TaxTMI 
TaxTMI 
Master Direction – Foreign Investment in India (Updated up to June 15, 2026)
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....isition and Transfer of Immovable Property in India) Regulations, 2018. These rules are amended from time to time to incorporate the changes in the regulatory framework and published through gazette notifications. 2. Rule 2(A) of NDI Rules empowers the Reserve Bank of India (RBI) to administer it, and while administering these rules, the RBI may interpret and issue such directions, circulars, instructions, clarifications, as it may deem necessary, for effective implementation of the provisions of these rules. The instructions relating to mode of payment and reporting requirements for investment in India by a person resident outside India are contained in Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (FEMA 395). 3. RBI, therefore, issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. This Master Direction lays down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents with a view to implementing the rules framed. 4. Instructions issued on Foreign Investment in India and its related a....
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....ments are at para 4 of this Master Direction. 2.3 'Indian company' means a company as defined in the Companies Act, 2013 or a body corporate established or constituted by or under any Central or State Act, which is incorporated in India but does not include a society, trust or any entity, which is excluded as an eligible investee entity under the FDI Policy. Note :Reference to 'company' or 'investee company' or 'transferee company' or 'transferor company' also includes a reference to a body corporate established or constituted by or under any Central or State Act but if the term 'Company ' or 'Indian company' or 'Investee company' or 'transferee company' or 'transferor company' is qualified by a reference to a company incorporated under the Companies Act, 2013 such term shall mean a company incorporated under the said Act but not a body corporate. 2.4 'Control' shall have the same meaning as assigned to it in the Companies Act, 2013 and for the purposes of Limited Liability Partnership, shall mean the right to appoint majority of the designated partners, where such designated partners, with specific ex....
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....o Investment' is any investment made by a person resident outside India in equity instruments where such investment is (a) less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company or (b) less than 10 percent of the paid-up value of each series of equity instruments of a listed Indian company. 2.10 'Foreign Portfolio Investor (FPI)' is a person registered in accordance with the provisions of Securities Exchange Board of India (SEBI) (Foreign Portfolio Investors) Regulations, 2014, as amended from time to time. 2.10.1 Any Foreign Institutional Investor (FII) or a sub account registered under the Securities Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 and holding a valid certificate of registration from SEBI shall be deemed to be a FPI till the expiry of the block of three years from the enactment of the SEBI (Foreign Portfolio Investors) Regulations, 2014. 2.11 'Foreign Investment' is any investment made by a person resident outside India on a repatriable basis in equity instruments of an Indian company or to the capital of an LLP. 2.11.1 Issue/ transfer of 'participating interest/ rig....
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....ulations, 2014, Infrastructure Investment Trusts (InvITs) governed by the SEBI (InvITs) Regulations, 2014 and Alternative Investment Funds (AIFs) governed by the SEBI (AIFs) Regulations, 2012. 2.19.1 A Venture Capital Fund (VCF) established in the form of a trust or a company or a body corporate and registered under the SEBI (Venture Capital Fund) Regulations, 1996 will not be considered as an Investment Vehicle for the purpose of the NDI Rules and this Master Direction. 2.20 'Limited Liability Partnership (LLP)' is a partnership formed and registered under the Limited Liability Partnership Act, 2008. 2.21 'Listed Indian Company' is an Indian company which has any of its equity instruments listed on a recognized stock exchange in India and the expression 'Unlisted Indian Company' shall be construed accordingly 2.22 'Non-Debt Instruments' as determined by Central Government by Gazette Notification S.O. 3722 (E) dated October 16, 2019, means the following instruments; namely: - • all investments in equity instruments in incorporated entities: public, private, listed and unlisted; • capital participation in LLP; • all instrum....
