Published on June 18, 2023 at 18:31
FOREIGN EXCHANGE
MANAGEMENT (NON-DEBT INSTRUMENTS) RULES, 2019
[Updated
up to August 16, 2024]
NOTIFICATION
New Delhi, the 17th October, 2019
S.O. 3732(E). In exercise of
the powers conferred by clauses (aa) and (ab) of sub-section (2) of section 46
of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession
of the Foreign Exchange Management (Transfer of Issue of Security by a Person
Resident outside India) Regulations, 2017 and the Foreign Exchange Management
(Acquisition and Transfer of Immovable Property in India) Regulations, 2018,
except as respects things done or omitted to be done before such supersession,
the Central Government hereby makes the following rules, namely:-
CHAPTER I
PRELIMINARY
1. Short title and
commencement
: (1) These rules may be called the Foreign
Exchange Management (Non-debt Instruments) Rules, 2019.
(2) Save as otherwise provided in
these rules, they shall come into force from the date of their publication in
the Official Gazette.
2. Definitions: -
In these rules,
unless the context otherwise requires:-
(a) "Act" means the
Foreign Exchange
Management Act, 1999 (42 of 1999);
(b) "asset reconstruction company"
means
a company registered with the Reserve Bank under section 3 of the Securitisation and Reconstruction of Financial
Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002);
(c) "authorised bank"
shall have the meaning assigned to it in the Foreign Exchange Management
(Deposit) Regulations,2016;
(d) "authorised
dealer" includes a person authorised under
sub-section (1) of section 10 of the Act;
[1]
[(da)
"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 exclusion to
others, have control over all the policies of an LLP;]
(e) "convertible note"
means an
instrument issued by a startup company acknowledging receipt of money initially
as debt, repayable at the option of the holder, or which is convertible into
such number of equity shares of that company, within a period not exceeding
[2]
[ten] years from
the date of issue of the convertible note, upon occurrence of specified events
as per other terms and conditions agreed and indicated in the instrument;
(f) "debt instruments"
means all
instruments other than non-debt instruments defined in clause (ai) of this rule;
(g) "depository receipt"
means a foreign
currency denominated instrument, whether listed on an international exchange or
not, issued by a foreign depository in a permissible jurisdiction on the back
of eligible securities issued or transferred to that foreign depository and
deposited
with a domestic custodian and includes global depository receipt as defined
in the Companies Act, 2013 (18 of 2013);
(h) "domestic custodian"
means a
custodian of securities registered with the Securities and Exchange Board of
India in accordance with the SEBI (Custodian of Securities) Regulations, 1996;
(i) "domestic
depository" means a custodian of securities registered
with the
Securities and Exchange Board of India and authorised
by the issuing entity to issue Indian depository receipts;
(j) "ESOP" means
Employees stock
option as defined under the Companies Act, 2013 and issued under the
regulations by the Securities and Exchange Board of India;
(k) "equity instruments"
means equity
shares, convertible debentures, preference shares and share warrants issued by
an Indian company;
Explanation:-
(i)
[3]
[Equity shares
issued by an Indian Company in accordance with the provisions of the Companies
Act, 2013 or any other applicable law, shall include equity shares that have
been partly paid. "Convertible debentures" means fully and mandatorily
convertible debentures which are fully paid. "Preference shares" means
fully and mandatorily convertible preference shares which are fully paid.
Share
Warrants are those issued by an Indian Company in
accordance with the
regulations made by the Securities and Exchange Board of India, the Companies
Act, 2013 or any other applicable law. Equity instruments can contain an
optionality
clause subject to a minimum lock-in period of one year or as prescribed for the
specific sector, whichever is higher, but without any option or right to exit
at an assured price].
(ii) Partly paid
shares that have been
issued to a person resident outside India shall be fully called-up within
twelve months of such issue or as may be specified by the Reserve Bank from
time to time. Twenty- five per cent of the total consideration amount (including
share premium, if any) shall be received upfront.
(iii) In case of
share warrants, at least twenty-five per cent of the consideration shall be
received upfront and the balance amount within eighteen months of the issuance
of share warrants.
(l) "escrow account"
means an escrow
account maintained in accordance with the Foreign Exchange Management (Deposit)
Regulations, 2016;
(m) "FDI linked performance
conditions"
means the sector specific conditions specified in Schedule I of these rules for
companies receiving foreign investment;
(n) "FVCI" means a
Foreign Venture
Capital Investor incorporated and established outside India and registered with
the Securities and Exchange Board of India under the Securities and Exchange
Board of India (Foreign Venture Capital Investors) Regulations, 2000;
(o) "foreign central bank"
means an
institution or organisation
or body corporate established in a country outside India and entrusted with the
responsibility of carrying out central bank functions under the law for the
time being in force in that country;
(p) "FCNR (B) account"
means a Foreign
Currency Non-Resident (Bank) account maintained in accordance with the Foreign
Exchange Management (Deposit) Regulations, 2016;
(q) FCCB or "Foreign Currency Convertible
Bond" means a bond issued under the Issue of Foreign
Currency
Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism)
Scheme, 1993;
(r) FDI or "Foreign Direct Investment"
means investment through equity instruments by a person resident outside India
in an unlisted Indian company; or in ten per cent or more of the post issue
paid-up equity capital on a fully diluted basis of a listed Indian company;
Note:- In case an
existing investment by a person resident outside India in equity instruments of
a listed Indian company falls to a level below ten percent, of the post issue
paid-up equity capital on a fully diluted basis, the investment shall continue
to be treated as FDI;
Explanation: - "Fully diluted
basis" means the total number of shares that would be outstanding if all
possible sources of conversion are exercised;
(s) "foreign investment"
means 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 a LLP;
[4]
[Explanation:
- If a
declaration is
made by a person as per the provisions of the Companies Act, 2013 or any other
applicable law, as the case may be, about a beneficial interest being held by a
person resident outside India, then even though the investment may be made by a
resident Indian citizen, the same shall be counted as foreign investment];
Note:- A person resident
outside India may hold foreign investment either as FDI or as FPI in any
particular Indian company;
(t) "foreign portfolio investment"
means
any investment made by a person resident outside India through equity
instruments where such investment is less than ten percent of the post issue
paid-up share capital on a fully diluted basis of a listed Indian company or
less than ten percent of the paid-up value of each series of equity instrument
of a listed Indian company;
(u) "FPI" or "Foreign Portfolio Investor"
means a person registered in accordance with the provisions of the Securities
and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014;
(v) "government approval"
means the
approval from the erstwhile Secretariat for Industrial Assistance (SIA),
Department of Industrial Policy and Promotion, 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;
(w) "group company" means
two or more
enterprises which, directly or indirectly, are in a position to (i) exercise twenty-six per cent, or more of voting
rights
in other enterprise; or (ii) appoint more than fifty per cent of members of
Board of Directors in the other enterprise;
(x) "hybrid securities"
means hybrid
instruments such as optionally or partially convertible preference shares or
debentures and other such instruments as specified by the Central Government
from time to time, which can be issued by an Indian company or trust to a
person resident outside India;
(y)
[5]
[ "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;
Note:
(i) It is clarified
that reference to 'company'
or 'investee company' or 'transferee company' or 'transferor company' in these
rules also includes a reference to a body corporate established or constituted
by or under any Central or State Act.
(ii) It
is further clarified that 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.
(iii) It
is also clarified that 'Indian company' does not include a society, trust or
any entity, which is excluded as an eligible investee entity under the FDI
Policy.];
(z) IDR or "Indian Depository Receipts
(IDRs)" means any instrument in the form of a
depository
receipt
created by a domestic depository in India and authorised
by a company incorporated outside India making an issue of such depository receipts;
(aa) Indian entity
shall
mean an Indian
company or a LLP ;
[6]
[(aaa)
International
Exchange shall mean permitted stock exchange in
permissible
jurisdictions which are listed at Schedule XI annexed to these rules;]
(ab) "investing
company"
means an Indian
company holding only investments in other Indian company/ies
directly or indirectly, other than for trading of such holdings or securities;
(ac) "investment"
means to
subscribe,
acquire, hold or transfer any security or unit issued by a person resident in
India;
Explanation:-
(i) Investment
shall include to acquire, hold or transfer depository receipts issued outside
India, the underlying of which is a security issued by a person resident in
India;
(ii) for the purpose
of LLP, investment
shall mean capital contribution or acquisition or transfer of profit shares;
(ad) "investment on
repatriation
basis"
means an investment, sale or maturity proceeds of which are net of taxes,
eligible to be repatriated out of India, and the expression investment
on non-repatriation basis , shall be construed accordingly;
(ae) "investment
vehicle"
means an entity
registered and regulated under the regulations framed by the Securities and
Exchange Board of India or any other authority designated for that purpose and
shall include, namely:- (i) Real Estate Investment
Trusts (REITs) governed by the Securities and Exchange Board of India (REITs)
Regulations, 2014;(ii) Infrastructure Investment Trusts (InvIts)
governed by the Securities and Exchange Board of India (InvIts)
Regulations, 2014 (iii) Alternative Investment Funds (AIFs) governed by the
Securities and Exchange Board of India (AIFs) Regulations, 2012
[7]
[*];
(af)
"LLP"
means a limited liability partnership formed and registered under the Limited
Liability Partnership Act, 2008 (6 of 2009);
(ag)
[8]
[ "listed
Indian company" means an Indian company which has any
of
its equity
instruments or debt instruments listed on a recognised
stock exchange in India and on an International Exchange and the expression
unlisted
Indian company shall be construed
accordingly;]
(ah) "manufacture"
, with
its grammatical
variations, means a change in a non-living physical object or article or thing,:-
(i) resulting
in transformation of the object or article or thing into a new and distinct
object or article or thing having a different name, character and use; or
(ii) bringing into
existence of a new and
distinct object or article or thing with a different chemical composition or
integral structure;
(ai) "non-debt
instruments"
means the
following instruments; namely :-
(i) all
investments in equity instruments in incorporated entities: public, private,
listed and unlisted;
(ii) capital
participation in LLP;
(iii) all
instruments of investment recognised in the FDI policy
notified from time to time;
(iv) investment in
units of Alternative
Investment Funds (AIFs), Real Estate Investment Trust (REITs) and
Infrastructure Investment Trusts (InvIts);
(v) investment in
units of mutual funds or
Exchange-Traded Fund (ETFs) which invest more than fifty per cent in equity;
(vi) junior-most
layer (i.e. equity tranche)
of securitisation structure;
(vii) acquisition,
sale or dealing directly in
immovable property;
(viii) contribution
to trusts; and
(ix) depository
receipts issued against equity
instruments;
(aj)
"NRI"
or
"Non-Resident
Indian" means an individual resident outside India who
is a citizen of India;
(ak)
"OCI"
or
"Overseas
Citizen of India" means an individual resident outside
India who is
registered as an Overseas Citizen of India Cardholder under section 7A of the
Citizenship Act, 1955 (57 of 1955);
[9]
[(aka)
permissible jurisdiction eans such
jurisdiction as notified by the Central
Government under sub-clause (f) of sub-rule (3) of rule 9 of Prevention of
Money-laundering (Maintenance of Records) Rules, 2005;]
(al) "resident
Indian
citizen"
means an
individual who is a person resident in India and is a citizen of India by
virtue of the Constitution of India or the Citizenship Act, 1955
;
(am) "sectoral cap"
means
the maximum
investment including both foreign investment on a repatriation basis by persons
resident outside India in equity
[10]
[*] 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 Indian investee entity.
Explanation:
(i) FCCBs
and DRs having underlying of instruments being in the
nature of debt shall not be included in the sectoral cap;
(ii) any equity
holding by a person
resident outside India resulting from conversion of any debt instrument under
any arrangement shall be reckoned under the sectoral cap;
[11]
[(ama) "Share Based Employee
Benefits"
means issue of equity instruments to employees or directors or employees or
directors of the holding company or joint venture or wholly owned overseas
subsidiary or subsidiaries who are resident outside India, pursuant to Share
Based Employee Benefits schemes formulated by an Indian Company;]
(an)
[12]
[ "startup
company" means a private company incorporated under the
Companies Act,
2013 (18 of 2013) and identified as startup under the notification of the
Government of India number G.S.R. 127 (E), dated the 19th
February, 2019 issued by the Department for Promotion of Industry and Internal
Trade, Ministry of Commerce and Industry, as amended from time to time;]
[13]
[(ana) subsidiary shall
have the same
meaning as is assigned to it in the Companies Act, 2013, as amended from time
to time;
(ao)
"sweat
equity shares" means sweat equity shares defined under
the Companies
Act, 2013;
(ap) transferable
development
rights (TDR)
shall have the meaning assigned to it in the regulations made under sub-section
(2) of section 6 of the Act;
(aq)
"unit"
means a beneficial interest of an investor in an investment vehicle;
[14]
[Explanation.- For the purposes of this
clause,
unit shall include unit that has been partly paid up, which is permitted under
the regulations framed by the Securities and Exchange Board of India, in
consultation with Government of India]
(ar)
"venture
capital fund" means 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 (Alternative Investment Funds) Regulations, 2012.
