TaxTMI 
TaxTMI 
Master Circular on Foreign Investment in India
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....Investments in India-Schematic Representation: Foreign Direct Investments Foreign Portfolio Investments Automatic Route Govt. Route Persons Resident outside India Foreign Investments Foreign Venture Capital Investments Other investments (G-Sec, NCDs, etc) Investments on non-repatriable basis Fils NRIs, PIO Fils NRIS, PIO SEBI regd. FVCIS NRIS, PIO VCF, IVCUS 2 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE PART-I रिज़रà¥à¤µ बैंक ANK OF INDEX FOREIGN INVESTMENTS IN INDIA-SCHEMATIC REPRESENTATION: SECTION - I: FOREIGN DIRECT INVESTMENT 0 .0 1. 2. FOREIGN DIRECT INVESTMENT IN INDIA. ENTRY ROUTES FOR INVESTMENTS IN INDIA 3. PROHIBITION ON INVESTMENT IN INDIA.. .2 4. ELIGIBILITY FOR INVESTMENT IN INDIA.. 5. TYPE OF INSTRUMENTS 5 6. INVESTMENTS IN MICRO AND SMALL ENTERPRISE (MSE).. 6 7. 8. 9. 10. 11. 12. INVESTMENTS IN ASSET RECONSTRUCTION COMPANIES (ARCS). INVESTMENT IN INFRASTRUCTURE COMPANIES IN THE SECURITIES MARKET INVESTMENT IN CREDIT INFORMATION COMPANIES.. INVESTMENT IN COMMODITY EXCHANGES INVESTMENT IN PUBLIC SECTOR BANKS. INVESTMENTS FROM NEPAL & BHUTAN. 6 7....
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....IP FIRM / PROPRIETARY CONCERN INVESTMENTS WITH REPATRIATION BENEFITS.. .42 .42 .42 42 .43 .43 .44 .55 56 .61 63 ANNEX - 6 64 ANNEX - 7 66 ANNEX - 8 67 ANNEX - 9 ANNEX-10 ANNEX - 11 APPENDIX 78 83 85 86 Website:www.fema.rbi.org.in 2 Email: [email protected] 4 of 92 Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India Foreign Direct Investment (FDI) in India is governed by the FDI Policy announced by the Government of India and the provisions of the Foreign Exchange Management Act (FEMA), 1999. Reserve Bank has issued Notification No. FEMA 20/2000-RB dated May 3, 2000 which contains the Regulations in this regard. This Notification has been amended from time to time. 2. (i) Entry routes for investments in India Foreign Direct Investment is freely permitted in almost all sectors. Under the Foreign Direct Investments (FDI) Scheme, investments can be made by non-residents in the shares / convertible debentures / preference shares¹ of an Indian company, through two routes - the Automatic Route and the Government Route. The pricing of shares / convertible debentures / preference shares should be decided / determine....
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....blic domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of Industrial Policy and Promotion http://siadipp.nic.in/policy/fdi circular/fdi circular 1 2010.pdf. FEMA Regulations prescribe the mode of investments i.e. manner of receipt of funds, issue of shares / convertible debentures and preference shares and reporting of the investments to the Reserve Bank. 3. Prohibition on investment in India (i) Foreign investment in any form is prohibited in a company or a partnership firm or a proprietary concern or any entity, whether incorporated or not Website:www.fema.rbi.org.in 2 Email: [email protected] 6 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिजरà¥à¤µ बैंक INDIA ANK OF (such as, Trusts) which is engaged or proposes to engage in the following activities²: (a) Business of chit fund, or (b) Nidhi company, or Agricultural or plantation activities, or (c) (d) Real estate business, or construction of farm houses, or (e) Trading in Transferable Development Rights (TDRs). (ii) (iii) It is clarified that “real estate business" does not include develop....
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.... or a body of individuals, whether incorporated or not, (f) every artificial juridical person, not falling within any of the preceding sub-clauses, and (g) any agency, office or branch owned or controlled by such person; "person resident in India" means-[As per FEMA Sec 2(v)] (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include― (A) a person who has gone out of India or who stays outside India, in either case- (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, 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....
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....in 9 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF OF IND 6. Investments in Micro and Small Enterprise (MSE) A company which is reckoned as Micro and Small Enterprise (MSE) (earlier Small Scale Industrial Unit) in terms of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, including an Export Oriented Unit or a Unit in Free Trade Zone or in Export Processing Zone or in a Software Technology Park or in an Electronic Hardware Technology Park, and which is not engaged in any activity/sector mentioned in Annex I may issue shares or convertible debentures to a person resident outside India (other than a resident of Pakistan and to a resident of Bangladesh under approval route), subject to the prescribed limits as per FDI Policy, in accordance with the Entry Routes and the provision of Foreign Direct Investment Policy, as notified by the Ministry of Commerce & Industry, Government of India, from time to time. Any Industrial undertaking, with or without FDI, which is not an MSE, having an industrial license under the provisions of the Industries (Development & Regulation) Act, 1951 for manufacturing items reserved for manufacture in the....