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....ompany or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of, any immovable property. Real estate broking services is excluded from the definition of "real estate business" and 100% foreign investment is allowed in real estate broking services under automatic route. 2.27 'Sectoral cap' is the maximum investment including both foreign investment on a repatriation basis by persons resident outside India in equity instruments of a company or the capital of a LLP, as the case may be, and indirect foreign investment, unless provided otherwise. This shall be the composite limit for the investee Indian entity. 2.27.1 FCCBs and DRs having underlying of instruments being in the nature of debt shall not be included in the sectoral cap. 2.27.2 Any equity held by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned under the sectoral cap. 2.28 'Unit' is the beneficial interest of an investor in an investment vehicle. Explanation.- i) For the purpose of this clause, unit shall include unit that has been partly paid....
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....y operations • Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for lottery business and gambling and betting activities. 3.2 Investment under Schedule I of NDI Rules by an entity or a citizen of a country, which shares land border with India or where the beneficial owner of an investment into India is a citizen of any such country, or where the beneficial ownership of an investment is vested in any such country shall invest only under the Government route. Explanation 1. - For the purposes of this para, - (i) the expression "beneficial owner of an investment into India" shall mean the beneficial owner of the investor entity incorporated or registered in a country other than a country which shares land border with India; and (ii) the expression "beneficial owner" shall have the same meaning as assigned to it in clause (fa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002 (15 of 2003), and shall be determined as per the criteria specified under sub-rule (3) of rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rule....
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....r. The equity instruments are equity shares, convertible debentures, preference shares and share warrants issued by the Indian company. 4.2 Equity shares: Equity shares are those issued in accordance with the provisions of the Companies Act, 2013 and will include equity shares that have been partly paid. 4.3 Partly paid shares: Partly paid shares issued on or after July 8, 2014 will be considered as equity instruments. 4.3.1 Partly paid shares that have been issued to a person resident outside India should be fully called-up within twelve months of such issue. 4.3.2 Twenty five percent of the total consideration amount (including share premium, if any), has to be received upfront and the balance consideration towards fully-paid equity shares should be received within a period of twelve months from the date of issue of partly-paid shares. 4.3.3 It shall not be necessary for a listed Indian company to receive the balance consideration within 12 months, if it has appointed a monitoring agency in compliance with regulations 41, 82, and 137 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended from time to time. 4.3.4 In case of an un....
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....om time to time. However, the investee company should ensure that the price/ conversion formula of convertible equity instruments is determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the NDI rules. 4.6.2 Convertible debentures which are not fully, compulsorily and mandatorily convertible are debt instruments in terms of the notification no. S.O.3722(E) dated October 16, 2019, issued under sub-section (7) of Section 6 of FEMA. Therefore, issuance of the same are not governed under the NDI Rules. 4.6.3 Optionally convertible/ partially convertible debentures issued up to June 7, 2007 or for which funds were received for such issue prior to June 7, 2007 are deemed to have been issued in accordance with the NDI Rules till their original maturity. Any extension of maturity prior to June 7, 2007, by the company in accordance with the provisions of the Companies Act, 2013, will be considered as original maturity for the purpose of these rules. 4.6.4 Non-convertible/ optionally convertible/ partially convertib....
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....through two routes, 5.1.1 Automatic Route is the entry route in which investment by a person resident outside India does not require the prior approval from the Central Government. 5.1.2 Government Route is the entry route in which investment by a person resident outside India requires prior Government approval. Foreign investment received under this route shall be in accordance with the conditions stipulated by the Government in its approval. 5.1.3 'Government approval' means approval from the erstwhile Secretariat for Industrial Assistance (SIA)/ Department of Industrial Policy and Promotion (DIPP), Government of India and/ or the erstwhile Foreign Investment Promotion Board (FIPB) and/ or any of the ministry/ department of the Government of India, as the case may be. The entities may make applications for Government approval on the Foreign Investment Facilitation Portal (FIFP) of Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India. 5.1.4 Aggregate Foreign Portfolio Investment up to forty-nine (49) percent of the paid-up capital on a fully diluted basis or the sectoral or statutory cap, whiche....