(2) The words and
expressions used but not
defined in these rules shall have the same meanings respectively assigned to
them in the Act, rules and regulations.
[15]
[2A.
Reserve Bank to
administer these rules.
(1) These rules
shall be administered by the
Reserve Bank.
(2) While
administrating these rules, the Reserve
Bank may interpret and issue such directions, circulars, instructions,
clarifications, as it may deem necessary, for effective implementation of the
provisions of these rules.]
CHAPTER II
GENERAL
CONDITIONS APPLICABLE TO ALL INVESTORS
3. Restriction on
investment in India by a
person resident outside India.-
Save as
otherwise provided in the Act or rules or regulations made thereunder, no
person resident outside India shall make any investment in India:
Provided that an investment
made in accordance with the Act or the rules or the regulations made thereunder
and held on the date of commencement of these rules shall be deemed to have
been made under these rules and shall accordingly be governed by these rules:
Provided further that the Reserve
Bank may, on an application made to it and for sufficient reasons
[16]
[*], permit a
person resident outside India to make any investment in India subject to such
conditions as may be considered necessary.
4. Restriction on
receiving investment.-
Save as
otherwise provided in the Act or rules or regulations made thereunder, an
Indian entity or an investment vehicle, or a venture capital fund or a firm or
an association of persons or a proprietary concern shall not receive any
investment in India from a person resident outside India or record such
investment in its books:
Provided that the Reserve Bank
may, on an application made to it and for sufficient reasons
[17]
[*] permit an
Indian entity or an investment vehicle, or a venture capital fund or a firm or
an association of persons or a proprietary concern to receive any investment in
India from a person resident outside India or to record such investment subject
to such conditions as may be considered necessary.
5. Permission for
making investment by a
person resident outside India.-
Unless otherwise
specified in these rules or the Schedules, any investment made by a person
resident outside India shall be subject to the entry routes, sectoral caps or
the investment limits, as the case may be, and the attendant conditionalities
for such investment as laid down in these rules.
CHAPTER III
INVESTMENT BY
PERSON RESIDENT OUTSIDE INDIA
6. Investments by
person resident outside
India: - A person resident outside India may make
investment as under:-
(a) may
subscribe,
purchase or sell equity instruments of an Indian company in the manner and
subject to the terms and conditions specified in Schedule I:
[18]
[Provided
that an entity of a country, which shares land border
with India or the
beneficial owner of an investment into India who is situated in or is a citizen
of any such country, shall invest only with the Government approval:
Provided
further that, a citizen of Pakistan or an entity
incorporated in
Pakistan shall invest only under the Government route, in sectors or activities
other than defence, space, atomic energy and such
other sectors or activities prohibited for foreign investment:
Provided
also that in the event of the transfer of ownership of
any existing or
future FDI in an entity in India, directly or indirectly, resulting in the
beneficial ownership falling within the restriction or purview of the above
provisos, such subsequent change in beneficial ownership shall also require
government approval.]
[19]
[Provided
also that a Multilateral Bank or Fund, of which India is
a member,
shall not be treated as an entity of a particular country nor shall any country
be treated as the beneficial owner of the investments of such Bank or Fund in
India.]
Note: Issue or transfer of
participating interest or right in oil fields by Indian companies to a person
resident outside India would be treated as foreign investment and shall comply
with the conditions laid down in Schedule I.
(b) A person
resident
outside India, other than a citizen of Bangladesh or Pakistan or an entity
incorporated in Bangladesh or Pakistan, may invest either by way of capital
contribution or by way of acquisition or transfer of profit shares of an LLP,
in the manner and subject to the terms and conditions specified in Schedule VI.
(c) A person
resident
outside India, other than a citizen of Bangladesh or Pakistan or an entity
incorporated in Bangladesh or Pakistan, may invest in units of an investment
vehicle, in the manner and subject to the terms and conditions specified in
Schedule VIII.
(d) A person
resident outside India may invest in the depository receipts (DRs) issued by
foreign depositories against eligible securities in the manner and subject to
the terms and conditions specified in Schedule IX.
7. Acquisition
through rights issue or bonus issue.-A
person resident
outside India and having investment in an Indian company may make investment in
equity instruments (other than share warrants) issued by such company as a
rights issue or a bonus issue, provided that,-
(a) the offer
made by
the Indian company is in compliance with the provisions of the Companies Act,
2013;
(b) such issue
shall
not result in a breach of the sectoral cap applicable to the company;
(c) the share holding on the basis
of which the rights issue or the
bonus issue has been made must have been acquired and held as per the
provisions of these rules;
(d) in case of a
listed Indian company, the rights issue to persons resident outside India shall
be at a price determined by the company;
(e) in case of
an
unlisted Indian company, the rights issue to persons resident outside India
shall not be at a price less than the price offered to persons resident in India;
(f) such
investment
made through rights issue or bonus issue shall be subject to the conditions as
are applicable at the time of such issue;
(g) the mode of
payment and attendant conditions for such transactions shall be specified by
the Reserve Bank.
(h) an
individual who
is a person resident outside India exercising a right which was issued when he
or she was a person resident in India shall hold the equity instruments (other
than share warrants) so acquired on exercising the option on a non-repatriation
basis.
Explanation:
[20]
[*]
[21]
[7A. Acquisition
after renunciation of rights.- A person resident
outside India who has acquired a right from a person resident in India who has
renounced it may acquire equity instruments (other than share warrants) against
the said rights as per pricing guidelines specified under rule 21 of these
rules.]
8.
[22]
[Issue of
Employees Stock Options , sweat equity shares
and
Share Based Employee Benefits to persons resident outside
India.- An Indian
company may issue employees stock option , sweat equity shares , and Share
Based Employee Benefits to its employees or directors or employees or
directors of its holding company or joint venture or wholly owned overseas
subsidiary or subsidiaries who are resident outside India:
Provided that. -
(a) the scheme
has
been drawn either in terms of regulations issued under the Securities and
Exchange Board of India Act, 1992 or the Companies (Share Capital and
Debentures) Rules, 2014 or as per other applicable law, as the case may be;
(b) the employee
s
stock option or sweat equity shares or Share Based Employee Benefits so
issued under the applicable rules or regulations are in compliance with the
sectoral cap applicable to the said company;
(c) the issue of
employee s stock option or sweat equity shares or Share Based Employee
Benefits in a company where foreign investment is under the approval route
shall require prior government approval;
(d) issue of
employee s stock option or sweat equity shares or Share Based Employee
Benefits to a citizen of Bangladesh or Pakistan shall require prior government
approval:
Provided further that an
individual who is a person resident outside India exercising an option which
was issued when he or she was a person resident in India shall hold the shares
so acquired on exercising the option on a non-repatriation basis]
9. Transfer of
equity instruments of an
Indian company by or to a person resident outside
India.- A person
resident outside India holding equity instruments of an Indian company or units
in accordance with these rules or a person resident in India, may transfer such
equity instruments or units so held by him in compliance with the conditions,
if any, specified in the Schedules of these rules and subject to the terms and
conditions prescribed hereunder :
(1) a person
resident outside India, not being a
non-resident Indian or an overseas citizen of India or an erstwhile overseas
corporate body may transfer by way of sale or gift the equity instruments of an
Indian company or units held by him to any person resident outside India;
Explanation:
It shall also include transfer of equity instruments of an Indian company
pursuant to liquidation, merger, de-merger and amalgamation of entities or
companies incorporated or registered outside India.
Provided
that.-
(i)
[23]
[prior
Government approval shall be obtained for transfer in all cases wherever
Government approval is applicable;]
(ii) where the
equity instruments are held by the
person resident outside India on a non-repatriable basis, the transfer by way
of sale where the transferee intends to hold the equity instruments on a
repatriable basis, shall be in compliance with and subject to the adherence to
entry routes, sectoral caps or investment limits, as specified in these rules
and attendant conditionalities for such investment, pricing guidelines,
documentation and reporting requirements for such transfers, as may be
specified by the Reserve Bank from time to time;
(2) A person
resident outside India, holding
equity instruments of an Indian company or units in accordance with these rules
may transfer the same to a person resident in India by way of sale or gift or
may sell the same on a recognised stock exchange in
India in the manner specified by the Securities and Exchange Board of India:
Provided that. -
(i)
the
transfer by way of sale shall be in compliance with and subject to the
adherence to pricing guidelines, documentation and reporting requirements for
such transfers as may be specified by the Reserve Bank in consultation with the
Central Government from time to time;
(ii) where the
equity instruments are held
by the person resident outside India on a non-repatriable basis, conditions at
item (i) of the proviso shall not apply.
(3) A person
resident in India holding equity
instruments of an Indian company or units, may transfer the same to a person
resident outside India by way of sale, 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 and documentation and reporting requirements for such transfers as may be
specified by the Reserve Bank in consultation with the Central Government from
time to time;
(4) A person
resident in India holding equity
instruments or units of an Indian company
[24]
[*] may transfer
the same to a person resident outside India by way of gift with the prior
approval of the Reserve Bank, in the manner prescribed, and subject to the
following conditions, namely:-
(i)
the donee is
eligible to hold such a security under the
Schedules of these Rules;
(ii) the gift does
not exceed five percent
of the paid up capital of the Indian company or each
series of debentures or each mutual fund scheme;
Explanation: The five
percent of the paid up capital of the Indian company
or each series of debentures or each mutual fund
scheme will be on cumulative basis by a single person to another single person.
(iii) the applicable
sectoral cap in the
Indian company is not breached;
(iv) the donor and
the donee
shall be relatives within the meaning in clause (77) of section 2 of the
Companies Act, 2013;
(v) the value of
security to be
transferred by the donor together with any security transferred to any person
residing outside India as gift during the financial year does not exceed the
rupee equivalent of fifty-thousand US Dollars;
(vi) such other
conditions as considered
necessary in public interest by the Central Government.
(5) A person
resident outside India holding
equity instruments of an Indian company containing an optionality clause in
accordance with these rules and exercising the option or right, may exit without any assured return, subject to the
pricing
guidelines prescribed in these rules and a minimum lock-in period of one year
or minimum lock-in period as prescribed in these rules, whichever is higher.
(6) In case of
transfer of equity instruments
between a person resident in India and a person resident outside India, an
amount not exceeding twenty five percent of the total consideration,-
(i)
may be
paid by the buyer on a deferred basis within a period not exceeding eighteen
months from the date of the transfer agreement; or
(ii) may 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
(iii) may 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:
Provided that the total
consideration finally paid for the shares shall be compliant with the
applicable pricing guidelines.
(7) In case of
transfer of equity instruments
between a person resident in India and a person resident outside India, a
person resident outside India may open an escrow account in accordance with the
Foreign Exchange Management (Deposit) Regulations, 2016 and such escrow account
may be funded by way of inward remittance through banking channels and/ or by
way of guarantee issued by an authorised dealer bank,
subject to the terms and conditions as specified in the Foreign Exchange
Management (Guarantees) Regulations, 2000.