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....ent of the paid up capital. Foreign investment up to 49 per cent is allowed only with the prior approval of FIPB and regulatory clearance from the Reserve Bank. Investment by SEBI Registered Flls is permitted only through purchases in the secondary market to an extent of 24 per cent which should be within the overall limit of 49 per cent for foreign investment. No FIl can individually hold directly or indirectly more than 10 per cent of the equity. Website:www.fema.rbi.org.in 7 Email: [email protected] 11 of 92 SERVE 10. à¤à¤¾à¤°à¤¤à¥€à¤¯ BANK रिज़रà¥à¤µ बैंक OF INDI NK OF Investment in Commodity Exchanges Foreign investment is permitted in Commodity Exchanges 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. (ii) FDI will be allowed with specific prior approval of the FIPB. (iii) The FII purchases in equity of Commodity Exchanges are restricted to the secondary markets only. (iv) Foreign Investment in Commodity Exchanges is also subject to compliance with the....
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.... 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 shares out of unsubscribed portion, subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap. 5 16. Acquisition of shares under Scheme of Merger / Amalgamation Mergers and amalgamations of companies in India are usually governed by an order issued by a competent Court on the basis of the Scheme submitted by the companies undergoing merger/amalgamation. Once the scheme of merger or Applications to be addressed to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai Website:www.fema.rbi.org.in 9 Email: [email protected] 13 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ amalgamation of two or more Indian companies has been approved by a Court in India, the transferee company or new company is allowed to issue shares to the shareholders of the transferor compa....
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....travention under FEMA and could attract penal provisions. The Form can also be downloaded from the Reserve Bank's website http://www.rbi.org.in/Scripts/BSViewFemaForms.aspx. (b) Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares / convertible debentures, through an AD Category - I bank, together with a copy/ies of the FIRC/s evidencing the receipt of the remittance along with the KYC report (enclosed as Annex - 7) on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported. (ii) Time frame within which shares have to be issued The 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-reside....
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.... bank to the Regional Office concerned of the Reserve Bank under whose jurisdiction the registered office of the company is situated. - (d) Part B of Form FC-GPR should be filed on an annual basis by the Indian company, directly with the Reserve Bank. This is an annual return to be submitted by 31st of July every year, pertaining to all investments by way of direct/portfolio investments/re-invested earnings/other capital in the Indian company made during the previous years (i.e. the information in Part B submitted by 31st July 2010 will pertain to all the investments made in the previous years up to March 31, 2010). 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 ....
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....nsferred, is engaged, he has to obtain prior permission of SIA/FIPB to acquire the shares. This restriction is, however, not applicable to the transfer of shares for investments to be made by Venture Capital Funds registered with SEBI; investments by multinational financial institutions (i.e. ADB, IFC, CDC, DEG); or where in the existing joint venture investment by either of the parties is less than 3 per cent; or where the existing joint venture / collaboration is defunct or sick or for transfer of shares of an Indian company engaged in Information Technology sector or in the mining sector, if the existing joint venture or technology transfer/trade mark agreement of the person to whom the shares are to be transferred are also in the Information Technology sector or in the mining sector for same area/mineral. C. d. e. Gift from Non Resident to Resident:A person resident outside India can transfer any security to a person resident in India by way of gift. Sale of Shares by Non-resident on the Stock Exchange: A person resident outside India can sell the shares and convertible debentures of an Indian company on a recognized Stock Exchange in India through a stock ....
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....consolidate the Form FC-TRS and submit a monthly report to the Reserve Bank³. 8 To the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai Website:www.fema.rbi.org.in 16 Email: [email protected] 20 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ रिजरà¥à¤µ बैंक SERVE E BANK OF (iii) IND 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 KYC check by the remittance receiving AD Category - I bank at the time of receipt of funds. In case, the remittance receiving AD Category - I bank is different from the AD Category - I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category - I bank carrying out the transaction along with the Form FC-TRS. (iv) AD Category - I banks have been given general permission to open Escrow account and Special account of non-resident corporates for open offers ....
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.... 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. 9 Addressed to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, 11th floor, Fort, Mumbai 400 001 along with the documents prescribed in Annex-4. Website :www.fema.rbi.org.in 18 Email: [email protected] 22 of 92 RESERV रिजरà¥à¤µ बैंक INDIA 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) d) The applicable sectoral cap limit in the Indian company is not breached. The transferor (donor) and the proposed transferee (donee) are close relatives as defined in Section 6 of the Companies Act, 1956, as amended from time to time. The current list is reproduced in Annex - 5. e) f) The value of security to be transferred together with any security already transferred b....