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....aid by the transferee during post-issue transfer beyond the issue price of the equity instrument cannot be taken into account while calculating minimum capitalization requirement. Note: In case of any clarification pertaining to foreign investment in a sector or related conditions, the request may be made to the Department of Promotion of Industry and Internal Trade, Ministry of commerce and Industry, Government of India. 5.2.6 Foreign investment in investing companies: 5.2.6.1 Foreign Investment in investing companies not registered as Non-Banking Financial Companies with the RBI and in core investment companies (CICs), both engaged in the activity of investing in the capital of other Indian entities, will require prior Government approval. 5.2.6.2 The core investment companies should additionally comply with the regulatory framework prescribed for such entities as NBFCs under the Reserve Bank of India Act, 1934 and regulations framed thereunder. 5.2.6.3 Foreign investment in investing companies registered as Non-Banking Financial Companies (NBFCs) with the RBI, will be under 100% automatic route. 5.2.7 For undertaking activities which are under automatic route a....
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.... sale of equity instruments of a listed Indian company on a recognised stock exchange in India by an individual person resident outside India including a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis is permitted as per the directions laid down in Annex 3. 6.4 Purchase/ sale of equity instruments of an Indian company or Units or contribution to capital of a LLP or a firm or a proprietary concern by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on a Non-Repatriation basis is permitted as per the directions laid down in Annex 4. 6.5 Investment in a Limited Liability Partnership (LLP) is permitted as per the directions laid down in Annex 5. 6.6 Investment by a Foreign Venture Capital Investor (FVCI) is permitted as per the directions laid down in Annex 6. 6.7 Investment in an Investment Vehicle is permitted as per the directions laid down in Annex 7. 6.8 Issue/ transfer of eligible instruments to a foreign depository for the purpose of issuance of depository receipts by eligible person(s) is permitted as per the directions laid down in Annex 8. 6.9 Purchase/ sale of Indian Depository Receipts (IDRs) issued by Compan....
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....eration may also be paid by debit to the NRO account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 6.12.2 An individual who is a person resident outside India exercising a right which was issued when he/ she was a person resident in India can hold the equity instruments so acquired on exercising the right on a non-repatriation basis. 6.12.3 Indian company may issue equity instruments under Section 62(1)(a)(iii) of Companies Act, to a person resident outside India (other than an OCB). Such issue shall be subject to the adherence to entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions as applicable for investment by a person resident outside India specified in the NDI Rules. 6.12.4 Renunciation of rights • A person resident in India and a person resident outside India may subscribe to additional shares over and above the shares offered on rights basis by the company and also renounce the shares offered either in full or part thereof in favour of a person named by them. • The facility at para 6.12.4(1) would not be available to investors who have been al....
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....stan shall require prior government approval. Note: Issue of "sweat equity shares" to a person resident outside India was permitted with effect from June 11, 2015. Issuance of equity instruments under any share-based employee benefit scheme, other than Employees Stock Options and Sweat equity shares, was permitted with effect from April 12, 2022. 6.13.2 An individual who is a person resident outside India exercising an option which was issued when he/ she was a person resident in India shall hold the equity instruments so acquired on exercising the option on a non-repatriation basis. Note: The percentage of foreign investment shall be calculated on fully diluted basis, upfront, at the time of issuance/grant of Employee Stock Options, sweat equity shares and Share Based Employee Benefits to persons resident outside India. 6.14 Issue of Convertible Notes by an Indian startup company 6.14.1 A person resident outside India (other than an individual who is citizen of Pakistan or Bangladesh or an entity which is registered/ incorporated in Pakistan or Bangladesh), is permitted to invest in convertible notes issued by an Indian startup company for an amount of twenty five l....