(8) The transfer of
equity instruments of an
Indian company or units of an investment vehicle by way of pledge is subject to
the following terms and conditions, namely :-
(i)
any
person being a promoter of a company registered in India (borrowing company),
which has raised external commercial borrowing in compliance with the Foreign
Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations,
2000 may pledge the shares of the borrowing company or that of its associate
resident companies for the purpose of securing the external commercial
borrowing raised by the borrowing company subject to the following further
conditions, namely :-
(A) the period of
such pledge shall be
co-terminus with the maturity of the underlying external commercial borrowing;
(B) in case of
invocation of pledge, transfer
shall be made in accordance with these rules and directions issued by the
Reserve Bank;
(C) the statutory
auditor has certified that the
borrowing company shall utilise or has utilised the proceeds of the external commercial
borrowing
for the permitted end-use only;
(D) no person shall
pledge any such share unless a
no-objection has been obtained from an authorised
dealer bank that the above conditions have been complied with;
(ii) any person
resident outside India
holding equity instruments in an Indian company or units of an investment
vehicle may pledge the equity instruments or units, as the case may be,-
(A) in favour of a bank
in India to secure the credit facilities being extended to such Indian company
for bona fide purposes,
(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,
(C) in favour of a
non-banking financial company registered with the Reserve Bank to secure the
credit facilities being extended to such Indian company for bona fide purposes,
(D) subject to the
authorised
dealer bank satisfying itself of the compliance of the conditions stipulated by
the Reserve Bank in this regard;
(iii) in case of
invocation of pledge,
transfer of equity instruments of an Indian company or units shall be in
accordance with entry routes, sectoral caps or investment limits, pricing
guidelines and other attendant conditions at the time of creation of pledge.
[25]
[9A. Swap of equity
instruments and equity capital.-
The transfer of
equity instruments of an Indian company between a person resident in India and
a person resident outside India may be by way of ]
(i)
swap of equity
instruments, in compliance with the rules prescribed by the Central Government
and the regulations specified by the Reserve Bank from time to time;
(ii) swap of equity
capital of a foreign company
in compliance with the rules prescribed by the Central Government including the
Foreign Exchange Management, (Overseas Investment) Rules, 2022, and the
regulations specified by the Reserve Bank from time to time:
Provided that prior Government
approval shall be obtained for transfer in all cases wherever Government
approval is applicable.
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.]
CHAPTER IV
INVESTMENT BY
FOREIGN PORTFOLIO INVESTOR (FPI)
10. Investment by
FPI - A FPI may make
investments as under:-
(1) A FPI may
purchase or sell equity
instruments of an Indian company which is listed or to be listed on a recognised stock exchange in India, and/or may
purchase or
sell securities other than equity instruments, in the manner and subject to the
terms and conditions specified in Schedule II.
Note - A FPI may
trade or invest in all exchange traded derivative contracts approved by
Securities and Exchange Board of India from time to time subject to the limits
specified by the Securities and Exchange Board of India and the conditions
prescribed in Schedule II.
(2) A FPI may
purchase, hold, or sell Indian
Depository Receipts (IDRs) of companies resident
outside India and issued in the Indian capital market, in the manner and
subject to the terms and conditions as prescribed in Schedule X.
11.
[26]
[Transfer of
equity instruments of an Indian company by FPI A FPI
holding
equity instruments of an Indian company or units in accordance with these
rules, may transfer such equity instruments or units held by him in compliance
with the conditions, if any, specified in the Schedules annexed to these rules,
subject to the terms and conditions specified therein and by the Securities and
Exchange Board of India:
Provided that, -
(i)
prior
Government approval shall be obtained for any transfer in case the company is
engaged in a sector which requires the Government approval;
(ii) where the
acquisition of equity instruments
by FPI under Schedule II has resulted in a breach of the applicable aggregate
FPI limits or sectoral limits the provisions of item (iii) of sub-paragraph (a)
of paragraph (1) of Schedule II shall apply.]
CHAPTER V
INVESTMENT BY
NON-RESIDENT INDIAN OR AN OVERSEAS CITIZEN OF INDIA
12. Investment by
NRI or OCI - A NRI or an
OCI may make investments as under:-
(1) A
NRI or an OCI
may, on repatriation basis, purchase or sell equity instruments of a listed
Indian company and other securities in the manner and subject to the terms and
conditions prescribed in Schedule III.
(2) A
NRI or an OCI may,
on non-repatriation basis, purchase or sell equity instruments of an Indian
company or other securities or contribute to the capital of a LLP or a firm or
proprietary concern, in the manner and subject to the terms and conditions
specified
in Schedule IV.
Note: A NRI or an OCI may trade or
invest in all exchange traded
derivative contracts approved by the Securities and Exchange Board of India
from time to time subject to the limits specified by Securities and Exchange
Board of India and conditions prescribed in Schedule III.
(3) A
NRI or an OCI may
purchase, hold, or sell Indian Depository Receipts (IDRs) of companies resident
outside India and issued in the Indian capital market, in the manner and
subject to the terms and conditions specified in Schedule X.
13. Transfer of
equity instruments by NRI or OCI - A NRI or an OCI holding
equity instruments of an Indian
company or units in accordance with these rules may transfer such equity
instruments or units so held by him in compliance with the conditions, if any,
prescribed in the Schedules of these rules and subject to the terms and
conditions prescribed hereunder:
(1) A NRI or an OCI
holding equity instruments
of an Indian company or units on repatriation basis may transfer the same by
way of sale or gift to any person resident outside India
:
Provided that,-
(i)
prior
Government approval shall be obtained for any transfer in case the company is
engaged in a sector which requires Government approval;
(ii) where the
acquisition of equity instruments
by an NRI or an OCI under the provisions of Schedule III of these rules has
resulted in a breach of the applicable aggregate NRI or OCI limit or sectoral
limits, the NRI or the OCI shall sell such equity instruments to a person
resident in India eligible to hold such instruments within the time stipulated
by the Reserve Bank of India in consultation with the Central Government and
the breach of the said aggregate or sectoral limit on account of such
acquisition for the period between the acquisition and sale, provided the sale
is within the prescribed time, shall not be reckoned as a contravention under
these rules.
(2) A NRI or an OCI
or an eligible investor under
Schedule IV of these rules, holding equity instruments of an Indian company or
units on a non-repatriation basis, may transfer the same to a person resident
outside India by way of sale, 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 and
documentation and reporting requirements for such transfers as may be specified
by the Reserve Bank in consultation with the Central Government from time to
time;
Provided that the entry
routes, sectoral caps or investment limits, pricing guidelines and other
attendant conditions shall not apply in case the transfer is to an NRI or an
OCI or an eligible investor under Schedule IV of these rules acquiring such
investment.
(3) A NRI or an OCI
or an eligible investor under
Schedule IV of these rules holding equity instruments or units of an Indian
company on a non-repatriation basis may transfer the same to a person resident
outside India by way of gift with the prior approval of the Reserve Bank of
India, in the manner prescribed, and subject to the following conditions, namely :-
(i)
the donee is
eligible to hold such a security under relevant
Schedules of these rules;
(ii) the gift does
not exceed five percent of
the paid up capital of the Indian company or each
mutual fund scheme;
Explanation: The five
percent shall be on cumulative basis by a single person to another single
person.
(iii) the applicable
sectoral cap in the Indian
company is not breached;
(iv) the donor and
the donee
shall be relatives within the meaning in clause (77) of section 2 of the
Companies Act, 2013;
(v) the value of
security to be transferred by
the donor together with any security transferred to any person residing outside
India as gift during the financial year does not exceed the rupee equivalent of
USD 50000;
(vi) such other
conditions as may be considered
necessary in public interest by the Central
Government.
(4) A
NRI or an OCI or
an eligible investor specified under Schedule IV of these rules holding equity
instruments of an Indian company or units on a non-repatriation basis, may
transfer the same by way of gift to an NRI or an OCI or an eligible investor
under Schedule IV of these rules who shall hold it on a non-repatriable basis.
(5) An erstwhile OCB
may transfer equity
instruments subject to the directions issued by the Reserve Bank of India from
time to time in this regard.
Explanation: "Overseas
Corporate Body (OCB)" means an entity de-recognised
through Foreign Exchange Management [Withdrawal of General Permission to
Overseas Corporate Bodies (OCBs)] Regulations, 2003.
CHAPTER VI
INVESTMENT BY
OTHER NON-RESIDENT INVESTORS
14. Investment in
securities by other
non-resident investors - The other
non-resident investors may make investments in securities in the manner and
subject to the terms and conditions specified in Schedule V.
15. Transfer of
securities by other non-resident
investors :-
The other
non-resident investors, holding securities in accordance with these rules, may
transfer the securities subject to such terms and conditions prescribed in
Schedule V and as specified by the Securities and Exchange Board of India and
the Reserve Bank.
CHAPTER VII
INVESTMENT BY
FOREIGN VENTURE CAPITAL INVESTOR
16. Investment by
FVCI - A Foreign Venture
Capital Investor (FVCI) may make investments in the manner and subject to the
terms and conditions specified in Schedule VII.
17. Transfer of
equity instruments of an Indian
company by or to a FVCI - A FVCI holding
equity instruments of an Indian company or units in accordance with these rules
or a person resident in India, may transfer such equity instruments or units so
held by him in compliance with the conditions, if any, prescribed in Schedule
VII
of these rules and as specified by the Securities and Exchange Board of India
and the Reserve Bank.
CHAPTER VIII
GENERAL
PROVISIONS
18. Issue of
Convertible Notes by an Indian
startup company .-
(1) A person
resident outside India (other than
an individual who is citizen of Pakistan or Bangladesh or an entity which is
registered or incorporated in Pakistan or Bangladesh), may purchase convertible
notes issued by an Indian startup company for an amount of twenty
five lakh rupees or more in a single tranche.
(2) A startup
company, engaged in a sector where
investment by a person resident outside India requires Government approval, may
issue convertible notes to a person resident outside India only with such
approval. Further, issue of equity shares against such
convertible notes shall be in compliance with the
entry route, sectoral caps, pricing guidelines and other attendant conditions
for foreign investment.
(3) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
(4) A NRI or an OCI may
acquire convertible notes on non-repatriation basis in accordance with Schedule
IV of these rules.
(5) A person
resident outside India may acquire
or transfer by way of sale, convertible notes, from or to, a person resident in
or outside India, provided the transfer takes place in accordance with the
entry routes and pricing guidelines as prescribed for capital instruments.
19.
Merger or
demerger or amalgamation of Indian
companies.-
(1)
[27]
[Where 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, or
transfer of undertaking of one or more Indian company to another Indian
company, or involving division of one or more Indian company, has been approved
by the National Company Law Tribunal (NCLT) or other authority competent 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, namely:-
(a) the
transfer or
issue is in compliance with the entry routes, sectoral caps or investment
limits, as the case may be and the attendant conditionalities of investment by
a person resident outside India:
Provided that where the percentage is likely to breach
the sectoral
caps or the attendant conditionalities, the transferor company or the
transferee or new company may obtain necessary approval from the Central Government;
(b) the
transferor
company or the transferee company or the new company is not engaged in any
sector prohibited for investment by a person resident outside India.
Note: Government
approval shall not be required in case of mergers and acquisitions taking place
in sectors under automatic route.]
(2) where a scheme
of
[28]
[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, then the scheme of arrangement shall be in compliance with the SEBI (Listing Obligation
and
Disclosure Requirement) Regulations, 2015.
20. Reporting
requirements - The reporting
requirements for any investment in India by a person resident in India shall be
as specified by the Reserve Bank.
21. Pricing
guidelines
(1) The pricing
guidelines specified in these
rules shall not be applicable for any transfer by way of sale done in
accordance with Securities and Exchange Board of India regulations where the
pricing is specified by Securities and Exchange Board of India.
(2) Unless otherwise
prescribed in these rules,
the price of equity instruments of an Indian company, -
(a) issued by
such
company to a person resident outside India shall not be less than
:
(i)
the price worked
out in accordance with the Securities and Exchange Board of India guidelines in
case of a listed Indian company or in case of a company going through a
delisting process as per the Securities and Exchange Board of India (Delisting
of Equity Shares) Regulations, 2009;
(ii) 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 Merchant Banker registered with the Securities and Exchange Board of India
or a practising Cost Accountant, in case of an
unlisted Indian Company.
[29]
[Explanation:
In case of
convertible equity instruments, the price or conversion formula of the
instrument should 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 these rules.]
(b) transferred
from
a person resident in India to a person resident outside India shall not be less
than,-
(i)
the price worked
out in accordance with the Securities and Exchange Board of India guidelines in
case of a listed Indian company;
(ii) the price
at
which a preferential allotment of shares can be made under the Securities and
Exchange Board of India Guidelines, as applicable, in case of a listed Indian
company or in case of a company going through a delisting process as per the
Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009;
(iii) 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 Merchant Banker registered with the Securities and Exchange Board of India
or a practising Cost Accountant, in case of an
unlisted Indian company.
