of ADR/GDR. Under this mechanism, the company offers its resident shareholders a choice to submit their shares back to the company so that on the basis of such shares, ADRs / GDRs can be issued abroad. The proceeds of the ADR / GDR issue is remitted back to India and distributed among the ....
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....e registered with the Securities and Exchange Board of India(SEBI) under SEBI(Venture Capital Fund) Regulations 1996. Investment in other Trusts is not permitted. 5.4 Investment in other Entities: Investment in any other resident entities is not permitted. 6.0 CONDITIONS ON ISSUE/TRANSFER OF SHARES 6.1The equity instruments should be issued within 180 days from the date of receipt of the inward remittance or by debit to the NRE/FCNR (B) account of the non-resident investor. In case, the equity instruments are not issued within 180 days from the date of receipt of the inward remittance or date of debit to the NRE/FCNR (B) account, the amount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B) account, as the case may be. Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions. In exceptional cases, refund of the amount of consideration outstanding beyond a period of 180 days from the date of receipt may be considered by the RBI, on the merits of the case. 6.2 Issue price....
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....o a person resident in India, subject to the guidelines given in Annex-3. (g) The above General Permission also covers transfer by a resident to a non-resident of shares/convertible debentures of an Indian company, engaged in an activity earlier covered under the Government Route but now falling under Automatic Route of RBI, as well as transfer of shares by a non-resident to an Indian company under buyback and/or capital reduction scheme of the company. However, this General Permission is not available in case of transfer of shares / debentures, from a Resident to a Non-Resident/Non-Resident India, of an entity engaged in any activity in the financial services sector (i.e. Banks, NBFCs, ARCs, CICs, Insurance, infrastructure companies in the securities market such as Stock Exchanges, Clearing Corporations, and Depositories, Commodity Exchanges, etc.). (ii) The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels, shall be subjected to a Know Your Customer(KYC) check by the remittance receiving AD Category - I bank at the time of receipt of funds. In case, the remittance recei....
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....i) The following instances of transfer of shares from residents to non-residents by way of sale or otherwise requires Government approval followed by permission from RBI: (a) Transfer of shares of companies engaged in sectors falling under the Government Route. (b) Transfer of shares resulting in foreign investments in the Indian company, breaching the sectoral cap applicable. (iii)A person resident in India, who intends to transfer any security, by way of gift to a person resident outside India, has to obtain prior approval from Reserve Bank. While forwarding applications to Reserve Bank for approval for transfer of shares by way of gift, the documents mentioned in Annex-4 should be enclosed. Reserve Bank considers the following factors while processing such applications: (a) The proposed transferee (donee) is eligible to hold such security under Schedules 1, 4 and 5 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. (b) The gift does not exceed 5 per cent of the paid-up capital of the Indian company/each series of debentures/each mutual fund scheme. (c) The applicable sectoral cap limit in the Indian company is not breache....
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....to adherence to sectoral cap, if any. However, such issue of bonus / rights shares has to be in accordance with other laws/statutes like the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines (in case of listed companies), etc. The price of shares offered on rights basis by the Indian company to non-resident shareholders shall not be lower than the price at which such shares are offered to resident shareholders. 7.2 Prior permission of RBI for Rights issue to erstwhile OCBs- OCBs have been de-recognised as a class of investors from September 16, 2003. Therefore companies desiring to issue rights share to such erstwhile OCBs will have to take specific prior permission from RBI. As such, entitlement of rights share is not automatically available to OCBs. However bonus shares can be issued to erstwhile OCBs without the approval of RBI. 7.3 Additional allocation of rights share by residents to non-residents - Existing non-resident shareholders are allowed to apply for issue of additional shares/convertible debentures/preference shares over and above their rights share entitlements. The investee company can allot the additional rights share....