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....nt to do so by law, the transferee company or the new company, as the case may be, may issue equity instruments to the existing shareholders of the transferor company resident outside India, subject to the following conditions: • The transfer or issue should comply with entry routes, sectoral caps or investment limits, as the case may be, and the attendant conditionalities of foreign investment as well as reporting in form FC-GPR or FC-TRS as the case may be. • In case the foreign investment is likely to breach the Sectoral caps or the attendant conditionalities, the transferor company or the transferee or the new company should obtain necessary Government approval. • The transferor company or the transferee company or the new company should not be in a sector prohibited for foreign investment. • In a scheme of compromise or arrangement or merger or amalgamation of two or more Indian companies or a reconstruction by way of demerger or otherwise of an Indian company, where any of the companies involved is listed on a recognised stock exchange in India, the scheme of arrangement shall be in compliance with the SEBI (List....
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....de India including an NRI/ OCI by way of gift or sale to any person resident outside India 7.3.1 An individual person resident outside India holding equity instruments of an Indian company or units on repatriation basis can transfer the same by way of sale or gift to any person resident outside India. 7.3.2 Prior Government approval is required for any transfer in case the company is engaged in a sector which requires Government approval. 7.3.3 Where the equity instruments acquired by an individual person resident outside India under the provisions of para 6.3 of this Master Direction has resulted in a breach of the applicable individual or aggregate or sectoral limits, the individual person resident outside India shall be required to sell the equity instruments so acquired within five trading days after settlement to a person resident in India eligible to hold such instruments. The breach of the applicable individual or aggregate or sectoral limit, as the case may be, on account of such acquisition for the period between the acquisition and sale, provided the sale is within the prescribed five trading days after settlement, shall not be reckoned as a contravention under N....
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....p firm incorporated outside India and owned and controlled by NRIs or OCIs acquiring such investment on a non-repatriation basis. 7.5 Transfer by an NRI/ OCI holding equity instruments on a non-repatriable basis by way of gift to another NRI/ OCI who will hold such equity instruments on a non-repatriable basis 7.5.1 An NRI or an OCI or a company/ trust/ partnership firm incorporated outside India and owned and controlled by NRIs or OCIs holding equity instruments of an Indian company or units on a non-repatriation basis, is permitted to transfer the same by way of gift to an NRI or an OCI or a company/ trust/ partnership firm incorporated outside India and owned and controlled by NRIs or OCIs and the the transferee shall hold them on a non-repatriable basis. 7.6 Transfer by person resident outside India to person resident in India or sale on recognised stock exchange in India 7.6.1 A person resident outside India, holding equity instruments of an Indian company or units in accordance with NDI Rules is permitted to transfer the same to a person resident in India by way of sale/ gift or may sell the same on a recognised stock exchange in India in the manner prescribed by ....
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....n resident in India and a person resident outside India, an amount not exceeding twenty five per cent of the total consideration, • can be paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the transfer agreement; or • can be settled through an escrow arrangement between the buyer and the seller for a period not exceeding eighteen months from the date of the transfer agreement; or • can be indemnified by the seller for a period not exceeding eighteen months from the date of the payment of the full consideration, if the total consideration has been paid by the buyer to the seller. Note: A transaction intended to be undertaken using above arrangement(s) shall require the share purchase/transfer agreement to contain the respective clause and related conditions for such arrangement. 7.9.2 The total consideration finally paid for the shares must be compliant with the applicable pricing guidelines. 7.10 Opening of Escrow account 7.10.1 In case of transfer of equity instruments between a person resident in India and a person resident outside India, the person resident outside Indi....
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....nt SEBI disclosure norms, if any; and • pledge in favour of the lender (bank) would be subject to compliance with the Section 19 of the Banking Regulation Act, 1949. • the conditions at (i) to (iv) above will apply suitably for units. (b) In favour of an overseas bank to secure the credit facilities being extended to such person or a person resident outside India who is the promoter of such Indian company or the overseas group company of such Indian company, subject to the following conditions: • loan is availed only from an overseas bank; • loan is utilized for genuine business purposes overseas and not for any investments either directly or indirectly in India; • overseas investment should not result in any capital inflow into India; • in case of invocation of pledge, transfer should be in accordance with the policy in vogue at the time of creation of pledge; and • submission of a declaration/ annual certificate from a Chartered Accountant/ Certified Public Accountant of the non-resident borrower that the loan proceeds will be/ have been utilized for the declared pur....