(c) transferred
by a
person resident outside India to a person resident in India shall not exceed :
(i)
the price worked
out in accordance with the relevant Securities and Exchange Board of India
guidelines in case of a listed Indian company;
(ii) the price
at
which a preferential allotment of shares can be made under the Securities and
Exchange Board of India Guidelines, as applicable, in case of a listed Indian
company or in case of a company going through a delisting process as per the
Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009 :
Provided
that the price is determined for such duration as
specified in the
Securities and Exchange Board of India Guidelines, preceding the relevant date,
which shall be the date of purchase or sale of shares;
(iii) 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 Merchant Banker registered with the Securities and Exchange Board of India
or a practising Cost Accountant, in case of an
unlisted Indian company.
Explanation: The guiding
principle shall be that the person resident outside India is not guaranteed any
assured exit price at the time of making such investment or agreement and shall
exit at the price prevailing at the time of exit.
(iv) in case
of swap
of equity instruments, subject to the condition that irrespective of the
amount, valuation involved in the swap arrangement shall have to be made by a
Merchant Banker registered with the Securities and Exchange Board of India or
an investment banker outside India registered with the appropriate regulatory
authority in the host country.
(v) 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.
(vi) in case of share
warrants, their pricing and the price or conversion formula shall be determined
upfront:
Provided
that these pricing guidelines shall not be applicable
for investment in
equity instruments by a person resident outside India on a non-repatriation
basis.
22. Taxes and
remittances of sale proceeds
(1) Taxes -
All transaction under these
rules shall be undertaken through banking channels in India and subject to the
payment of applicable taxes and other duties or levies in India.
(2) Remittance of
sale proceeds:
(a) No
remittance of
sale proceeds of an Indian security held by a person resident outside India
shall be made otherwise than in accordance with these rules
,
the conditions prescribed in the relevant Schedule and as specified by the
Reserve Bank.
(b) An authorised dealer may allow
the remittance of sale proceeds
of a security (net of applicable taxes) to the seller of shares resident
outside India :
Provided that -
(i)
the security was
held by the seller on repatriation basis; and
(ii) either the
security
has been sold in compliance with the pricing guidelines or the Reserve Bank s
approval has been obtained in other cases for sale of the security and
remittance of the sale proceeds thereof.
23. Downstream
investment
(1) Indian entity
which has received indirect
foreign investment shall comply with the entry route, sectoral caps, pricing
guidelines and other attendant conditions as applicable for foreign investment.
Explanation: Downstream
investment by an LLP not owned and not controlled by resident Indian citizens
or owned or controlled by persons resident outside India is allowed in an
Indian company operating in sectors where foreign investment up to one hundred
percent is permitted under automatic route and there are no FDI linked
performance conditions.
(2) With effect from
the 31st day of July, 2012,
downstream investment(s) made under Corporate Debt Restructuring (CDR), or
other loan restructuring mechanism, or in trading book, or for acquisition of
shares due to defaults in loans, by a banking company, as defined in clause (c)
of section 5 of the Banking Regulation Act, 1949 ( 10 of 1949) incorporated in
India, which is not owned and not controlled by resident Indian citizens or
owned or controlled by persons resident outside India, shall not count towards
indirect
foreign investment, however, their strategic downstream investment shall be
counted towards indirect foreign investment for the company in which such
investment is being made.
(3) Guidelines for
calculating total foreign
investment in Indian companies are as follows ,-
(a) any equity
holding by a person resident outside India resulting from conversion of any
debt instrument under any arrangement shall be reckoned for total foreign investment;
(b) FCCBs and
DRs
having underlying of instruments in the nature of debt
shall not be reckoned for total foreign investment;
(c) the
methodology
for calculating total foreign investment shall apply at every stage of
investment in Indian companies and thus in each and every Indian company;
(d) for the
purpose
of downstream investment, the portfolio investment held as on 31st March of the previous financial year in
the
Indian company making the downstream investment shall be considered for
computing its total foreign investment;
(e) indirect
foreign
investment received by a wholly owned subsidiary of an Indian company shall be
limited to the total foreign investment received by the company making the
downstream investment.
(4) Downstream
investment that is treated as
indirect foreign investment for the investee entity shall be subject to the
following conditions, namely :-
(a) downstream
investment shall have the approval of the Board of Directors as also a
shareholders Agreement, if any;
(b) for the
purpose
of downstream investment, the Indian entity making the downstream investment
shall bring in requisite funds from abroad and not use funds borrowed in the
domestic markets and the downstream investments may be made through internal
accruals and for this purpose, internal accruals shall mean profits transferred
to reserve account after payment of taxes. Further raising of debt and its utilisation shall be in compliance
with
the Act, rules or regulations made thereunder.
(5) Equity
instrument of an Indian company held
by another Indian company which has received foreign investment and is not
owned and not controlled by resident Indian citizens or is owned or controlled
by persons resident outside India may be transferred to-
(a) a person
resident
outside India, subject to the reporting requirements as specified by the
Reserve Bank.
(b) a person
resident
in India subject to adherence to pricing guidelines;
(c) an Indian
company
which has received foreign investment and is not owned and not controlled by
resident Indian citizens or owned or controlled by persons resident outside
India.
(6) The first level
Indian company making
downstream investment shall 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 and such first level company shall obtain a
certificate to this effect from its statutory auditor on an annual basis and
such compliance of these rules shall be mentioned in the Director s report in
the Annual Report of the Indian company. In case statutory auditor has given a
qualified report, the same shall be immediately brought to the notice of the
regional office of the Reserve Bank in whose jurisdiction the Registered Office
of the company is located and shall also obtain acknowledgement from the
Registered Office.
(7) The provisions
(5) and (6) of rule 23 shall
apply mutatis mutandis to a LLP.
Note: Downstream
investment that is treated as indirect foreign investment for the investee
entity made in accordance with the guidelines in existence prior to the 13th February, 2009 shall not require any
modification to
conform to these rules and all such investments, after the said date, shall
come under the ambit of these rules. Downstream investment that is treated as
indirect foreign investment for the investee entity made between the 13th February, 2009 and 21st June 2013 which is not in conformity
with these
rules shall have to be intimated to the Reserve Bank by 3rd October,2013 for treating such cases as
compliant with these Rules.
Explanation.- For the purposes
of this rule,-
(a) ownership of an
Indian company shall mean
beneficial holding of more than fifty percent of the equity instruments of such
company and ownership of an LLP shall mean contribution of more than
fifty percent in its capital and having majority profit share;
(b) company owned by
resident Indian citizens shall mean 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 and LLP owned by resident Indian citizens shall mean an LLP where
ownership is vested in resident Indian citizens and/ or Indian entities, which
are ultimately owned and controlled by resident Indian citizens;
(c) company owned by
persons resident outside India shall mean
an
Indian company that is owned by persons resident outside India and LLP
owned by persons resident outside India shall mean an
LLP that is
owned by persons resident outside India;
(d)
[30]
[*]
(e) "company
controlled by resident Indian citizens"
means an Indian
company, the control of which is vested in resident Indian citizens and/ or
Indian companies which are ultimately owned and controlled by resident Indian
citizens and LLP controlled by resident Indian citizens shall mean an LLP,
the control of which is vested in resident Indian citizens and/ or Indian
entities, which are ultimately owned and controlled by resident Indian citizens;
(f) company
controlled by persons resident outside India
shall mean an
Indian company that is controlled by persons resident outside India and
LLP
controlled by persons resident outside India shall mean
an LLP that is
controlled by persons resident outside India;
(g) downstream
investment shall mean investment made by
an
Indian entity which has total foreign investment in it, or an Investment
Vehicle in the capital instruments or the capital, as the case may be, of
another Indian entity;
(h) holding company shall have the
same meaning as assigned to it under Companies Act, 2013;
(i)
"indirect foreign
investment" means downstream investment
received
by an Indian entity from,-
(A) another Indian entity (IE) which has received foreign investment and (i) the IE is not owned and not controlled by
resident
Indian citizens or (ii) is owned or controlled by persons resident outside
India; or
(B) an investment vehicle whose sponsor or manager or investment manager (i) is not owned and not controlled by resident
Indian
citizens or (ii) is owned or controlled by persons resident outside India :
Provided
that no person resident in India other than an Indian
entity can
receive Indirect Foreign Investment;
[31]
[*]
[32]
[
Explanation.
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 foreign investment.]
(j) "total foreign
investment" means the total of foreign
investment
and indirect foreign investment and the same will be reckoned on a fully
diluted basis;
(k) "strategic
downstream investment" means investment
by banking companies incorporated in India in their subsidiaries, joint
ventures and associates.
CHAPTER IX
ACQUISITION AND
TRANSFER OF IMMOVABLE PROPERTY IN INDIA
24. Acquisition and
transfer of property in India
by a NRI or an OCI - A NRI or
an OCI
may-
(a) acquire
immovable
property in India other than an agricultural land or farm house or plantation
property:
Provided
that the consideration, if any, for transfer, shall be
made out of
funds received in India through banking channels by way of inward remittance
from any place outside India ; or
(i) funds held in any
non-resident
account maintained in accordance with the provisions of the Act, rules or
regulations framed thereunder:
Provided
further that no payment for any transfer of immovable
property shall be
made either by traveller s cheque or by foreign
currency notes or by any other mode other than those specifically permitted
under this clause;
(b) acquire any
immovable property in India other than agricultural land or farm
house or plantation property by way of gift from a person
resident in
India or from an NRI or from an OCI, who in any case is a relative as defined
in clause (77) of section 2 of the Companies Act, 2013;
(c) acquire any
immovable property in India by way of inheritance from a person resident
outside India who had acquired such property:-
(i) in accordance with
the provisions of the
foreign exchange law in force at the time of acquisition by him or the
provisions of these rules ;or
(ii) from
a person resident in India;
(d) transfer
any
immovable property in India to a person resident in India;
(e) transfer
any
immovable property other than agricultural land or farm
house
or plantation property to an NRI or an OCI.
25. Joint
acquisition by the spouse of a NRI or
an OCI : A person resident
outside India, not being an NRI or an OCI, who is a spouse of an NRI or an OCI
may acquire one immovable property (other than agricultural land or farm house
or plantation property), jointly with his or her NRI or OCI spouse :
Provided that -
(a) consideration
for
transfer, shall be made out of -
(i) funds received in
India through banking
channels by way of inward remittance from any place outside India; or
(ii) funds
held in any non-resident account maintained in accordance with the provisions
of the Act and the regulations made by the Reserve Bank;
(b) no payment
for
any transfer of immovable property shall be made either by traveller s
cheque or by foreign currency notes or by any other mode other than those
specifically permitted under this clause:
Provided
that the marriage has been registered and subsisted for
a continuous
period of not less than two years immediately preceding the acquisition of such
property:
Provided
further that the non-resident spouse is not otherwise
prohibited from
such acquisition.
26. Acquisition of
immovable property for
carrying on a permitted activity - A person resident
outside India who has established in India in accordance with the Foreign
Exchange Management (Establishment in India of a Branch office or a liaison
office or a project office or any other place of business) Regulations, 2016,
as amended from time to time, a branch, office or other place of business for
carrying on in India any activity, excluding a liaison office, may-
(a) acquire any
immovable property in India, which is necessary for or incidental to carrying
on such activity:
Provided that,-
(i) all applicable
laws, rules, regulations,
for the time being in force are duly complied with; and
(ii) the
person files with the Reserve Bank a declaration in the Form IPI as specified
by the Reserve Bank from time to time, not later than ninety days from the date
of such acquisition;
(b) transfer by
way
of mortgage to an authorised dealer as a security for
any borrowing, the immovable property acquired in pursuance of clause (a) of
rule 26:
Provided that no person of
Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong
Kong or Macau or Nepal or Bhutan or Democratic People s Republic of Korea
(DPRK) shall acquire immovable property, other than on lease not exceeding five
years, without prior approval of the Reserve Bank.
27. Purchase or sale
of immovable property by
Foreign Embassies or Diplomats or Consulate Generals -
A Foreign Embassy
or Diplomat or Consulate General may purchase or sell immovable property in
India other than agricultural land or plantation property or farm house provided :
(i) clearance from
Government of India,
Ministry of External Affairs is obtained for such purchase or sale; and
(ii) the
consideration for acquisition of immovable property in India is paid out of
funds remitted from abroad through banking channels.