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.... - 400 051, within seven working days from the close of month to which it relates. The words "ECB wholly converted to equity" shall be clearly indicated on top of the Form ECB-2. Once reported, filing of Form ECB-2 in the subsequent months is not necessary. In case of partial conversion of ECB, the company shall report the converted portion in Form FC-GPR to the Regional Office concerned as well as in Form ECB-2 clearly differentiating the converted portion Website:www.fema.rbi.org.in 20 Email: [email protected] 24 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV रिजरà¥à¤µ बैंक INDIA C. from the non-converted portion. The words "ECB partially converted to equity" shall be indicated on top of the Form ECB-2. In the subsequent months, the outstanding balance of ECB shall be reported in Form ECB-2 to DSIM. The SEZ unit issuing equity as mentioned in para (iii) above, should report the particulars of the shares issued in the Form FC-GPR. 24. Remittance of sale proceeds AD Category - I bank can allow the remittance of sale proceeds of a security (net of applicable taxes) to the seller of shares resident outsi....
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....ipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India thereunder from time to time. iii) A company can issue ADRs/GDRs if it is eligible to issue shares to persons resident outside India under the FDI Scheme. 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. iv) 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 Website:www.fema.rbi.org.in 22 Email: [email protected] 26 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिजरà¥à¤µ बैंक OF BANK market, have to list in the domestic market on making profit or within three years of such issue of ADRs/GDRs, whichever is earlier. ADRs/GDRs are issued on the basis ....
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....rve Bank, from time to time. 27. 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. 28. 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 resident investors who had offered their Rupee denominated shares for conversion. These proceeds can be kept in Resident 10 As per DBOD Circular No. DBOD.No.PSBD.7269/16.13.100/2006-07 dated February 5,2007 bank raising fund through ADR / GDR mechanism, should give an undertaking to the Reserve B....
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....tatutory Auditor has certified that the borrowing company will utilized / has utilized the proceeds of the external commercial borrowing for the permitted end-use/s only Website:www.fema.rbi.org.in 26 Email: [email protected] 30 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिज़रà¥à¤µ बैंक BANK OF OF IND Section II: Foreign Portfolio Investments 1. Portfolio Investment Scheme (PIS) (i) Foreign Institutional Investors (FIls) registered with SEBI and Non-resident Indians (NRIs) are eligible to purchase shares and convertible debentures issued by Indian companies under the Portfolio Investment Scheme (PIS). (ii) The Flls, which have been granted registration by SEBI, should approach their designated AD Category - I bank (known as Custodian bank), for opening a foreign currency account and / or a Non Resident Special Rupee Account. (iii) NRIs can approach the designated branch of any AD Category - I bank authorised by the Reserve Bank to administer the Portfolio Investment Scheme for permission to open a NRE/NRO account under the Scheme for routing investments. 2. Investment by Flls under PIS Reserve Bank....
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....s regard: i) to open and maintain demat accounts with foreign depositories and to acquire, hold, pledge and transfer the foreign sovereign securities, offered as collateral by Flls; ii) to remit the proceeds arising from corporate action, if any, on such foreign sovereign securities; and Website:www.fema.rbi.org.in 28 Email: [email protected] 32 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESER (ii) रिज़रà¥à¤µ बैंक INDIA iii) arises. to liquidate such foreign sovereign securities if the need Clearing Corporations have to report, on a monthly basis, the balances of foreign sovereign securities, held by them as non-cash collaterals of their clearing members to the Reserve Bank 11. The report should be submitted by the 10th of the following month to which it relates. Prohibition on investments (a) (b) Fils are not permitted to invest in equity shares issued by an Asset Reconstruction Company. Fils are also not allowed to invest in any company which is engaged or proposes to engage in the following activities: Business of chit fund, or Nidhi company, or Agricultural or plantation activities, or i) ii)....
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....arket settlement, transaction charges, brokerage, etc.). Further, transfer of funds between the Special Non-Resident Rupee Account and the separate account maintained for the purpose of trading in exchange traded derivative contracts can be freely made. However, repatriation of the Rupee amount will be made only through their Special Non-Resident Rupee Account subject to payment of relevant taxes. The AD Category - I banks have to keep proper records of the above mentioned separate account and submit them to the Reserve Bank as and when required. 12 As per Notification no FMD.MSRG.No.39/02.04.003/2009-10 dated August 28,2008 FIls registered with SEBI may purchase / sell Interest Rate Futures subject to the condition that total gross long position does not exceed their individual permissible limit for investment in government securities and the total gross short position, for the purpose of hedging only, does not exceed their long position in the government securities and in the Interest Rate Futures at any point of time. Website:www.fema.rbi.org.in 30 Email: [email protected] 34 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE OF IND (ii) Flls are allowed to ....