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....warded to the RBI with the following documents: • A copy of the Board Resolution passed by the non-resident company/ies approving the pledge of security acquired in terms of NDI Rules (number/ percentage of securities to be pledged) of Investee Company held by them for securing the loan facility in favour of the lender/s. • A copy of the Board Resolution passed by the investee company approving pledge of securities acquired in terms of NDI Rules in favour of the lender for the loan facility availed by the investee company. • A copy of the loan agreement/ pledge agreement containing security clause duly certified by the company secretary, requiring the pledge of shares of Investee Company. • The details of the facility availed/ proposed to be availed. • The details of reporting of the acquisition of the security as prescribed in terms of NDI Rules, if any. 7.12. Transfer from a resident to a person resident outside India where the investee company is in the financial sector In case of transfer of equity instruments of a company in the financial sector from a resident to a person resident outside In....
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....g through a delisting process as per the SEBI (Delisting of Equity Shares) Regulations, 2009; or • the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm's length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker or a practicing Cost Accountant, in case of an unlisted Indian Company. 8.1.2 In case of convertible equity instruments, the price/ conversion formula of the instrument is required to be determined upfront at the time of issue of the instrument. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant FEMA rules. 8.2 Equity instruments transferred by a person resident in India to a person resident outside India The price of equity instruments of an Indian company transferred by a person resident in India to a person resident outside India should not be less than: • the price worked out in accordance with the relevant SEBI guidelines in case of a listed Indian company; or • the price at which a preferent....
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....ctive of the amount, valuation will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the host country. 8.5 Subscription to Memorandum of Association Where shares in an Indian company are issued to a person resident outside India in compliance with the provisions of the Companies Act, 2013, by way of subscription to Memorandum of Association, such investments shall be made at face value subject to entry route and sectoral caps. 8.6 Partly paid shares The pricing of the partly paid equity shares shall be determined upfront. 8.7 Share warrants 8.7.1 In case of share warrants, their pricing and the price/ conversion formula shall be determined upfront. 8.7.2 The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such warrants. 8.8 Investment in an LLP Investment in an LLP either by way of capital contribution or by way of acquisition/ transfer of profit shares, should not be less than the fair price worked out as per any valuation norm which is internationally accepted/ adopted as per ma....
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....ailable for direct investment under the Rules such as investment by way of swap of equity instruments/equity capital, payment arrangements/mechanism as per Rule 9(6) of the Rules etc, shall also be available for the purpose of downstream investment provided that the transaction does not circumvent the provisions contained in Rule 23 of the Rules, including the restrictions on use of borrowed funds for downstream investment. 9.1 Definitions 9.1.1 'Ownership of an Indian company' is the beneficial holding of more than 50 percent of the equity instruments of such company. 9.1.2 'Ownership of an LLP' is the contribution of more than 50 percent in its capital and having majority profit share. 9.1.3 'Company owned by resident Indian citizens' is an Indian company where ownership is vested in resident Indian citizens and/ or Indian companies, which are ultimately owned and controlled by resident Indian citizens. 9.1.4 An 'LLP owned by resident Indian citizens' is an LLP where ownership is vested in resident Indian citizens and/ or Indian entities, which are ultimately owned and controlled by resident Indian citizens. 9.1.5 'Company owned by persons resident outside India....
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....nsor or manager or investment manager is foreign owned and controlled. [Explanation 1: For cases where the original investment made in the investee entity was made as a resident but later the investor entity becomes owned and/or controlled by persons resident outside, the same shall be reckoned as downstream investment from the date on which the investor entity is owned and/or controlled by persons resident outside India. Such downstream investment shall be in compliance with the applicable entry route and sectoral cap and shall require to be reported by the investor entity within 30 days from the date of such reclassification in form DI] [Explanation 2: The investments made by NRIs/OCIs on non-repatriation basis is treated as deemed domestic investment. Accordingly, an investment made by an Indian entity which is owned and controlled by a Non-Resident Indian or an Overseas Citizen of India including a company, a trust and a partnership firm incorporated outside India and owned and controlled by a Non-Resident Indian or an Overseas Citizen of India, on a non-repatriation basis in compliance with Schedule IV of these rules, shall not be considered for calculation of indirect f....