28. Acquisition by a
long-term visa holder - A person being a
citizen of Afghanistan, Bangladesh or Pakistan belonging to minority
communities in those countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis
and Christians who is residing in India and has been granted a Long Term Visa
(LTV) by the Central Government may purchase only one residential immovable
property in India as dwelling unit for self-occupation and only one immovable
property for carrying out self-employment subject to the following conditions,
namely :-
(a) the
property
shall not be located in and around restricted or
protected areas so notified by the Central Government and cantonment areas;
(b) the person
submits a declaration to the Revenue Authority of the district where the
property is located, specifying the source of funds and that he or she is
residing in India on LTV;
(c) the
registration
documents of the property shall mention the nationality and the fact that such
person is on LTV;
(d) the
property of
such person may be attached or confiscated in the event of his or her
indulgence in anti-India activities;
(e) a copy of
the
documents of the purchased property shall be submitted to the Deputy
Commissioner of Police (DCP) or Foreigners Registration Office (FRO) or
Foreigners Regional Registration Office (FRRO) concerned and to the Ministry of
Home Affairs (Foreigners Division);
(f) such person
shall
be eligible to sell the property only after acquiring Indian citizenship,
however, transfer of the property before acquiring Indian citizenship shall
require prior approval of DCP or FRO or FRRO concerned.
29. Repatriation of
sale proceeds
(1) A person
referred to in sub-section (5) of
section 6 of the Act, or his successor shall not, except with the general or
specific permission of the Reserve Bank, repatriate outside India the sale
proceeds of any immovable property referred to in that sub- section.
(2) In the event of
sale of immovable property
other than agricultural land or farm house or plantation property in India by
an NRI or an OCI, the authorised dealer may allow
repatriation of the sale proceeds outside India, provided the following
conditions are satisfied, namely:-
(a) the immovable
property was acquired by the seller in accordance with the provisions of the
foreign exchange law in force at the time of acquisition or the provisions of
these rules;
(b) the amount
for
acquisition of the immovable property was paid in foreign exchange received
through banking channels or out of funds held in Foreign Currency Non-Resident
Account or out of funds held in Non-Resident External Account;
(c) in the case
of
residential property, the repatriation of sale proceeds is restricted to not
more than two such properties.
(3) In the event of
failure in repayment of
external commercial borrowing availed by a person resident in India under the
provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000, as amended from time to time, a bank which is an
authorised dealer may permit the overseas lender or
the
security trustee (in whose favour the charge on
immovable property has been created to secure the ECB) to sell the immovable
property on which the said loan has been secured only to a (by the) person
resident in India and to repatriate the sale proceeds towards outstanding dues
in respect of the said loan and not any other loan.
30. Prohibition on
transfer of immovable property
in India
(1) Save as
otherwise provided in the Act or
rules, no person resident outside India shall transfer any immovable property
in India:
Provided that:-
(a) the Reserve
Bank
may, for sufficient reasons, permit the transfer subject to such conditions as
may be considered necessary;
(b) a bank
which is
an authorised dealer may, subject to the directions
issued by the Reserve Bank in this behalf, permit a person resident in India or
on behalf of such person to create charge on his immovable property in India in
favour of an overseas lender or security trustee, to
secure an external commercial borrowing availed under the provisions of the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange)
Regulations, 2000;
(c) an authorised dealer in India
being the Indian correspondent
of an overseas lender may, subject to the directions issued by the Reserve Bank
in this regard, create a mortgage on an immovable property in India owned by an
NRI or an OCI, being a director of a company outside India, for a loan to be
availed by the company from the said overseas lender :
Provided further that :-
(i) the funds shall be
used by the borrowing
company only for its core business purposes overseas;
(ii) in
case of invocation of charge, the Indian bank shall sell the immovable property
to an eligible acquirer and remit the sale proceeds to the overseas lender.
(2) A person
resident outside India who has
acquired any immovable property in India in accordance with foreign exchange
laws in force at the time of such acquisition or with the general or specific
permission of the Reserve Bank may transfer such property to a person resident
in India provided the transaction takes place through banking channels in India
and provided further that the resident is not otherwise prohibited from such
acquisition.
31. Prohibition on
acquisition or transfer of
immovable property in India by citizens of certain countries -
No person being a
citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal,
Bhutan, Hong Kong or Macau or Democratic People s Republic of Korea (DPRK)
without prior permission of the Reserve Bank shall acquire or transfer
immovable property in India, other than lease not exceeding five years :
Provided that this prohibition
shall not apply to an OCI.
Explanation: For the purpose of this
rule,
the term citizen shall include
natural persons and legal entities.
32.
Miscellaneous - Any
transaction involving acquisition or transfer of immovable property under these
rules shall be undertaken:-
(a) through
banking
channels in India;
(b) subject to
payment of applicable taxes and other duties or levies in India.
33.
Savings - Any existing
holding of immovable property in India by a person resident outside India made
in accordance with the policy in existence at the time of such acquisition
would not require any modifications to conform to these rules.
[33]
[CHAPTER X
INVESTMENT BY PERMISSIBLE
HOLDER IN EQUITY SHARES OF PUBLIC COMPANIES INCORPORATED IN INDIA AND
LISTED ON
INTERNATIONAL EXCHANGES
34. Investment by
permissible holder
.-
(1) A permissible
holder may purchase or sell
equity shares of a public Indian company which is listed or to be listed on an
International Exchange under Direct Listing of Equity Shares of Companies
Incorporated in India on International Exchanges Scheme as specified in
Schedule XI.
(2) The mode of
payment and other attendant
conditions for remittance of proceeds of issue shall be as specified by the
Reserve Bank.]
SCHEDULE I
Purchase or sale
of equity instruments of an Indian company by a person resident outside
India
(1) Purchase or sale
of equity instruments of
an Indian company by a person resident outside India
(a) An Indian
company may issue equity
instruments to a person resident outside India subject to entry routes,
sectoral caps and attendant conditionalities prescribed in this Schedule.
(b) A person
resident outside India may
purchase equity instruments of a listed Indian company on a stock exchange in
India:
Provided that -
(i) 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;
(ii) the amount of
consideration may be paid
as per the mode of payment specified by the Reserve Bank or out of the dividend
payable by Indian investee company in which the person resident outside India
has acquired and continues to hold the 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 a specially designated noninterest bearing rupee account for
acquisition of shares on the recognised stock
exchange.
(c) A wholly owned
subsidiary set up in India
by a non-resident entity, operating in a sector where 100 percent foreign
investment is allowed in the automatic route and there are no FDI linked
performance conditions, may issue equity instruments to the said non-resident
entity against pre- incorporation or pre-operative expenses incurred by the
said nonresident entity up to a limit of five percent of its authorised capital or USD 500,000 whichever is less,
subject to the condition that within thirty days from the date of issue of
equity instruments but not later than one year from the date of incorporation
or such time as the Reserve Bank permits, the Indian company shall report the
transaction to the Reserve Bank as per the reporting requirements as specified
by the Reserve Bank.
(d)
[34]
[An Indian
company may issue, subject to compliance with the rules prescribed by the
Central Government and the regulations specified by the Reserve Bank from time
to time, equity instruments to a person resident outside India against,-
(i) swap of equity
instruments; or
(ii) import of
capital goods or machinery or
equipment (excluding second-hand machinery); or
(iii) pre-operative
or pre-incorporation expenses
(including payments of rent etc.)
(iv) 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:
Provided that Government approval shall be obtained in all cases wherever Government
approval is applicable and the applications for approval shall be made in the
manner prescribed by the Central Government from time to time.]
(d) An Indian
company may issue equity shares
against any funds payable by it to a person resident outside India, the
remittance of which is permitted under the Act or the rules and regulations
framed or directions issued thereunder or does not require prior permission of
the Central Government or the Reserve Bank under the Act or the rules and
regulations framed or directions issued thereunder or has been permitted by the
Reserve Bank under the Act or the rules and regulations framed or directions
issued thereunder:
Provided that in case where
permission has been granted by the Reserve Bank for making remittance, the
Indian company may issue equity 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.
(e) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
(2) Sectors
prohibited for FDI.-
(a) Lottery business
including Government or
private lottery, online lotteries, etc.
(b) Gambling and
betting including casinos,
etc.
(c) Chit funds
(d) Nidhi company
(e) Trading in
Transferable Development Rights
(f) Real estate
business or construction of farm houses
[35]
[Explanation: For the purpose of this rule, 'real estate business' means dealing in
land and immovable property with a view to earning profit from there and does
not include development of townships, construction of residential or commercial
premises, roads or bridges, educational institutions, recreational facilities,
city and regional level infrastructure, townships, real estate broking services
and Real Estate Investment Trusts (REITs) registered and regulated under the
SEBI (REITs) Regulations 2014 and earning of rent or income on lease of the
property, not amounting to transfer]
(g) Manufacturing of
cigars, cheroots,
cigarillos and cigarettes, of tobacco or of tobacco substitutes.
(h) Activities or
sectors not
open to private sector investment e.g. (I) Atomic energy and (II)
Railway operations (other than permitted activities mentioned in paragraph (3)
of Schedule I)
(i) Foreign
technology collaborations in any form including licensing for franchise,
trademark, brand name, management contract is also prohibited for lottery
business and gambling and betting activities.
(3) Permitted
sectors, entry routes and sectoral
caps for total foreign investment
Unless otherwise specified in these Rules or
the Schedules, the entry routes and sectoral caps for the total foreign
investment in an Indian entity shall be as follows, namely:-
(a) Entry
routes.-
(i) "automatic
route" means the entry route through which investment
by
a person
resident outside India does not require the prior approval of the Reserve Bank
or the Central Government;
(ii) "government route"
means the entry
route through which investment by a person resident outside India requires
prior Government approval and foreign investment received under this route
shall be in accordance with the conditions stipulated by the Government in its
approval.
(iii)
[36]
[The aggregate
foreign portfolio investment up to the sectoral or statutory cap shall not
require Government approval or compliance of sectoral conditions as the case
may be, if such investment does not result in transfer of ownership and/ or
control of the resident Indian company from resident Indian citizens to persons
resident outside India and other investments by a person resident outside India
shall be subject to the conditions of Government approval and compliance of
sectoral conditions as laid down in these rules.]
(b) Sectoral
caps.
(i) Sectoral cap
for the sectors or activities specified in the table is the limit indicated
against each sector. The total foreign investment shall not exceed the sectoral
or statutory cap.
(ii) Foreign
investment in the following
sectors or activities is subject to applicable laws or regulations, security
and other conditionalities.
(iii) In sectors or
activities not listed below
or not prohibited under paragraph (2) of Schedule I of these rules, foreign
investment is permitted up to one hundred percent on the automatic route,
subject to applicable laws or regulations, security and other conditionalities:
Provided that foreign
investment in financial services other than those indicated under serial number
F below would require prior approval of the Government.
(iv) Wherever there
is a requirement of minimum capitalisation, it shall
include premium received along
with the face value of the equity instrument, only when it is received by the
company upon issue of such instruments to the person resident outside India and
the amount paid by the transferee during post-issue transfer beyond the issue
price of the capital instrument, shall not be taken into account while
calculating minimum capitalization requirement.
(v) (A) Foreign
Investment in investing
companies not registered as Non-Banking Financial Companies with the Reserve
Bank and in core investment companies (CICs), both engaged in the activity of
investing in the capital of other Indian entities, shall require prior approval
of the Government.
Note: Compliance to
these rules by the core investment companies is in addition to the compliance
of the regulatory framework prescribed to such companies as NBFCs under the
Reserve Bank of India Act, 1934 and regulations framed thereunder.
(B)Foreign
investment in investing companies registered as Non-Banking Financial Companies
(NBFCs) with the Reserve Bank, shall be under 100% automatic route.
(vi) For undertaking
activities which are under
automatic route and without FDI linked performance conditions, an Indian
company which does not have any operations and also has not made any downstream
investment that is treated as indirect foreign investment for the investee
entity, may receive investment in its equity instruments from persons resident
outside India under automatic route, however, approval of the Government shall
be required for such companies for undertaking activities which are under
Government
route and as and when such a company commences business or makes downstream
investment that is treated as indirect foreign investment for the investee
entity, it shall have to comply with the relevant sectoral conditions on entry
route, conditionalities and caps.
(vii) The onus of
compliance with the sectoral or
statutory caps on such foreign investment and attendant conditions, if any,
shall be on the company receiving foreign investment.