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....ary, has been deducted from the gross amount of dividend / interest payable / approved income to the share / debenture / Government securities holder at the applicable rate, in accordance with the Income Tax Act. (V) The Special Non-Resident Rupee Account may be debited for purchase of shares debentures, dated Government securities, Treasury Bills, etc., and for payment of fees to applicant FIls' local Chartered Accountant / Tax Consultant where such fees constitute an integral part of their investment process. 6. Private placement with Flls SEBI registered Flls have been permitted to purchase shares / convertible debentures of an Indian company through offer/private placement, subject to total FII investment viz. PIS/ private placement / offer being within the ceilings prescribed, i.e. individual FII/sub account -10 per cent and all Flls/sub-accounts put together - 24 per cent of the paid-up capital of the Indian company or to the sectoral limits, as applicable. Indian company is permitted to issue such shares provided that: a) b) in the case of public offer, the price of shares to be issued is not less than the price at which shares are issued to residents; a....
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....ai 400 001. Website :www.fema.rbi.org.in 33 Email: [email protected] 37 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE OF INDI BANK OF (ii) The NRI investor has to take delivery of the shares purchased and give delivery of shares sold. Short Selling is not permitted. (iii) Payment for purchase of shares and/or debentures on repatriation basis has to be made by way of inward remittance of foreign exchange through normal banking channels or out of funds held in NRE/FCNR(B) account maintained in India. If the shares are purchased on non-repatriation basis, the NRIs can also utilise their funds in NRO account in addition to the above. (iv) The link office of the designated branch of an AD Category - I bank shall furnish to the Reserve Bank 15, a report on a daily basis on PIS transactions undertaken by it, such report can be furnished on-line or on a floppy to the Reserve Bank. (v) Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under private arrangement or by way of gift (except by NRIs to their relatives as defined in Section 6 of Companies Act, 1956 or to a charitable trust duly registered under the laws in ....
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....vestments by Foreign Venture Capital Investor (i) A SEBI registered Foreign Venture Capital Investor (FVCI) with specific approval from the Resserbe Bank under FEMA Regulations can invest in Indian Venture Capital Undertaking (IVCU) or Indian Venture Capital Fund (IVCF) or in a Scheme floated by such IVCFs subject to the condition that the VCF should also be registered with SEBI. These investments by SEBI registered FVCI, would be subject to the SEBI regulation and sector specific caps of FDI. An IVCU is defined as a company incorporated in India whose shares are not listed on a recognized stock exchange in India and which is not engaged in an activity under the negative list specified by SEBI. A VCF is defined as a fund established in the form of a trust, a company including a body corporate and registered under the Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996 which has a dedicated pool of capital raised in a manner specified under the said Regulations and which invests in Venture Capital Undertakings in accordance with the said Regulations. (ii) FVCIs can purchase equity / equity linked instruments / debt / debt instruments, deb....
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....g bids. 2. Indian Depository Receipts (IDR) Indian Depository Receipts (IDRs) can be issued by non resident companies in India subject to and under the terms and conditions of Companies (Issue of Depository Receipts) Rules, 2004 and subsequent amendment made thereto and Website :www.fema.rbi.org.in 37 Email: [email protected] 41 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ b) SERVE BANK OF the SEBI (DIP) Guidelines,2000, as amended from time to time. These IDRs can be issued in India through Domestic Depository to residents in India as well as SEBI registered Flls and NRIs. In case of raising of funds through issuances of IDRs by financial / banking companies having prescence in India, either through a branch or subsidiary, the approval of the sectoral regulator(s) should be obtained before the issuance of IDRs. a) The FEMA Regulations shall not be applicable to persons resident in India as defined under Section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of transaction on a recognized stock exchange in India. Foreign Institutional Investors (Flls) including SEBI approved sub-accounts of the FIls, registered with SEBI and ....
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....ees. 3. Purchase of other securities by FIIS Foreign Institutional Investors (Flls) can buy on repatriation basis dated Government securities / treasury bills, listed non-convertible debentures / bonds issued by Indian companies and units of domestic mutual funds either directly from the issuer of such securities or through a registered stock broker on a recognized stock exchange in India. Purchase of debt instruments by Flls are subject to limits notified by SEBI and the Reserve Bank from time to time. Website:www.fema.rbi.org.in 39 Email: [email protected] 43 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ रिजरà¥à¤µ बैंक SERVE OF IND E BANK OF 4. Investment by Multilateral Development Banks (MDBs) A Multilateral Development Bank (MDB) which is specifically permitted by the Government of India to float rupee bonds in India can purchase Government dated securities. 5. India Foreign investment in Tier-I and Tier-ll instruments issued by banks in (i) FIls registered with SEBI and NRIs have been permitted to subscribe to the Perpetual Debt instruments (eligible for inclusion as Tier I capital) and Debt Capital i....