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.... CHAPTER 3: CALCULATION, ENTRY ROUTE, CAPS, CONDITIONS, ETC. OF INVESTMENT 8.0 CALCULATION OF TOTAL FOREIGN INVESTMENT I.E. DIRECT AND INDIRECT FOREIGN INVESTMENT IN INDIAN COMPANIES. 8.1 Investment in Indian companies can be made both by non-resident as well as resident Indian entities. Any non-resident investment in an Indian company is direct foreign investment. Investment by resident Indian entities could again comprise of both resident and non-resident investment. Thus, such an Indian company would have indirect foreign investment if the Indian investing company has foreign investment in it. The indirect investment can be a cascading investment i.e. through multi-layered structure also. 8.2 For the purpose of computation of indirect Foreign investment, Foreign Investment in Indian company shall include all types of foreign investments i.e. FDI, investment by FIIs(holding as on March 31), NRIs, ADRs, GDRs, Foreign Currency Convertible Bonds (FCCB) and convertible preference shares, convertible Currency Debentures regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEMA (Transfer or Issue of Security by Persons Residen....
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....then only 75% would be treated as indirect foreign equity and the balance 25% would be treated as resident held equity. The indirect foreign equity in Company A would be computed in the ratio of 75: 25 in the total investment of Company B in Company A. (iii)The total foreign investment would be the sum total of direct and indirect foreign investment. (iv) The above methodology of calculation would apply at every stage of investment in Indian Companies and thus to each and every Indian Company. (v)Additional conditions: (a) The full details about the foreign investment including ownership details etc. in Indian company(s) and information about the control of the company(s) would be furnished by the Company(s) to the Government of India at the time of seeking approval. (b) In any sector/activity, where Government approval is required for foreign investment and in cases where there are any inter-se agreements between/amongst share-holders which have an effect on the appointment of the Board of Directors or on the exercise of voting rights or of creating voting rights disproportionate to shareholding or any incidental mat....
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....nt entity, then even though the investment may be made by a resident Indian citizen, the same shall be counted as foreign investment. (vi)The above mentioned policy and the methodology would be applicable for determining the total foreign investment in all sectors, excepting in sectors where it is governed specifically under any statutes or rules thereunder. Thus, for the present purposes this methodology will not be applicable in the Insurance Sector where it will continue to be governed by the relevant Regulation. 8.4 Any foreign investment already made in accordance with the guidelines in existence prior to February 13, 2009 (date of issue of Press Note 2 of 2009) would not require any modification to conform with these guidelines. All other investments, past and future, would come under the ambit of these new guidelines. 9.0 ENTRY ROUTES FOR INVESTMENT: (i) Investments can be made by non-residents in the shares/convertible debentures/preference shares of an Indian company, through two routes; the Automatic Route and the Government Route. Under the Automatic Route, the foreign investor or the Indian company does not require any approval....
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....f Security by Persons Resident Outside India) Regulations. 10.0 CAPS ON INVESTMENTS 10.1Investments can be made by non-residents in the capital of an Indian entity only to the extent of the percentage of the total capital. Thus investment can be prohibited in some sectors/activities or their can be a restriction through a CAP on the investment for other sector/activities ,while in others there may not be any restrictions and the total 100% capital can be held by non resident entities. The caps in various sector(s)/activity are detailed out later in this regulation. 11.0 ENTRY CONDITIONS ON INVESTMENT 11.1 Investments can be allowed by non-residents in the capital of an Indian entity in certain sectors/activity with entry conditions. These entry conditions are then only applicable for investment by non-resident entities. The usual conditions are about minimum capital that is to be inducted/brought in, etc. The ENTRY CONDITIONS in various sector(s)/activity are detailed out later in this regulation. 12.0 OTHER CONDITIONS ON INVESTMENT BESIDES ENTRY CONDITIONS 12.1 Besides the entry conditions on foreign investment, the inv....