(viii) Wherever the
person resident outside India
who has made foreign investment specifies a particular auditor or audit firm
having international network for the audit of the Indian investee company, then
audit of such investee company shall be carried out as joint audit wherein one
of the auditors is not part of the same network.
TABLE
Sl. No (1)
|
Sector/
Activity
(2)
|
Sectoral Cap (3)
|
Entry Route
(4)
|
1.
|
Agriculture and
Animal Husbandry
|
|
|
1.1 |
(a) Floriculture,
Horticulture and Cultivation
of vegetables and mushrooms under controlled conditions;
(b) Development
and production of seeds and
planting material;
(c) Animal
Husbandry (including breeding of
dogs), Pisciculture, Aquaculture and Apiculture; and
(d) Services
related to agro
and allied sectors. Note: Other than
the above, foreign investment is not allowed in
any other agricultural sector
or activity.
|
100% |
Automatic |
1.2 |
Other Conditions |
|
|
|
The term under controlled
conditions covers the following: Cultivation
under controlled conditions for the
categories of Floriculture,
Horticulture, Cultivation of vegetables and mushrooms is
the practice of
cultivation wherein rainfall, temperature, solar
radiation, air humidity and
culture medium are controlled artificially. Control in
these parameters may
be effected through protected
cultivation under
green houses, net houses, poly houses or any other
improved infrastructure
facilities where micro-climatic conditions are regulated
anthropogenically. |
||
2.
|
Plantation
|
|
|
2.1 |
(a) Tea sector
including tea plantations (b) Coffee
plantations (c) Rubber
plantations (d) Cardamom
plantations (e) Palm oil tree
plantations (f) Olive oil tree
plantation Note: Foreign
investment is not allowed in any plantation
sector/ activity other than those
listed above. |
100% |
Automatic |
2.2 |
Other Conditions
|
|
|
|
Prior approval of the State
Government concerned is required in case of any future
land use change. |
||
3.
|
Mining
|
|
|
3.1 |
Mining and
Exploration of metal and non-metal ores including
diamond, gold, silver and
precious ores but excluding titanium bearing minerals
and its ores; subject
to the Mines and Minerals (Development and Regulation)
Act, 1957. |
100% |
Automatic |
3.2 |
Coal and
Lignite
|
|
|
|
(a)
[37]
[Coal
and
Lignite mining for captive consumption by power
projects, iron and steel and
cement units and other eligible activities permitted
under and subject to the
provisions of the Mines and Minerals (Development and
Regulation) Act, 1957
(67 of 1957) and the Coal Mines (Special Provisions)
Act, 2015 (11 of 2015).] (b) Setting up
coal processing plants like
washeries, subject to the condition that the company
shall not do coal mining
and shall not sell washed coal or sized coal from its
coal processing plants
in the open market and shall supply the washed or sized
coal to those parties
who are supplying raw coal to coal processing plants for
washing or sizing. (c)
[38]
[For
sale of
coal, coal mining activities including associated
processing infrastructure
subject to the provisions of the Mines and Minerals
(Development and
Regulation) Act, 1957 and the Coal Mines (Special
Provisions) Act, 2015 and
as amended from time to time and other relevant Acts on
the subject.] |
100% |
Automatic |
3.3 |
Mining and
mineral separation of titanium bearing minerals
and ores, its value addition
and integrated activities
|
||
|
(a) Mining and
mineral separation of titanium
bearing minerals and ores, its value addition and
integrated activities
subject to sectoral regulations and the Mines and
Minerals (Development and
Regulation) Act, 1957. |
100% |
Government |
3.4 |
Other Conditions |
|
|
|
(a)
[39]
[Associated
Processing Infrastructure as contained in 3.2 (c)
includes coal washery,
crushing, coal handling, and separation (magnetic and
non-magnetic).] (b) Foreign
investment for separation of
titanium bearing minerals and ores shall be subject to
the following
conditions: (i) Value
addition facilities are set up within
India along with transfer of technology;
(ii) Disposal of
tailings during the mineral
separation shall be carried out in accordance with
regulations framed by the
Atomic Energy Regulatory Board such as Atomic Energy
(Radiation Protection)
Rules, 2004 and the Atomic Energy (Safe Disposal of
Radioactive Wastes)
Rules, 1987. (c) Foreign
investment will not be allowed in
mining of "prescribed substances"
listed in the Notification
No. S.O. 61(E), dated 18.1.2006, issued by the
Department of Atomic Energy. Clarification:
(i)
For titanium
bearing ores such as Ilmenite, Leucoxene and Rutile,
manufacture of titanium
dioxide pigment and titanium sponge constitutes value
addition. Ilmenite can
be processed to produce Synthetic Rutile or Titanium
Slag as an intermediate value
added product. (ii) The objective
is to ensure that the raw
material available in the country is utilized for
setting up downstream
industries and the technology available internationally
is also made
available for setting up such industries within the
country. Thus, if with
the technology transfer, the objective of this Rules can
be achieved, the
conditions prescribed at (a)(i) above shall be
deemed to be fulfilled. |
||
4.
|
Petroleum and
Natural Gas
|
||
4.1 |
Exploration
activities of oil and natural gas fields, infrastructure
related to marketing
of petroleum products and natural gas, marketing of
natural gas and petroleum
products, petroleum product pipelines, natural gas/
pipelines, LNG
Regasification infrastructure, market study and
formulation and Petroleum
refining in the private sector, subject to the existing
sectoral policy and
regulatory framework in the oil marketing sector and the
policy of the
Government on private participation in exploration of
oil and the discovered
fields of national oil companies. |
100% |
Automatic |
4.2 |
Petroleum
refining by the Public Sector Undertakings (PSUs),
without any disinvestment
or dilution of domestic equity in the existing PSUs.
|
49% |
Automatic |
[40]
[4.3
|
Notwithstanding
anything contained at Sl. No. 4.2 above, foreign
investment up to 100% under
the automatic route is allowed in case an 'in-principle'
approval for
strategic disinvestment of a PSU has been granted by the
Government.] |
||
5.
|
Manufacturing
|
100% |
Automatic |
5.1 |
[41]
[Manufacturing
activities may be either self
manufacturing by the
investee entity or contract manufacturing in India
through a legally tenable
contract, whether on Principal to Principal or Principal
to Agent basis.
Further, a manufacturer is permitted to sell his
products manufactured in
India through wholesale and/or retail, including through
e-commerce, without
Government approval.] Notwithstanding
the provisions of these Rules on trading sector, 100
percent foreign
investment under the government approval route is
allowed for trading,
including through e-commerce, in respect of food
products manufactured and/
or produced in India. Applications for foreign
investment in food products
retail trading shall be processed in the Department of
Industrial Policy and
Promotion before being considered by the Government for
approval. |
||
[42]
[6.
|
Defence
|
|
|
6.1 |
Defence Industry
subject to Industrial license under the Industries
(Development & Regulation) Act, 1951; and
Manufacturing of small arms and
ammunition under the Arms Act, 1959 |
100% |
Automatic route
up to 74% Government
route beyond 74% wherever it is likely to result in
access to modern
technology or for other reasons to be recorded. |
6.2 |
Other Conditions |
||
|
(a) FDI up to 74%
under automatic route shall
be permitted for companies seeking new industrial
licenses. (b) Infusion of
fresh foreign investment up to
49%, in a company not seeking industrial license or
which already has
Government approval for FDI in Defence, shall
submit a declaration with the Ministry of Defence
in cases of change in equity/shareholding pattern or
transfer of stake by existing
investor to new foreign investor, for FDI up to 49%,
within a period of
thirty days of such change and any proposal for raising
FDI beyond 49% from
such companies shall require Government approval. (c) License
applications will be considered by
the Department for Promotion of Industry and Internal
Trade, Ministry of
Commerce and Industry, in consultation with Ministry of
Defence
and Ministry of External Affairs. (d) Foreign
investment in the sector shall be
subject to security clearance by the Ministry of Home
Affairs and as per
guidelines of the Ministry of Defence. (e) Investee
company shall be structured to be
self-sufficient in the areas of product design and
development and the
investee or joint venture company along with the
manufacturing facility, shall
also have maintenance and life cycle support facility of
the product being
manufactured in India. (f) Foreign
investments in the Defence
sector shall be subject to scrutiny on grounds of
national security and Government reserves the right to
review any foreign
investment in the Defence
sector that affects or
may affect national security.] |
||
7.
|
Broadcasting
|
|
|
7.1 |
Broadcasting Carriage Services |
|
|
7.1.1 |
(a) Teleports
(setting up of up-linking HUBs/ Teleports);
(b) Direct
to Home (DTH);
(c) Cable Networks
(Multi System
Operators (MSOs) operating at National or State or
District level and
undertaking up-gradation of networks towards
digitalization and
addressability);
(d) Mobile
TV;
(e) Head-end-in-the
Sky Broadcasting Service (HITS) |
100% |
Automatic |
7.1.2 |
Cable Networks
(Other MSOs not undertaking
up-gradation of networks towards digitalization and
addressability and Local
Cable Operators (LCOs)). |
100% |
Automatic |
7.1.3 |
Note: Infusion of
fresh foreign investment for sectors specified in 7.1.1
and 7.1.2 above,
beyond 49 percent in a company not seeking license/
permission from sectoral
Ministry, resulting in change in the ownership pattern
or transfer of stake
by existing investor to new foreign investor, will
require Government
approval |
||
7.2 |
Broadcasting Content Services |
|
|
7.2.1 |
Terrestrial
Broadcasting FM (FM Radio), subject to such terms and
conditions, as
specified from time to time, by Ministry of Information
and Broadcasting, for
grant of permission for setting up of FM Radio stations.
|
49% |
Government |
7.2.2 |
Up-Linking of News & Current
Affairs TV Channels |
49% |
Government |
[43]
[7.2.3
|
Uploading/Streaming
of News and Current Affairs through Digital Media |
26% |
Government] |
[44]
[7.2.4]
|
Up-linking of
Non-'News & Current Affairs' TV Channels/
Downlinking of TV Channels |
100% |
Automatic |
7.3 |
Other Conditions |
|
|
|
(a) Foreign
investment in companies engaged in
all the afore-stated services shall be subject to
relevant regulations and
such terms and conditions, as may be specified from time
to time, by the
Ministry of Information and Broadcasting. (b) Foreign
investment in the afore-stated
broadcasting carriage services shall be subject to the
terms and conditions
as may be specified by the Ministry of Information and
Broadcasting, from
time to time, in this regard. (c) Licensee shall
ensure that broadcasting
service installation carried out by it shall not become
a safety hazard and
is not in contravention of any statute, rule or
regulations and public
policy. (d) In the I and B
sector where the sectoral
cap is up to 49 percent, the company should be owned and
controlled by
resident Indian citizens or Indian companies which are
owned and controlled
by resident Indian citizens. (i) For this purpose, the
equity held by the largest
Indian shareholder shall be at least 51 percent of the
total equity,
excluding the equity held by Public Sector Banks and
Public Financial
Institutions, as defined in section 4A of the Companies
Act, 1956 or Section
2 (72) of the Companies Act, 2013, as the case may be
and the term `largest
Indian shareholder' used in this clause, shall include
any or a combination
of the following, namely : (1) In the case of
an individual shareholder,
(aa) The
individual shareholder, (bb) A
relative of the shareholder within the meaning of
Section 2 (77) of Companies
Act, 2013. (cc) A
company or group of companies in which the individual
shareholder or Hindu
Undivided Family to which he belongs has management and
controlling interest.
(2) In the case of
an Indian company,
(aa) The
Indian company (bb) A
group of Indian companies under the same management and
ownership control. (3) For this
purpose, "Indian company"
shall be a company which must have a resident Indian or
a relative as defined
under section 2 (77) of Companies Act, 2013/ HUF, either
singly or in
combination holding at least 51percent of the shares.