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....t, Reserve Bank of India, Foreign Investment Division, Central Office, Central Office Building, Mumbai 400 001. Website:www.fema.rbi.org.in 41 Email: [email protected] 45 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV Part II Investment in Partnership Firm / Proprietary Concern 1. Investment in Partnership Firm / Proprietary Concern 18 A Non-Resident Indian 17 (NRI) or a Person of Indian Origin´ (PIO) resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided: Ä°. Amount is invested by inward remittance or out of NRE / FCNR(B) / NRO account maintained with Authorised Dealers / Authorised banks. 2. ii. iii. The firm or proprietary concern is not engaged in any agricultural / plantation or real estate business (i.e. dealing in land and immovable property with a view to earning profit or earning income there from) or print media sector. Amount invested shall not be eligible for repatriation outside India. Investments with repatriation benefits NRIS / PIO may seek prior permission of Reserve Bank 19 for investment in sole proprietorship concerns / partners....
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....y, Pisciculture, Aquaculture, Cultivation of Vegetables & Mushrooms under controlled conditions and services related to agro and allied sectors. NB: Besides the above, FDI is not allowed in any other agricultural sector /activity 2. Tea Sector, including tea plantation 3. NB: Besides the above, FDI is not allowed in any other plantation sector /activity INDUSTRY MINING Mining covering exploration and mining of diamonds & precious stones; gold, silver and minerals. 100% FIPB 100% Automatic Website :www.fema.rbi.org.in 44 Other conditions Subject to divestment of 26% equity in favour of Indian partner/Indian public within 5 years and prior approval of State Government concerned in case of any change in future land use. Subject to Mines & Minerals (Development & Regulation) Act, 1957 (www.mines.nic.in) Email: [email protected] 48 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE 4. BANK OF Coal & Lignite mining for captive consumption by power projects, and iron & steel, cement production and other eligible activities permitted under the Coal Mines (Nationalisation) Act, 100% Automatic Subject to provisions of Coa....
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.... prohibited and is reserved for public sector. SERVICES CIVIL AVIATION SECTOR 13. Airports- a. Greenfield projects 100% Automatic 14. b. Existing projects 100% FIPB beyond 74% Subject to sectoral Regulations notified by Ministry of Civil Aviation (www.civilaviation.nic. in) Subject to sectoral Regulations notified by Ministry of Civil Aviation (www.civilaviation.nic. in) Air Transport Services including Domestic Scheduled Passenger Airlines; Non- Schedules Airlines; Chartered Airlines; Cargo Airlines; Helicopter and Seaplane Services a. Scheduled Air Transport Services/ 49%- FDI; 100%- for Automatic Domestic NRIs Scheduled investme Passenger Airline nt Subject to no direct or indirect participation by foreign airlines and Sectoral Regulations. (www.civilaviation.nic.in) Website :www.fema.rbi.org.in 46 Email: [email protected] 50 of 92 b. à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF Non-Scheduled Air Transport Service / 74%-FDI Automatic 100%- for Non-Scheduled NRIS airlines, Chartered investme airlines, and Cargo airlines nt C. Helicopter Services / 100% Automatic Seaplane services requiring DGCA approval....
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....ucture and Construction Development Projects (which would include but not be restricted to Website :www.fema.rbi.org.in 48 & Subject to Up-linking Policy notified by Ministry of Information Broadcasting. (www.mib.nic.in) Subject to guidelines issued by Ministry of Information Broadcasting. (www.mib.nic.in) & & Subject to guidelines issued by Ministry of Information Broadcasting. (www.mib.nic.in) FII purchases shall be restricted to secondary market only. Subject to regulations specified by concerned Regulators. Subject to conditions vide para 5.23 of Consoildated FDI policy of Government of India including: a. Minimum capitalization of US$ 10 million for wholly owned subsidiaries and US$ 5 million for joint venture. The funds would have to be brought within Email: [email protected] 52 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) NB: FDI is not allowed in Real Estate Business 21. Courier services for carrying packages, parcels 100% FIPB six months of commencemen....
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....l Parks 25. Insurance 26% Automatic 26. Investing companies in infrastructure / services sector (except telecom sector) 100% FIPB Website:www.fema.rbi.org.in 50 Conditions in para 5.23 of Consoildated FDI policy of Government of India applicable for construction development projects would not apply provided the Industrial Parks meet with the under-mentioned conditions- i. it would comprise of a minimum of 10 units and no single unit I shall occupy more than 50% of the allocable area and ; ii. the minimum percentage of the area to be allocated for industrial activity shall not be less than 66% of the total allocable area. Subject to licensing by the Insurance Regulatory & Development Authority (www.irda.nic.in) Where there is a prescribed cap for foreign investment, only the direct investment will be considered for the prescribed cap and foreign investment in an investing company will not be set off against this cap provided the foreign direct investment in Email: [email protected] 54 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिजरà¥à¤µ बैंक such investing company does not ex....