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....nly investing companies as below: (ii) Only operating companies: Foreign investment in such companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and caps with regard to the sectors in which such companies are operating. (iii) Operating-cum-investing companies: Foreign investment into such companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and caps with regard to the sectors in which such companies are operating. Further, the subject Indian companies into which downstream investments are made by such companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and caps in regard of the sector in which the subject Indian companies are operating. (iv) Investing companies: Foreign Investment in Investing Companies will require the prior Government/FIPB approval, regardless of the amount or extent of foreign investment. The Indian companies into which downstream investments are made by such investing companies would have to comply with the relevant sectoral conditions on entry route, conditionalities and ca....
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....e considering cases and making recommendations, FIPB should keep in mind the sectoral requirements and the sectoral policies vis-à-vis the proposal (s). 14.6 FIPB would consider each proposal in totality 14.7 The Board should examine the following while considering proposals submitted to it for consideration. (i) whether the items of activity involve industrial licence or not and if so the considerations for grant of industrial licence must be gone into; (ii) whether the proposal involves any export projection and if so the items of export and the projected destinations. (iii)Whether the proposal has any strategic or defence related considerations. 14.8 While considering proposals the following may be priortised. (i) Items falling in infrastructure sector. (ii) Items which have an export potential. (iii)Items which have large scale employment potential and especially for rural people. (iv) Items which have a direct or backward linkage with agro business/farm sector. (v) Items which have greater social relevance such as hospitals, human resource development, life saving drugs and equipment. (vi) Proposals which result in induction of ....
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....pto a designated percentage of foreign equity in the joint venture company, the percentage of resident entities would not be reduced while permitting induction of additional capital subsequently. Also in the case of approved activities, if the foreign investor(s) concerned wishes to bring in additional capital on later dates keeping the investment to such approved activities, FIPB would recommend such cases for approval on an automatic basis. 14.12 As regards proposal for private sector banks, the application would be considered only after "in principle" permission is obtained from the Reserve Bank of India (RBI). 15.0 CONSTITUTION OF FIPB : FIPB comprises of the following Core Group of Secretaries to the Government of India: (i) Secretary to Government, Department of Economic Affairs, Ministry of Finance - Chairperson (ii) Secretary to Government, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry (iii)Secretary to Government, Department of Commerce, Ministry of Commerce & Industry (iv) Secretary to Government, Economic Relations, Ministry of External Affairs (v) Secretary to Government, Ministry of Overseas....
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....nbsp; AGRICULTURE 17.0 Agriculture & Animal Husbandry 17.1 100% FDI is allowed under automatic route in Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisciculture, Aquaculture and Cultivation of Vegetables & Mushrooms under controlled conditions and services related to agro and allied sectors. Note: Besides the above, FDI is not allowed in any other agricultural sector/activity. 17.2Plantation -including tea plantation. 17.3100% FDI is allowed in the Tea sector including tea plantations under Government route subject to the conditions of : (i) Compulsory divestment of 26% equity of the company in favour of an Indian partner/Indian public within a period of 5 years (ii) Prior approval of the State Governemnt concerned in case of any future land use change. Note: Besides the above, FDI is not allowed in any other plantation sector/activity. INDUSTRY 18.0 MINING 18.1100%&....
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....ndia Notification No. S.O.61(E) dated 18.1.2006, the Department of Atomic Energy re-notified the list of "prescribed substances" under the Atomic Energy Act 1962. Titanium bearing ores and concentrates (Ilmenite, Rutile and Leucoxene) and Zirconium, its alloys and compounds and minerals/cpmcentrates including Zircon, were removed from the list of "prescribed substances". (iv) FDI up to 100% will be allowed under Government route in mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals (Development and Regulation Act 1957). (v) (a) FDI for separation of titanium bearing minerals & ores will be subject to the following additional conditions viz.: (A) value addition facilities are set up within India along with transfer of technology; (B) disposal of tailings during the mineral separation shall be carried out in accordance with disposal of tailings during the mineral separation shall be carried out in accordance with regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and t....