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....t outside India to non-convertible debentures issued by an Indian company will not be construed as funds borrowed/ leveraged in the domestic market. However, raising of debt and its utilisation will have to comply with the Act and the rules or regulations made thereunder. 9.3.7 Downstream investments which is treated as Indirect Foreign Investment for the investee Indian entity can be made through internal accruals. For this purpose, internal accruals will mean profits transferred to reserve account after payment of taxes. 9.3.8 When a company which does not have any operations makes downstream investment which is treated as Indirect Foreign Investment for the investee Indian entity or commences business(s), it will have to comply with the relevant sectoral conditions on entry route, conditionalities and caps. 9.4 Downstream investment/s under Corporate Debt Restructuring (CDR), mechanism 9.4.1 With effect from July 31, 2012, downstream investment/s made by a banking company (as defined in clause (c) of section 5 of the Banking Regulation Act, 1949, incorporated in India) which is not owned and not controlled by resident Indian citizens or is owned or controlled by pers....
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....vestment will be responsible for ensuring compliance with the provisions of these rules for the downstream investment made by it at second level and so on and so forth. Such first level company shall obtain a certificate to this effect from its statutory auditor on an annual basis. Such compliance of FEMA provisions shall be mentioned in the Director's report in the Annual Report of the Indian company. 9.7.2 In case the statutory auditor has given a qualified report, the same should be immediately brought to the notice of the Regional Office of the RBI in whose jurisdiction the Registered Office of the company is located and shall also obtain acknowledgement from the RO. 9.7.3 The instructions at 9.7.1 above will be construed accordingly for an LLP 9.8 Applicability of downstream investment guidelines 9.8.1 Downstream investment which is treated as indirect foreign investment for the investee Indian entity made prior to February 13, 2009 would not require any modification to conform to NDI Rules. All other investments, after the said date, would come under its ambit. 9.8.2 Downstream investments which is treated as indirect foreign investment for the investee Ind....
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....any on a stock exchange in India provided: • The person resident outside India making the investment has already acquired control of such company in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 and continues to hold such control; • The amount of consideration is paid as per the mode of payment prescribed in this annex or out of the dividend payable by the Indian investee company in which the person resident outside India has acquired and continues to hold control in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, provided the right to receive dividend is established and the dividend amount has been credited to an SNRR account opened in terms of Foreign Exchange Management (Deposit) Regulations, 2016 for acquisition of shares on the recognised stock exchange. 1.3 Issue by a wholly owned subsidiary 1.3.1 A wholly owned subsidiary set up in India by a non-resident entity, operating in a sector where 100 percent foreign investment is allowed under the automatic route and there are no FDI linked performance conditions, may issue equity instruments to the said non-res....
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.... 1.4.3 In case where permission has been granted by the RBI for making remittance as stated at 1.4.2 above, the Indian company may issue equity shares (other than partly paid shares) against such remittance provided all regulatory actions with respect to the delay or contravention under the Act or the rules or the regulations framed thereunder have been completed. 1.4.4 An Indian company may issue equity instruments to a person resident outside India subject to compliance with the rules prescribed by the Central Government and the regulations specified by the Reserve Bank from time to time, against: (a) Swap of equity instruments; (b) Swap of equity capital of a foreign company in compliance with the rules prescribed by the Central Government including Foreign Exchange Management, (Overseas Investment) Rules 2022, and the regulations specified by the Reserve Bank from time to time. Explanation. - For the purposes of this clause, the expression "equity capital" shall have the same meaning as assigned to it in the Foreign Exchange Management, (Overseas Investment) Rules, 2022, as amended from time to time. (c) Import of capital goods/ machinery/ equipment (excluding s....