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....(in case of Automatic Subject to Sectoral policy and no divestment or dilution of domestic equity in the existing PSUs. (www.petroleum.nic.in) b. Other than Refining and including market study and formulation; investment/ financing; setting up infrastructure for marketing in Petroleum & Natural Gas sector. Private compani private companies) es 100% Automatic a. 25 29. Print Media Publishing of 26% FIPB newspaper and periodicals dealing with news and current affairs b. Publishing of 100% FIPB scientific magazines/ specialty journals/ periodicals 30. Telecommunications a. Basic and 74% cellular, Unified Access Services, (Includin g Automatic up to 49%. National/ FDI, FII, Website :www.fema.rbi.org.in 52 Subject to sectoral Regulations issued by Ministry of Petroleum & Natural Gas. (www.petroleum.nic.in) & Subject to guidelines notified by Ministry of Information Broadcasting. (www.mib.nic.in) & Subject to guidelines issued by Ministry of Information Broadcasting. (www.mib.nic.in) Subject to guidelines vide para 5.38 of Consoildated FDI policy of Government of India. Email: [email protected] 56 of 92 à....
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....istered FVCI are allowed to invest in domestic venture capital undertakings and domestic venture capital funds through the automatic route subject to the SEBI regulations and sector specific caps on FDI. Note: All the above sector / activities are governed by the Consolidated FDI Policy and the respective Press Notes / Releases issued by the Government of India from time to time Website:www.fema.rbi.org.in 54 Email: [email protected] 58 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Annex - 2 (PART I, Section I, para 3) (A) All Activities/ Sectors would require prior approval of the Government of India for FDI in accordance with the FDI policy issued by Government of India from time to time. (B) Sectors prohibited for FDI I. II. Retail Trading (except single brand product retailing) Atomic Energy III. Lottery Business including Government / private lottery, online lotteries etc. IV. Gambling and Betting including casinos etc. V. Business of chit fund VI. Nidhi Company VII. VIII. IX. X. XI. Trading in Transferable Development Rights (TDRs) Activities/sector not opened to private sector investment Agriculture (excluding Floricultu....
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....ere the shares of an Indian company are: (a) listed on a recognized stock exchange in India, shall not be less than the price at which the preferential allotment of shares can be made under the SEBI guidelines ' as applicable, provided the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of shares, (b) not listed on a recognized stock exchange in India, shall not be less than the fair value to be determined by a SEBI registered Category | Merchant Banker or a Chartered Accountant as per the discounted free cash flow method. AP Dir (Series) Circular No 49 dated May 4,2010 Website :www.fema.rbi.org.in 56 Email: [email protected] 60 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF IN The price per share arrived at should be certified by a SEBI registered Category I 2.3 Merchant Banker or a Chartered Accountant. Transfer by Non-resident (i.e. by incorporated non-resident entity, erstwhile OCB, foreign national, NRI, FII) to Resident Sale of shares by a non-resident to resident shall be in accordance with Regulation 10 B (2) of Notification No. FEMA 20/2000-RB dated Ma....
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....range to obtain and keep on record the following documents: 5.1 For sale of shares by a person resident in India i. ii. iii. iv. V. vi. vii. 5.2. i. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. In case there is no formal Sale Agreement, letters exchanged to this effect may be kept on record. Where Consent Letter has been signed by their duly appointed agent, the Power of Attorney Document executed by the seller/buyer authorizing the agent to purchase/sell shares. The shareholding pattern of the investee company after the acquisition of shares by a person resident outside India showing equity participation of residents and non-residents category-wise (i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIls) and its percentage of paid up capital obtained by the seller/buyer or their duly appointed agent from the company, where the sectoral cap/limits have been prescribed. Certificate indicating fair value of share....
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....tions. These branches could be staffed with adequately trained staff for this purpose to ensure that the transactions are put through smoothly. The ADs may also designate a nodal office to coordinate the work at these branches and also ensure the reporting of these transactions to the Reserve Bank. 6.2 When the transfer is on private arrangement basis, on settlement of the transactions, the transferee/his duly appointed agent should approach the investee company to record the transfer in their books along with the certificate in the Form FC- TRS from the AD branch that the remittances have been received by the transferor/payment has been made by the transferee. On receipt of the certificate from the AD, the company may record the transfer in its books. 6.3 The actual inflows and outflows on account of such transfer of shares shall be reported by the AD branch in the R-returns in the normal course. 6.4 In addition the AD branch should submit two copies of the Form FC-TRS received from their constituents/customers together with the statement of inflows/outflows on account of remittances received/made in connection with transfer of shares, by way of sale, to IBD/FED/or....
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....Board of India or DCF method for listed companies and unlisted companies, respectively. vii. Certificate from the concerned Indian company certifying that the proposed transfer of shares/ convertible debentures by way of gift from resident to the non-resident shall not breach the applicable sectoral cap/ FDI limit in the company and that the proposed number of shares/convertible debentures to be held by the non- resident transferee shall not exceed 5 per cent of the paid up capital of the company. 23 viii. An undertaking from the resident transferor that the value of security to be transferred together with any security already AP (DIR Series) Circular No. 08 dated August 25, 2005 Website:www.fema.rbi.org.in 61 Email: [email protected] 65 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA- transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 25,000 during a calendar year. Website:www.fema.rbi.org.in 62 Email: [email protected] 66 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA- Annex - 5 (PART I, Section I, para 22) Definition of "relative" as given in Section 6 o....