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....mpany / partnership firm being resident Indians. (v) Full particulars of the Directors and the Chief Executives should be furnished along with the applications. (vi) The Government reserves the right to verify the antecedents of the foreign collaborators and domestic promoters including their financial standing and credentials in the world market. Preference would be given to original equipment manufacturers or design establishments, and companies having a good track record of past supplies to Armed Forces, Space and Atomic energy sections and having an established R & D base. (vii) There would be no minimum capitalization for the FDI. A proper assessment, however, needs to be done by the management of the applicant company depending upon the product and the technology. The licensing authority would satisfy itself about the adequacy of the net worth of the foreign investor taking into account the category of weapons and equipment that are proposed to be manufactured. (viii) There would be a three-year lock-in period for transfer of equity from one foreign investor to another foreign investor (including NRIs & OCBs with 60% or more NRI stake) and such t....
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....other than the Central of State Governments with the prior approval of the Ministry of Defence. Licensee would also need to institute a verifiable system of removal of all goods out of their factories. Violation of these provisions may lead to cancellation of the licence. (xvi) Government decision on applications to FIPB for FDI in defence industry sector will be normally communicated within a time frame of 10 weeks from the date of acknowledgement by the Secretariat for Industrial Assistance in the Department of Industrial Policy & Promotion. 23.0 POWER 23.1 Electric Generation, Transmission, Distribution and Trading: FDI upto 100% is permitted under automatic route for: 23.2 Generation and transmission of electric energy produced in-hydro electric, coal/lignite based thermal, oil based thermal and gas based thermal power plants. 23.3 Non-Conventional Energy Generation and Distribution. 22.4 Distribution of electric energy to households, industrial, commercial and other users. 23.5 This does not include generation, transmission and distribution of electricity produced in atomic power plant/atomic energy since private investment in....
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.... they constitute a recognisably systematic series, each flight being open to use by members of the public. (viii) "Non-Scheduled Air Transport service" means any service which is not a scheduled air transport service and will include Chartered and Cargo airlines. (ix) "Chartered" and "Cargo" airlines would mean such airlines which meet the conditions as given in the Civil Aviation Requirements issued by the Ministry of Civil Aviation. (x) "Seaplane" means an aeroplane capable normally of taking off from and alighting solely on water; (xi) "Ground Handling" means (i) ramp handling , (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling. 25.3 Policy for FDI in Civil Aviation sector (i) Airports: (a) Greenfield projects- FDI upto 100% is allowed under the automatic route. (b) Existing projects- FDI upto 100% is allowed under Government route for FDI beyond 74%. (ii) AirTransp....
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....equity capital of ARCs and FDI is restricted to 49 per cent of the paid-up capital of the ARC. 26.2 However, FIIs registered with SEBI can invest in the Security Receipts (SRs) issued by ARCs registered with Reserve Bank. FIIs can invest upto 40 per cent of each tranche of scheme of SRs, subject to the condition that investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue. 26.3 Any individual investment of more than 10% would be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of Financial Assests and Enforcement of Security Interest Act, 2002. 27.0 Banking -Private sector 27.1 FDI limit in Private Sector Banks is 74 % including investment by FIIs. This will include FDI investment under the Portfolio Investment Scheme (PIS) by FIIs, NRIs and shares acquired prior to September 16, 2003 by OCBs, and continue to include IPOs, Private placements, GDR/ADRs and acquisition of shares from existing shareholders. FDI as above upto 49% is under the automatic route and beyond that upto 74% on the Government route. 27.2 The aggregate foreign investment in a private bank from all....
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....) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve Bank's licensing criteria will be allowed to hold 100 per cent paid up capital to enable them to set up a wholly-owned subsidiary in India. (c) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary and (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 per cent in a private bank. (d) A foreign bank will be permitted to establish a wholly-owned subsidiary either trough conversion of existing branches into a subsidiary or through a fresh banking license. A foreign bank will be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 per cent of the paid capital of the private sector bank is held by residents at all times consistent with para 1(b) above. (e) A subsidiary of a foreign bank will be subject to the licensing requirements and conditions broadly consistent with those for new private sector banks. (f) Guidelines for setting up a wholly-owned subsidiary of a foreign bank will be issued separately by RBI.....