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....t (Deposit) Regulations, 2016. 2.2 The amount of consideration will include issue of equity shares by an Indian company against any funds payable by it to the investor and also swap of equity instruments where the Indian investee company is engaged in an automatic route sector. 2.3 If the equity instruments are not issued by the Indian company within sixty days from the date of receipt of the consideration, the amount so received has to be refunded to the person concerned by outward remittance through banking channels or by credit to his ^7repatriable foreign currency or Rupee accounts maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016, as the case may be, within fifteen days from the date of completion of sixty days. 2.4 In case of partly paid equity shares, the period of 60 days will be reckoned from the date of receipt of each call payment. The forfeiture of the amount paid upfront on non-payment of call money shall be in accordance with the provisions of the Companies Act, 2013 and Income Tax Act, 1961 as applicable 2.5 Refund may be permitted by an authorised dealer provided it is satisfied: • with the bonafide....
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....ividual limit. In case of investment of 10 percent or more, the provisions of para 1.4 of this annex shall apply. Explanation: For the purpose of this annex, the expression "investor group" shall have the same meaning as assigned to it under the SEBI (FPI) Regulations, 2019, as amended from time to time. 1.4 In case the total holding of an FPI increases to 10 percent or more of the total paid-up equity capital on a fully diluted basis or 10 per cent or more of the paid-up value of each series of debentures or preference shares or warrants issued by an Indian company, the total investment so made by the FPI will be re-classified as FDI subject to the conditions as specified by SEBI in this regard and the investee company and the investor complying with the reporting requirements prescribed in FEMA 395. The reclassification of foreign portfolio investment of a foreign portfolio investor to FDI shall be in accordance with the framework issued by the RBI vide A.P. (DIR Series) Circular No. 19 dated November 11, 2024. 1.5 For arriving at the ceiling on holdings of FPI, equity instruments acquired both through primary as well as secondary market will be included. However, the ce....
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....ance with the Foreign Exchange Management (Deposit) Regulations, 2016. 2.2 The foreign currency account ^9can be used only and exclusively for transactions under this Annex. 3. Remittance of sale proceeds The sale proceeds (net of taxes) of the investments made can be remitted outside India or may be credited to the foreign currency account or SNRR account of the FPI. 4. Saving All investments made by deemed FPIs in accordance with the regulations prior to their registration as FPIs are valid and taken into account for computation of aggregate limits. Annex 3 Investments by an individual person resident outside India including a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis 1. Purchase/ sale of equity instruments 1.1 An individual person resident outside India is allowed to purchase or sell equity instruments of a listed Indian company on repatriation basis, on a recognised stock exchange in India, subject to the following conditions: • The purchase and sale is done through a designated authorised dealer branch; • The total holding by any individual person resident outside India shall be....
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....ccount are as follows: • Inward remittances from abroad in foreign exchange through banking channels; • Transfer from other repatriable foreign currency or rupee account of the individual person resident outside India maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016; • Sale proceeds (net of taxes) of equity instruments acquired on repatriation basis in accordance with instructions contained in this annex and sold on stock exchange; and • Dividend or income earned on investment made on repatriation basis in accordance with instructions contained in this annex. 2.2.2 The specific debits permitted for the designated rupee account are as follows: • Outward remittances of dividend or income earned on investment made on repatriation basis in accordance with instructions contained in this annex; • Amounts paid on account of purchase of equity instruments on repatriation basis on stock exchanges in accordance with instructions contained in this annex; • Any charges on account of sale/ purchase of equity instruments in accordance with in....