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....ares/ convertible debentures as above is enclosed. (Authorised signatory of the investee company) (Stamp) FOR USE OF THE RESERVE BANK ONLY: Unique Identification Number for the remittance received: (Authorised signatory of the AD) (Stamp) Website:www.fema.rbi.org.in 65 Email: [email protected] 69 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA Annex - 7 (PART I, Section I, para 18 (i) (b)) Know Your Customer (KYC) Form in respect of the non-resident investor Registered Name of the Remitter / Investor (Name, if the investor is an Individual) Registration Number (Unique Identification Number* in case remitter is an Individual) Registered Address (Permanent Address if remitter Individual) Name of the Remitter's Bank Remitter's Bank Account No. Period of banking relationship with the remitter * Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as prevalent in the remitter's country We confirm that all the information furnished above is true and accurate as provided by the overseas remitting bank of the non-resident investor. (Signature of the Authorised Official of the AD bank receiving the remi....
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....hose assets separately from the official reserves of the monetary authorities. Website :www.fema.rbi.org.in 68 Email: [email protected] 72 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK OF Nature of issue 01 IPO/FPO 02 Preferential allotment / private placement 03 Rights 04 Bonus 05 Conversion of ECB 06 Conversion of royalty 07 (including lump sum payments) Conversion against import of capital goods by units in SEZ 08 ESOPS 09 Share Swap 10 Total (b) Others (please specify) Type of security issued No. Nature of security 01 Equity 02 Compulsorily Convertible Debentures 03 Compulsorily Convertible Preference shares 04 Others (please specify) Total Date of issue Number of shares/ convertible debentures Number Maturity Face value Premium Issue Price per share Amount of inflow* i) In case the issue price is greater than the face value please give break up of the premium received. ii) * In case the issue is against conversion of ECB or royalty or against import of capital goods by units in SEZ, a Chartered Accountant's Certificate certifying the amount outstanding on the date of conversion (á) Brea....
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....2 of Consoildated FDI policy Circular of Government of India have been complied with. OR Foreign entity/entities—(other than individuals), to whom we have issued shares do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field. For the purpose of the 'same' field, 4 digit NIC 1987 code would be relevant. b) We are not an Industrial Undertaking manufacturing items reserved for small sector. OR We are an Industrial Undertaking manuafacturing items reerved for small sector and the investment limit of 24 % of paid-up capital has been observed/ requisite approvals have been obtained. c) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time. OR Shares issued are bonus. OR Shares have been issued under a scheme of merger and amalgamation of two or more Indian companies or reconstruction by way of de-merger or otherwise of an Indian company, duly approved by a court in India. OR Shares are issued under ESOP and the conditions regarding this issue have been satisfied Website :www.fema.r....
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.... Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000. (Name & Signature of the Company Secretary) (Seal) FOR USE OF THE RESERVE BANK ONLY: Registration Number for the FC-GPR: Unique Identification Number allotted to the Company at the time of reporting receipt of remittance R 25 If the company doesn't have a full time Company Secretary, a certificate from a practicing Company Secretary may be submitted. Website :www.fema.rbi.org.in 73 Email: [email protected] 77 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV रिजरà¥à¤µ बैंक BANK OF OF IND INDIA PART-B [Part- B of Annex I to A. P. (DIR Series) Circular No. 44 dated May 30, 2008] FC-GPR (i) This part of Form FC-GPR is to be submitted to the Director, Balance of Payment Statistical Division, Department of Statistics and Information Management, Reserve Bank of India, C-8, 3rd Floor, Bandra-Kurla Complex, Bandra (E), Mumbai - 400051; Tel: 2657 1265, 2657 2513, Fax: 26570848; email:[email protected] (ii) This is an annual return to be submitted by 31st of July every year by all companies, pertaining to all investments by way of direct/port....
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....investee / reporting company, relating to i) Short Term Borrowing from overseas investors, ii) Long Term Borrowing from overseas investors, iii) Trade Credit, iv) Suppliers Credit, v) Financial Leasing, vi) Control Premium, vii) Non- Competition Fee in case of transactions not involving issue of shares, viii) Non-cash acquisition of shares against technical transfer, plant and machinery, goodwill, business development and similar considerations and ix) investment in immovable property made during the year. + Under foreign liabilities, for retained earnings (undistributed profit), please furnish the proportionate amount as per the share holding of non-resident investors (Direct investors). Similarly under foreign assets outside India, the retained earnings of your company would be proportionate to your shareholding of ordinary shares in the non-resident enterprise. Website :www.fema.rbi.org.in 75 Email: [email protected] 79 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE रिज़रà¥à¤µ बैंक BANK OF IND OF 7. Portfolio and Other Investment [Please furnish here the outstanding investments other than those mentioned ....