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....ent route for Up-linking a News & Current Affairs TV Channel subject to the condition that the portfolio investment in the form of FII/ NRI deposits shall not be "persons acting in concert" with FDI investors, as defined in the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997. (ii) The above will be further subject to the Company permitted to uplink the channel shall certifying the continued compliance of this requirement through the Company Secretary at the end of each financial year. (iii) FDI for Up-linking TV Channels will be subject to compliance with the Up-linking Policy of the Government of India notified by the Ministry of Information & Broadcasting from time to time. 30.0 Business Services- 100% FDI under the automatic route is allowed in Data processing, software development and computer consultancy services; Software supply services; Business and management consultancy services, Market Research Services, Technical testing& Analysis services. 31.0 Commodity Exchanges 31.1 Futures trading in commodities are regulated under the Forward Contracts (Regulation) Act, 1952. Commodity Exchanges, like Stock Exchanges, are infrastr....
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....ket only. (v) No foreign investor/ entity, including persons acting in concert, will hold more than 5% of the equity in these companies. 32.0 Construction and maintenance 32.1 100% FDI is allowed in Construction and maintenance of-roads, rail-beds, bridges, tunnels, pipelines, ropeways, ports, harbours and runways, waterways & water reservoirs, hydroelectric projects, power plants, industrial plant. 32.2 100 % FDI is permitted in construction and maintenance of Roads and highways offered on BOT basis including collection of toll. 32.3 Ports and Harbours: 100% FDI is allowed in: (i) Leasing of existing assets of ports (ii) Construction/creation and maintenance of assets such as-container terminals bulk/break bulk/multipurpose and specialized cargo berths, warehousing, container freight stations, storage facilities and tank farms, cranage/ handling equipment, setting of captive power plants, dry docking and ship repair facilities. (iii) Leasing of equipment for port handling and leasing of floating crafts (iv) Captive facilities for port based industries. 33.0 Development of Townships, Housing, Built-up infrastructure and Construction-d....
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.... plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/bye-laws/regulations of the State Government/ Municipal/Local Body concerned. 33.6 The State Government/ Municipal/ Local Body concerned, which approves the building / development plans, would monitor compliance of the above conditions by the developer. 33.7 The conditions as at para 31.1, 31.2 and 31.3 would not apply to Hotels & Tourism, Hospitals and SEZ's. Note- FDI is not allowed in Real Estate Business. 34.0 Courier services for carrying packages, parcels and other items which do not come within the ambit of the Indian Post Office Act, 1898. 34.1 100% FDI is allowed under the Government route. 34.2 This will be subject to existing Law i.e Indian Post Office Act 1998 and exclusion of activity relating to the distribution of letters. 35.0 Credit Information Companies (CIC) 35.1 For the purposes of CIC and in terms of the Credit Information Companies (Regulation) Act, 2005- (i) "Credit information" means any in....
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.... 36.0 Health and Medical Services: 100% FDI is allowed under the automatic route 37.1 Hotels and Tourism related Industry 37.2 100% Foreign Investment is allowed under automatic route. 37.3 The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists. The term tourism related industry includes: (i) Travel agencies, tour operating agencies and tourist transport operating agencies (ii) Units providing facilities for cultural, adventure and wildlife experience to tourists (iii)Surface, air and water transport facilities for tourists (iv) Convention/seminar units and organizations 38.0 Industrial Parks both setting up and in established Industrial Parks. 38.1 FDI up to 100% is permitted under the automatic route in Industrial Parks. 38.2 FDI up to 100% on the automatic route is allowed in Construction development projects, etc. prescribing therein, inter-alia, the conditions for minimum capitalization, minimum area requirements and lock-in of original investment as per para 20 above. 38.3 For the purposes of Industr....