(4) Provided
that, in case of a
combination of all or any of the entities mentioned in
sub-clauses (d)(i) above, each
of the parties shall have entered into a
legally binding agreement to act as a single unit in
managing the matters of
the applicant company. |
||
8.
|
Print Media
|
|
|
8.1 |
Publishing of
newspaper and periodicals dealing with news and current
affairs |
26% |
Government |
8.2 |
Publication of
Indian editions of foreign magazines dealing with news
and current affairs |
26% |
Government |
8.2.1 |
Other conditions |
|
|
|
(a) 'Magazine',
for the purpose of these
guidelines, shall be defined as a periodical
publication, brought out on non-daily basis, containing
public news or comments on
public news. (b) Foreign
investment shall also be subject
to the Guidelines for Publication of Indian editions of
foreign magazines
dealing with news and current affairs issued by the
Ministry of Information
and Broadcasting on 4-12-2008. |
||
8.3 |
Publishing or
printing of Scientific and Technical Magazine or
specialty journals or
periodicals, subject to compliance with the legal
framework as applicable and
guidelines issued in this regard from time to time by
Ministry of Information
and Broadcasting. |
100% |
Government |
8.4 |
Publication of facsimile edition of
foreign newspapers |
100% |
Government |
8.4.1 |
Other conditions: |
|
|
|
(a) Foreign
investment shall be made by the
owner of the original foreign newspapers whose facsimile
edition is proposed
to be brought out in India. (b) Publication of
facsimile edition of foreign
newspapers can be undertaken only by an entity
incorporated or registered in
India under the provisions of the Companies Act, 2013.
(c) Publication of
facsimile edition of foreign
newspaper shall also be subject to the Guidelines for
publication of
newspapers and periodicals dealing with news and current
affairs and
publication of facsimile edition of foreign newspapers
issued by Ministry of
Information and Broadcasting on 31-3-2006. |
||
9.
|
Civil Aviation
|
||
9.1 |
The Civil
Aviation sector includes Airports, Scheduled and
Non-Scheduled domestic
passenger airlines, Helicopter
services or Seaplane
services, Ground Handling Services, Maintenance and
Repair organizations,
Flying training institutes, and Technical training
institutions. For the
purposes of the Civil Aviation sector:
(a)
""Airport"" means a
landing and taking off area for aircrafts, usually with
runways and aircraft
maintenance and passenger facilities and includes
aerodrome as defined in
clause (2) of section 2 of the Aircraft Act, 1934;
(b)
""Aerodrome"" means
any the landing or departure of aircraft, and includes
all buildings, sheds,
vessels, piers and other definite or limited ground or
water area intended to
be used, either wholly or in part, for structures
thereon or pertaining thereto;
(c)
""Air transport service""
means a service for the transport by air of persons,
mails or any other
thing, animate or inanimate, for any kind of
remuneration whatsoever, whether
such service consists of a single flight or series of
flights;
(d)
""Air Transport
Undertaking""
means an undertaking whose business includes the
carriage by air of
passengers or cargo for hire or reward;
(e)
""Aircraft component""
means any part, the soundness and correct functioning of
which, when fitted
to an aircraft, is essential to the continued
airworthiness or safety of the
aircraft and includes any item of equipment;
(f)
""Helicopter"" means
a heavier than air aircraft supported in flight by the
reactions of the air
on one or more power driven rotors on substantially
vertical axis;
(g)
""Scheduled air transport
service""
means an air transport service undertaken between the
same two or more places
and operated according to a published time table or
with flights so regular or frequent that they constitute
a recognizably
systematic series, each flight being open to use by
members of the public; (h)
""Non-Scheduled air transport
service"" means any service
which is not a scheduled air
transport service and will include Cargo airlines;
(i)
"Cargo
airlines" would mean such
airlines which meet the conditions as
given in the Civil Aviation Requirements issued by the
Ministry of Civil Aviation;
(j)
""Seaplane"" means
an aeroplane capable normally
of taking off from
and alighting solely on water;
(k)
""Ground Handling""
means (i) ramp handling, (ii)
traffic handling both
of which shall include the activities as specified by
the Ministry of Civil
Aviation through the Aeronautical Information Circulars
from time to time,
and (iii) any other activity specified by the Central
Government to be a part
of either ramp handling or traffic handling. |
||
9.2 |
Airports
|
|
|
|
(a) Greenfield projects |
100% |
Automatic |
(b) Existing projects |
100% |
Automatic |
|
[45]
[9.3
|
Air Transport Services |
|
|
|
(1) (a)
Scheduled Air Transport Service/ Domestic Scheduled
Passenger Airline (b) Regional
Air Transport Service |
100% |
Automatic up to
49% (Automatic up
to 100% for NRIs) Government
route beyond 49%
|
|
(2) Non-Scheduled Air Transport
Service |
100% |
Automatic |
|
(3) Helicopter
services/ seaplane services requiring Directorate General of Civil Aviation approval
|
100% |
Automatic ]
|
[46]
[Note:
As per Schedule XI of the Aircraft Rules, 1937, Air
Operator Certificate to
operate Scheduled Air Transport Services (including
Domestic Scheduled
Passenger Airline or Regional Air Transport Service) is
granted to such
company or a body corporate, - (a) which is registered and has its
principal place of business within India;
(b) whose Chairman
and at least two-thirds of its Directors are citizens of
India; and (c) whose substantial ownership and
effective control is vested in
Indian nationals.] |
|||
9.4 |
Other Services under Civil Aviation
sector |
|
|
|
(a) Ground
Handling Services subject to sectoral regulations and
security clearance |
100% |
Automatic |
|
(b) Maintenance
and Repair organizations; flying training institutes and
technical training
institutions |
100% |
Automatic |
9.5 |
Other Conditions |
|
|
|
(a)
[47]
[Air
Transport
Services shall include Domestic Scheduled Passenger
Airlines, Non-Scheduled
Air Transport Services, helicopter and seaplane
services. (b) Foreign
airlines are allowed to
participate in the equity of companies operating Cargo
airlines, helicopter
and seaplane services, as per the limits and entry
routes mentioned above. (c) Foreign
airlines are allowed to invest in
the capital of Indian companies, operating scheduled and
non-scheduled air
transport services, up to the limit of 49 per cent of
their paid-up capital,
subject to the following conditions, namely :- (i) it is
made under the Government approval
route, (ii) the
49 per cent limit will subsume FDI and FII/FPI
investment, (iii) the
investments so made would need to
comply with the relevant regulations of the Securities
and Exchange Board of
India (SEBI), such as the Issue of Capital and
Disclosure Requirements (ICDR)
Regulations/Substantial Acquisition of Shares and
Takeovers (SAST)
Regulations, as well as other applicable rules and
regulations, (iv) all foreign
nationals likely to be
associated with Indian scheduled and non-scheduled air
transport services, as
a result of such investment shall be cleared from
security view
point before deployment, and (v) all technical
equipment that might be
imported into India as a result
of such investment
shall require clearance from the relevant authority in
the Ministry of Civil
Aviation. It shall be under the Government approval
route. (d) In addition to
the above conditions,
foreign investment in M/s Air India Limited shall be
subject to the following
conditions, namely :- (i) foreign
investments in M/s Air India
Limited, including that of foreign airlines shall not
exceed 49 per cent
either directly or indirectly except in case of those
NRIs, who are Indian
Nationals, where foreign investments is permitted up
to 100 per cent under automatic route. (ii) substantial
ownership and effective control of M/s Air India Limited
shall continue to be
vested in Indian Nationals as stipulated in Aircraft
Rules, 1937. (e) FDI in Civil
Aviation shall be subject to provisions of the Aircraft
Rules, 1937, as amended from
time to time. Note: (i) The FDI limits or entry
routes mentioned at serial
numbers 9.2 and 9.3 above, are applicable in the
situation where there is no
investment by foreign airline. (ii) Any
investment by foreign airlines in companies operating in
Air Transport
Services, including in M/s Air India Limited, shall be
subject to entries (b)
and (c) above. (iii) The
dispensation for those NRIs, who are Indian Nationals,
regarding FDI up to
100 per cent will continue in respect of the investment
regime specified at
entries (c) (ii) and (d) above.]
|
||
10
|
Construction Development: Townships,
Housing, Built-up
infrastructure
|
|
|
10.1 |
Construction-development
projects (which shall include development of townships,
construction of
residential/ commercial premises, roads or bridges,
hotels, resorts,
hospitals, educational institutions, recreational
facilities, city and
regional level infrastructure, townships) |
100% |
Automatic |
10.2 |
Other Conditions |
||
|
(a) Each phase of
the construction development
project shall be considered as a separate project. (b) The investor
shall be permitted to exit on
completion of the project or after development of trunk
infrastructure i.e.
roads, water supply, street lighting, drainage and
sewerage. (c)
Notwithstanding anything contained at (b)
above, a person resident outside India shall be
permitted to exit and
repatriate foreign investment before the completion of
project under
automatic route, provided that a lock-inperiod of
three years, calculated with reference to each tranche
of foreign investment
has been completed. Further, transfer of stake from a
person resident outside
India to another person resident outside India, without
repatriation of
foreign investment will neither be subject to any
lock-in period nor to any
government approval. (d) The project
shall conform to the norms and
standards, including land use requirements and provision
of community
amenities and common facilities, as laid down in the
applicable building
control regulations, byelaws, rules, and other
regulations of the State
Government or Municipal or Local Body concerned. (e) The Indian
investee company shall be
permitted to sell only developed plots. For the purposes
of this policy
developed
plots shall mean plots where
trunk infrastructure i.e. roads, water
supply, street lighting, drainage and sewerage, have
been made available. (f) The Indian
investee company shall be
responsible for obtaining all necessary approvals,
including those of the
building or layout plans, developing internal and
peripheral areas and other
infrastructure facilities, payment of development,
external development and
other charges and complying with all other requirements
as prescribed under
applicable rules/ bye-Laws/
regulations of the State
Government or Municipal or Local Body concerned. (g) The State
Government or Municipal or Local
Body concerned, which approves the building or
development plans, shall
monitor compliance of the above conditions by the
developer. Note:
(1) Foreign
investment is not permitted in
an entity which is engaged or proposes to engage in real
estate business,
construction of farm houses and
trading in
transferable development rights (TDRs). (2) Condition of
lock-in period shall not
apply to Hotels and Tourist Resorts, Hospitals, Special
Economic Zones
(SEZs), Educational Institutions, Old Age Homes and
investment by NRIs or OCIs.
(3) Completion of
the project shall be
determined as per the local bye-laws/ rules and
other regulations of State Governments. (4) Foreign
investment up to 100 percent
under automatic route is permitted in completed projects
for operating and
managing townships, malls/ shopping complexes and
business centres. Consequent
to such foreign investment, transfer
of ownership and/ or control of the investee company
from persons resident in
India to persons resident outside India is also
permitted, however, there
shall be a lock-in-period of three years, calculated
with reference to each
tranche of foreign investment and transfer of immovable
property or part
thereof is not permitted during this period. (5)
Transfer , in relation to this
sector, includes,
(a) the
sale, exchange or relinquishment of the asset; or (b) the
extinguishment of any rights therein; or (c) the
compulsory acquisition thereof under any law; or (d) any
transaction involving the allowing of
the possession of any immovable property to be taken or
retained in part
performance of a contract of the nature referred to in
section 53A of the
Transfer of Property Act, 1882 (4 of 1882) ; or (e) any
transaction, by acquiring capital
instruments in a company 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. (6) "Real estate
business" means dealing in
land and immovable property with a view to earning
profit therefrom and does
not include development of townships, construction of
residential/ commercial
premises, roads or bridges, educational institutions,
recreational
facilities, city and regional level infrastructure,
townships;
Explanation: - (a) Investment in
units of Real Estate
Investment Trusts (REITs) registered and regulated under
the Securities and
Exchange Board of India (REITs) regulations 2014 shall
also be excluded from
the definition of real estate business . (b) Earning of
rent income on lease of the
property, not amounting to transfer, shall not amount to
real estate
business. (c) Transfer in
relation to real estate
includes, (i)
the sale,
exchange or relinquishment of the asset; or (ii) the
extinguishment of any rights therein;
or (iii) the
compulsory acquisition thereof under
any law; or (iv) any
transaction involving the allowing of
the possession of any immovable property to be taken or
retained in part
performance of a contract of the nature referred to in
section 53A of the
Transfer of Property Act, 1882 (4 of 1882); or (v) any
transaction, by acquiring capital
instruments in a company 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. (7) Real estate
broking services shall be
excluded from the definition of real estate business and
100% foreign
investment is allowed in real estate broking services
under automatic route. |
||
11. |
Industrial Parks |
100% |
Automatic |
11.1 |
For the purpose
of this sector: (a)
Industrial Park is a project in
which quality infrastructure in the form of plots of
developed land or built up
space or a combination with common facilities, is
developed and made available to all the allottee units
for the purposes of
industrial activity. (b)
Infrastructure refers to
facilities required for functioning of units located in
the Industrial Park
and includes roads (including approach roads), railway
line/ sidings
including electrified railway lines and connectivity to
the main railway
line, water supply and sewerage, common effluent
treatment facility, telecom
network, generation and distribution of power, air
conditioning. (c)
Common Facilities refer to the
facilities available for all the units located in the
industrial park, and
include facilities of power, roads (including approach
roads), railway line/
sidings including electrified railway lines and
connectivity to the main
railway line, water supply and sewerage, common effluent
treatment, common
testing, telecom services, air conditioning, common
facility buildings,
industrial canteens, convention/ conference halls,
parking, travel desks,
security service, first aid centre, ambulance and
other safety services, training facilities and such
other facilities meant
for common use of the units located in the Industrial
Park. (d)
Allocable area
in
the
"Industrial Park" means (i)
in the case
of plots of developed land - the net site area available
for allocation to
the units, excluding the area for common facilities.