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....nt proceeds of an LLP should be credited only to the NRO account of the investor, irrespective of the type of account from which the consideration was paid. 3.2 The amount invested in equity instruments of an Indian company or the consideration for contribution to the capital of an LLP and the capital appreciation thereon cannot be repatriated abroad. B. Investment in a firm or a proprietary concern 1. Contribution to capital of a firm or a proprietary concern 1.1 An NRI or an OCI is permitted to invest, on a non-repatriation basis, by way of contribution to the capital of a firm or a proprietary concern in India. 1.2 The investee firm or proprietary concern should not be engaged in any agricultural/ plantation activity or print media or real estate business i.e., dealing in land and immovable property with a view to earning profit or earning income therefrom. 2. Mode of payment 2.1 The amount of consideration should be received from abroad through banking channels or paid out of funds held in NRE/ FCNR(B)/ NRO accounts maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 3. Sale/ maturity proceeds 3.1 The disinvestme....
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.... (FVCI) 1. Investment by Foreign Venture Capital Investor (FVCI) 1.1 Investment by an FVCI was permitted with effect from December 26, 2000 1.2 An FVCI is permitted to invest in securities (not listed on a recognised stock exchange at the time of issue), of an Indian company engaged in the following sectors: • Biotechnology • IT related to hardware and software development • Nanotechnology • Seed research and development • Research and development of new chemical entities in pharmaceutical sector • Dairy industry • Poultry industry • Production of bio-fuels • Hotel-cum-convention centres with seating capacity of more than three thousand. • Infrastructure sector. The term 'Infrastructure Sector' has the same meaning as given in the Harmonised Master List of Infrastructure sub-sectors approved by Government of India vide Notification F. No. 13/06/2009-INF dated March 27, 2012 as amended/ updated. 1.3 An FVCI can invest in equity or equity linked instrument or debt instrument issued by an Indian startup company irre....
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....nce with this annex are subject to the regulations framed by SEBI or the directions issued by the RBI. 1.3 An Investment vehicle can issue its units to a person resident outside India against swap of equity instruments of a Special Purpose Vehicle (SPV) proposed to be acquired by such Investment Vehicle. 1.4 The portfolio investment by an AIF (Cat III) which has foreign investment is restricted to the securities/ instruments permitted for FPIs under NDI Rules. 2. Mode of payment 2.1 The amount of consideration should be paid as inward remittance from abroad through banking channels or by way of swap of shares of a Special Purpose Vehicle or out of funds held in ^13any repatriable foreign currency or Rupee account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. 3. Remittance of sale/ maturity proceeds The sale/ maturity proceeds (net of taxes) of the units may be remitted outside India or credited to the ^14any repatriable foreign currency or Rupee account of the person concerned maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. Annex 8 Investment in Depository receipts by a p....
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....idiary, shall require prior approval of the sectoral regulator(s); 1.4 IDRs shall be denominated in Indian Rupees only; 1.5 The proceeds of the issue of IDRs shall be immediately repatriated outside India by the companies issuing such IDRs. 2. Purchase/ sale of IDRs: 2.1 An FPI or an NRI or an OCI may purchase, hold or sell IDRs 2.2 NRIs or OCIs may invest in the IDRs out of funds held in their NRE/ FCNR(B) account, maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. ^15An FPI may invest in the IDRs out of funds held in a foreign currency account or an SNRR account. 2.3 There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs by eligible foreign companies in Indian markets. This limit would be monitored by SEBI 3. Transfer, redemption and two way fungibility of IDRs 3.1 Redemption/ conversion of IDRs into underlying equity shares of the issuing company shall comply with the ^16Foreign Exchange Management (Overseas Investment) Rules, 2022. 3.2 IDRs shall not be redeemable into underlying equity shares before the expiry of one year from the date of issue. 3.3 Limited two way fungibil....
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....ained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016, or; 2.1.2 through banking channels to a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time. Explanation: The proceeds of purchase / subscription of equity shares of an Indian company listed on an International Exchange shall either be remitted to a bank account in India or deposited in a foreign currency account of the Indian company held in accordance with the Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time. 3. Remittance of sale/ maturity proceeds The sale proceeds (net of taxes) of the equity shares may be remitted outside India or may be credited to the bank account of the permissible holder maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. Annex 12 List of notifications/circulars which have been consolidated in this Master Direction SN Rules/Notifications/ A.P. (DIR Series) Circul....