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....in Para 20 above provided the Industrial Parks meet with the under-mentioned conditions: (i) it would comprise of a minimum of 10 units and no single unit shall occupy more than 50% of the allocable area; (ii) the minimum percentage of the area to be allocated for industrial activity shall not be less than 66% of the total allocable area. 39.0 Insurance 39.1 FDI up to 26% in the Insurance sector, as prescribed in the Insurance Act, 1999, is allowed under the automatic route. 39.2 This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities. 40.0 Infrastructure Company in the Securities Market: 40.1 Foreign investment is permitted in infrastructure companies in Securities Markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations and subject to the following conditions: (i) There is a composite ceiling of 49 per cent for Foreign Investment, with a FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital; (ii) FDI will be allowed under the ....
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.... credit card charge cards, debit cards, stored value cards, smart card, value added cards etc. 41.4 Venture Capital (Fund: An Foreign venture capital Investor(FCVI) may contribute upto 100% of the capital of a domestic venture capital fund(VCF/VCC) and may also set up a domestic asset management company to manage the fund. They are also allowed to invest in other companies subject to FDI Regulations. All investment are with prior approval of FIPB. Investment would be subject to SEBI and RBI regulations. 41.5 The NBFC will have to comply with the guidelines of the RBI. 42.0 Petroleum & Natural Gas Sector 42.1 FDI up to 100% under the automatic route is permitted in exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products, actual trading and marketing of petroleum products, petroleum product pipelines, Natural Gas/LNG pipelines, market study and formulation and Petroleum refining in the private sector. This wil....
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....lication of facsimile edition of foreign newspapers issued by Ministry of Information & Broadcasting on 31.3.2006, as amended from time to time. 44.0 Research and Development Services excluding basic Research and setting of R&D/ academic institutions which would award degrees/diplomas/certificates: 100% FDI is allowed under the automatic route 45.0 Security Agencies in Private sector The 'Private Security Agencies (Regulation) Act, 2005' regulates the operations of private security agencies. Under Section 6(2) of the above Act, "A company, firm or an association of persons shall not be considered for issue of a licence under this Act, if, it is not registered in India, or having a proprietor or a majority shareholder, partner or director, who is not a citizen of India". As such, under the provisions of this Act: * a foreign company cannot be considered for a license under the Act * only a firm registered in India can be eligible for a license * to be eligible for a license under the Act, a firm cannot have a foreign director/partner * majority shareholder cannot be a foreigner-i.e. foreign shareholding would be restricted to a maximum of 49% under t....
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....curity Conditions: (i) The Chief Officer In-charge of technical network operations and the Chief Security Officer should be a resident Indian citizen. (ii) Details of infrastructure/network diagram (technical details of the network) could be provided on a need basis only to telecom equipment suppliers/manufacturers and the affiliate/parents of the licensee company. Clearance from the licensor (Department of Telecommunications, Government of India) would be required if such information is to be provided to anybody else. (iii)For security reasons, domestic traffic of such entities as may be identified /specified by the licensor shall not be hauled/routed to any place outside India. (iv) The licensee company shall take adequate and timely measures to ensure that the information transacted through a network by the subscribers is secure and protected. (v) The officers/officials of the licensee companies dealing with the lawful interception of messages will be resident Indian citizens. (vi) The majority Directors on the Board of the company shall be Indian citizens. (vii) The positions of the Chairman, Managing Director, Chief Executive Officer (CEO) and/or Chi....
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....om service providers should ensure that necessary provision (hardware/software) is available in their equipment for doing the Lawful interception and monitoring from a centralized location. (xvii) The telecom service providers should familiarize/train Vigilance Technical Monitoring (VTM)/security agency officers/officials in respect of relevant operations/features of their systems. (xviii) It shall be open to the licensor to restrict the Licensee Company from operating in any sensitive area from the National Security angle. (xix) In order to maintain the privacy of voice and data, monitoring shall only be upon authorisation by the Union Home Secretary or Home Secretaries of the States/Union Territories. (xx) For monitoring traffic, the licensee company shall provide access of their network and other facilities as well as to books of accounts to the security agencies. (xxi) The aforesaid Security Conditions shall be applicable to all the licensee ....