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.... year. Website:www.fema.rbi.org.in 77 Email: [email protected] 81 of 92 % No. Compulsorily convertible Preference Shares/ Debentures of shares Amount Value) Rs. (Face % à¤à¤¾à¤°à¤¤à¥€à¤¯ RESER INDIA Annex - 9 Form FC-TRS (PART I, Section I, para 21 (ii)) Declaration regarding transfer of shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures by way of sale from resident to non resident / non-resident to resident (to be submitted to the designated AD branch in quadruplicate within 60 days from the date of receipt of funds) The following documents are enclosed For sale of shares / compulsorily and mandatorily convertible preference shares / debentures by a person resident in India i. ii. iii. iv. V. vi. vii. viii. Consent Letter duly signed by the seller and buyer or their duly appointed agent and in the latter case the Power of Attorney Document. The shareholding pattern of the investee company after the acquisition of shares by a person resident outside India. Certificate indicating fair value of shares from a Chartered Accountant. Copy of Broker's note if sale is made on Stock Exch....
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....l, telephone Number Fax no) 6 Particulars of earlier Reserve Bank / FIPB approvals 7 Details regarding shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures to be transferred Date of the transaction Number of 8 Foreign Investments in the company shares value CMCPS/ debentures in Rs. Face Negotiated Price for the Amount of consideration in Rs. transfer**in Rs. No. of shares Percentage Before the transfer П SWF means a Government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves of the monetary authorities. Website:www.fema.rbi.org.in 80 Email: [email protected] 84 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ SERVE BANK 9 Where the shares / CMCPS / debentures are listed on Stock Exchange Name of the Stock exchange Price Quoted on the Stock exchange Where the shares / CMCPS / debentures are Unlisted Price as per Valuation guidelines* Price as per Chartered Accountants */ ** Valuation report (CA Certificate to be attached) After the transfer Declaration by the transferor / transferee I/We hereby declare that : i....
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.... 11. Existing Business (please give the NIC Code of the activity in which the company is predominantly engaged) Details of the purpose for which GDRs/ADRs have been raised. If funds are deployed for overseas investment, details thereof Name and address of the Depository abroad Name and address of the Lead Manager/ Investment/Merchant Banker Name and address of the Sub-Managers to the issue Name and address of the Indian Custodians Details of FIPB approval (please quote the relevant NIC Code if the GDRs/ADRs are being issued under the Automatic Route) Whether any overall sectoral cap for foreign investment is applicable. If yes, please give details 12. Details of the Equity Capital (a) Authorised Capital (b) Issued and Paid-up Capital (i) Held by persons Resident in India (ii) Held by foreign investors other than Flls/NRIS/PIOs/ OCBS (a Website :www.fema.rbi.org.in 83 Before Issue After Issue Email: [email protected] 87 of 92 à¤à¤¾à¤°à¤¤à¥€à¤¯ RESERV INDIA 13. 14. (c) list of foreign investors holding more than 10 percent of the paid-up capital and number of shares held by each of them should be furnished) (iii) H....
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....Acquisition of Immovable property in India/ Establishment of Branch, Liaison and Project Offices in India and investments in proprietary / partnership firms Notifications Sl.No. Notification 1. 2. No. FEMA 32/2000-RB No. FEMA 35/2001-RB 3. No. FEMA 41/2001-RB 4. No. FEMA 45/2001-RB 5. No. FEMA 46/2001-RB 6. 7. 8. 9. 10. 11. 12. 13. No. FEMA 101/2003-RB No. FEMA 106/2003-RB 14. No. FEMA 108/2003-RB 15. 16. No.FEMA.118/2004-RB 17. No.FEMA.122/2004-RB 18. No.FEMA.125./2004-RB 19. No.FEMA.130/2005-RB 20. No.FEMA.131/2005-RB No. FEMA 50/2002-RB No. FEMA 55/2002-RB No. FEMA 76/2002-RB No. FEMA 85/2003-RB No. FEMA 94/2003-RB No. FEMA 100/2003-RB No. FEMA 111/2004-RB Date December 26, 2000 February 16, 2001 September 20, 2001 November 29, 2001 February 20, 2002 March 7, 2002 November 12, 2002 January 17, 2003 June 18, 2003 October 3, 2003 October 3, 2003 October 27, 2003 January 1, 2004 March 6, 2004 June 29, 2004 August 30, 2004 November 27, 2004 March 17, 2005 March 17, 2005 March 2, 2001 21. No.FEMA.138/2005-RB July 22, 2005 22. No. FEMA.136/2005-RB July 19, 2005 23. No. FEMA.137/2005- RB July 22, 2005 24. No.....