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.... 50.1 100% FDI is permitted under the automatic route for trading companies for the following activities: (i) Wholesale/cash & carry trading. (ii) Trading for exports. 50.2 100% FDI is permitted under the Government route for trading companies for the following activities: (i) Trading of items sourced from small scale sector. (ii) Test marketing of such items for which a company has approval for manufacture, provided such test marketing facility will be for a period of two years, and investment in setting up manufacturing facility commences simultaneously with test marketing. 50.3 Single Brand product trading: FDI up to 51%, under the Government route is allowed in retail trade of 'Single Brand' products. This is, inter alia, aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices. (i) FDI up to 51% in retail trade of 'Single Brand' products would be subject to the following conditions: (a) Products to be sold shou....
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.... guidelines and NOC / tax clearance certificate from the Income Tax Department has been produced. 53.2 Repatriation of Dividend: Dividends are freely repatriable without any restrictions. The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time. 54.0 REPORTING OF FDI 54.1 Reporting of Inflow (i) An Indian company receiving investment from outside India for issuing shares / convertible debentures / preference shares under the FDI Scheme, should report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank not later than 30 days from the date of receipt in the Advance Reporting Form enclosed in Annex. (ii) Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares / convertible debentu....
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.... years up to March 31). The details of the investments to be reported would include all foreign investments made into the company which is outstanding as on the balance sheet date. The details of overseas investments in the company both under direct / portfolio investment may be separately indicated. (e) Issue of bonus/rights shares or stock options to persons resident outside India directly or on amalgamation / merger with an existing Indian company, as well as issue of shares on conversion of ECB / royalty / lumpsum technical know-how fee / import of capital goods by units in SEZs has to be reported in Form FC-GPR. 54.3 Reporting of transfer of shares Reporting of transfer of shares between residents and non-residents and vice- versa is to be done in Form FC-TRS (enclosed in Annex). The Form FC-TRS should be submitted to the AD Category - I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India. The AD Category - I bank, would forward the same to its link office. The link office would c....
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....ion property / farm house. He can transfer any immovable property other than agricultural or plantation property or farm house to: (a) A person resident outside India who is a citizen of India, or (b) A person of Indian origin resident outside India, or (c) A person resident in India. (ii) He may transfer agricultural land / plantation property / farm house acquired by way of inheritance, only to Indian citizens permanently residing in India. (iii) Payment for acquisition of property can be made out of: (a) Funds received in India through normal banking channels by way of inward remittance from any place outside India, or (b) Funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999 and the regulations made by Reserve Bank from time to time. (iv) Such payment cannot be made either by traveler's cheque or by foreign currency notes or by other mode other than those specifically mentioned above. (v) A person resident outside India who is a person of Indian Origin (PIO) can acquire any immovable property in India other than agricultural land / farm house / plantation property: (a) By wa....
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....he said immovable property to an AD Category - I bank as a security for any borrowing. 55.4 Repatriation of sale proceeds (i) In the event of sale of immovable property other than agricultural land / farm house / plantation property in India by NRI / PIO, the authorized dealer will allow repatriation of sale proceeds outside India provided: (a) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of FEMA Regulations; (b) the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in Foreign Currency Non-Resident Account or (b) the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident (External) Rupee Account for acquisition of the property; and (c) In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. (ii) In the case of sale of immovable property purchased out of Rupee....
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....y during which the contraventions continues. (ii) Where a person committing a contravention of any provisions of this Act or of any rule, direction or order made there under is a company (company means any body corporate and includes a firm or other association of individuals as defined in the Companies Act), every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. (iii) Any Adjudicating Authority adjudging any contraventions under 25.1.1, may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Government of India. 56.2 Adjudication and Appeals (i)For the purpose of adjudication of any contravention of FEMA, the Government of India as per the provisions contained in the Foreign Exchange Management (Adjudication Proceedings an....