(ii) in the case
of built up
space - the floor area and built-up space utilized for
providing common
facilities. (iii) in the case
of a combination of developed
land and built-up space - the net site and floor area
available for
allocation to the units excluding the site area and
built-up space utilized
for providing common facilities. (e)
" Industrial Activity" means
manufacturing; electricity; gas and water supply; post
and
telecommunications; software publishing, consultancy and
supply; data
processing, database activities and distribution of
electronic content; other
computer related activities; basic and applied research
and development on
bio-technology, pharmaceutical sciences or life
sciences, natural sciences
and engineering; business and management consultancy
activities; and
architectural, engineering and other technical
activities. |
||
11.2 |
Foreign
investment in Industrial Parks shall not be subject to
the conditionalities
applicable for construction development projects etc.
spelt out in para 10
above, provided the Industrial Parks meet with the
undermentioned conditions:
(a) it shall
comprise of a minimum of 10 units
and no single unit shall occupy more than 50 percent of
the allocable area;
(b) the minimum
percentage of the area to be
allocated for industrial activity shall not be less than
66 percent of the
total allocable area. |
||
[48]
[12.
|
Space Sector
|
|
|
12.1 |
(a)
Satellites-Manufacturing and Operation (b) Satellite
Data Products (c) Ground
Segment and User Segment |
100% |
Automatic up to
74%
Government
route beyond 74% |
12.2 |
(a) Launch
Vehicles and associated systems or sub-systems (b) Creation of
Spaceports for launching and receiving Spacecraft |
100% |
Automatic up to
49%
Government
route beyond 74% |
12.3 |
Manufacturing
of components and systems or sub-systems for satellites,
Ground Segment and
User Segment |
100% |
Automatic |
12.4 |
The investee
entity shall be subject to sectoral guidelines as issued
by the Department of
Space from time to time |
||
12.5 |
Definitions: (a)
Satellites Manufacturing and
Operation : End-to-end
manufacturing and supply of satellite or
payload, establishing the satellite systems including
control of in-orbit
operations of the satellite and payloads;
(b)
Satellite Data Products : Reception,
generation or dissemination of earth observation or
remote sensing satellite
data and data products including Application Interfaces
(API);
(c) Ground
Segment and User
Segment :
(i) Ground
Segment : Supply of satellite
transmit or receive earth stations
including earth observation data receive station,
gateway, teleports,
satellite Telemetry, Tracking and Command (TTC) station,
and Satellite
Control Centre (SCC) etc.;
(ii) User
Segment : Supply of
user ground terminals for communicating with the
satellite, which are not
covered under the ground segment;
(d) Launch
Vehicles and Associated
Systems or Sub-systems : A
vehicle and its stages or components that
is designed to operate in or place spacecraft with
payloads or persons, in a
sub-orbital trajectory, or earth orbit or outer space;
(e)
Creation of Spaceports for
launching and receiving
Spacecraft : - A spaceport (also
referred as
launch site) may be regarded as the base from which
spacecraft are launched,
and consists of facilities involving devices for
transportation to, from and
via outer space;
(f)
Manufacturing of components and
systems or sub-systems for satellites
Ground Segment and User Segment
:
Comprises the manufacturing and supply of the
electrical, electronic and
mechanical components systems or sub-systems for
satellites, Ground Segment
and User Segment.]
|
||
13.
|
Private
Security Agencies
|
49% |
Government |
14.
|
Telecom
services
(including
Telecom Infrastructure Providers
Category-l)
|
|
|
14.1 |
[49]
[All
telecom
services including Telecom Infrastructure Providers
Category-I, viz. Basic,
Cellular, United Access Services, Unified license
(Access services), Unified
License, National/International Long Distance,
Commercial V-Sat, Public
Mobile Radio Trunked Services (PMRTS), Global Mobile
Personal Communications
Services (GMPCS), all types of ISP licenses, Voice
Mail/Audiotex/UMS,
Resale of IPLC, Mobile Number Portability services,
Infrastructure Provider
Category-I (providing dark fibre, right of way,
duct space, tower), Other Service Providers and such
other services as may be
permitted by the Department of Telecommunications
(DoT).] |
100% |
[50]
[Automatic]
|
14.2 |
Other Conditions |
|
|
|
[51]
[The
licensing,
security and any other terms and conditions as notified
by Department of
Telecommunications (DoT) from time to time, shall be
observed by
licensee/entities providing services as referred in
serial number 14.1 above
as well as investors.] |
||
15.
|
Trading
|
|
|
15.1
|
Cash and Carry Wholesale Trading/ Wholesale
Trading
(including
sourcing from MSEs)
|
100% |
Automatic |
15.1.1 |
Definition: (a) Cash
and Carry Wholesale
trading (WT)/ Wholesale trading, shall
mean sale of goods or
merchandise to retailers, industrial, commercial,
institutional or other
professional business users or to other wholesalers and
related subordinated
service providers. (b) Wholesale
trading shall, accordingly, imply
sales for the purpose of trade, business and profession,
as opposed to sales
for the purpose of personal consumption. The yardstick
to determine whether
the sale is wholesale or not shall be the type of
customers to whom the sale
is made and not the size and volume of sales. Wholesale
trading shall include
resale, processing and thereafter sale, bulk imports
with export/ ex-bonded
warehouse business sales and B2B e-Commerce. |
||
15.1.2 |
Other Conditions |
||
|
(a) For
undertaking WT', requisite licenses/
registration/ permits, as specified under the relevant
Acts or Regulations or
Rules or Orders of the State Government or Government
Body or Government
Authority or Local Self-Government Body under that State
Government shall be
obtained. (b) Except in
cases of sales to Government,
sales made by the wholesaler shall be considered as
'cash and carry wholesale
trading/ wholesale trading' with valid business
customers, only when WT is
made to the following entities: (i)
Entities
holding sales tax or VAT registration or service tax or
excise duty or Goods
and Services Tax (GST) registration; or (ii) Entities
holding trade licenses i.e. a
license or registration certificate or membership
certificate or registration
under Shops and Establishment Act, issued by a
Government Authority or
Government Body/ Local Self-Government Authority,
reflecting that the entity
or person holding the license or registration
certificate or membership
certificate, as the case may be,
is itself or
himself or herself engaged in a business involving
commercial activity; or (iii) Entities
holding permits or license etc.
for undertaking retail trade (like tehbazari and
similar license for hawkers) from Government Authorities
or Local Self
Government Bodies; or (iv) Institutions
having certificate of
incorporation or registration as a society or
registration as public trust
for their self-consumption. Note: An Entity, to
whom WT is made, may fulfil any one of the 4
conditions at (b)(i)
to (iv) above.
(c) Full records
indicating all the details of
such sales like name of entity, kind of entity,
registration/ license/ permit
etc. number, amount of sale etc. shall be maintained on
a day
to day basis. (d) WT of goods
shall be permitted among
companies of the same group. However, such WT to group
companies taken
together shall not exceed 25 percent of the total
turnover of the wholesale
venture. (e) WT can be
undertaken as per normal business
practice, including extending credit facilities subject
to applicable
regulations. (f) A wholesale or
cash and carry trader can
undertake single brand retail trading, subject to the
conditions mentioned in
para 15.3. An entity undertaking wholesale/ cash and
carry as well as retail
business shall be mandated to maintain separate books of
accounts for these
two arms of the business and duly audited by the
statutory auditors.
Conditions under these rules for wholesale or cash and
carry business and for
retail business have to be
separately complied with
by the respective business arms. |
||
15.2
|
E-Commerce
|
|
|
15.2.1 |
B2B E-commerce activities |
100% |
Automatic |
|
Such companies
would engage only in Business to Business (B2B)
e-commerce and not in retail
trading, inter alia implying that existing restrictions
on FDI in domestic
trading would be applicable to e-commerce as well. |
||
15.2.2 |
Market place model of e-commerce |
100% |
Automatic |
15.2.3 |
Other Conditions: |
|
|
|
(a)
"E-commerce" means buying and
selling of goods and services including digital products
over digital &
electronic network;
(b) "E-commerce
entity" means a company
incorporated under Companies Act 1956 or the Companies
Act, 2013 (c) "Inventory
based model of e-commerce"
means an e-commerce activity where inventory of goods
and services is owned
by e-commerce entity and is sold to the consumers directly;
(d) "Market
place model of e-commerce"
means providing of an information technology platform by
an e-commerce entity
on a digital and electronic network to act as a
facilitator between buyer and
seller. (e) Digital and
electronic network
shall include network of computers, television channels
and any other
internet application used in automated manner such as
web pages, extranets,
mobiles etc. (f) Marketplace
e-commerce entity shall be
permitted to enter into
transactions with sellers
registered on its platform on B2B basis. (g) E-commerce
marketplace may provide support
services to sellers in respect of warehousing,
logistics, order fulfilment,
call centre, payment
collection and other services.
(h) E-commerce
entity providing a marketplace
shall not exercise ownership over the inventory i.e.
goods purported to be
sold. Explanation: Inventory of
a vendor shall be deemed to be controlled by e-commerce
marketplace entity if
more than 25% of purchases of such vendor are from the
marketplace entity or
its group companies which shall render the business into
inventory
based model.
(i)
An entity
having equity participation by e-commerce marketplace
entity or its group
companies or having control on its inventory by
e-commerce marketplace entity
or its group companies, shall not be permitted to sell
its products on the
platform run by such marketplace entity. (j) Goods/
services made available for sale
electronically on website shall clearly provide name,
address and other
contact details of the seller. Post sales, delivery of
goods to the customers
and customer satisfaction shall be responsibility of
the seller. (k) Payments for
sale may be facilitated by the
e-commerce entity in conformity with the guidelines
issued by the Reserve
Bank in this regard. (l) Any warranty
or guarantee of goods and
services sold shall be the responsibility of the seller.
(m) E-commerce
entities providing marketplace
shall not directly or indirectly influence the
sale price of goods or services and shall maintain level
playing field.
Services should be provided by e-commerce marketplace
entity or other
entities in which e-commerce marketplace entity has
direct or indirect equity
participation or common control, to vendors on the
platform at arm s length
and in a fair and non-discriminatory manner. Explanation: Such services
shall include but not limited to fulfilment, logistics,
warehousing,
advertisement or marketing, payments, financing etc.
Cash back provided by
group companies of marketplace entity to buyers shall be
fair and
non-discriminatory. For the purposes of this clause,
provision of services to
any vendor on such terms which are not made available to
other vendors in
similar circumstances will be deemed unfair and
discriminatory. (n) Guidelines on
cash and carry wholesale
trading as given in Sl. No. 15.1.2 above shall apply to
B2B e-commerce
activities. (o) No e-commerce
marketplace entity shall
mandate any seller to sell any of their product
exclusively on its platform. (p)
[52]
[e-commerce
marketplace entity with FDI shall have to obtain and
maintain a report of
statutory auditor by 30th of September every year for
the preceding financial
year confirming compliance of the e-commerce guidelines]
Note: Foreign
investment is not permitted in inventory based model
of e-commerce. |
||
15.2.4 |
Sale of
services through e-commerce shall be under automatic
route subject to the
sector specific conditions, applicable laws/
regulations, security and other
conditionalities. |
||
15.3 |
Single Brand Product Retail Trading Foreign
investment in Single Brand Product Retail Trading (SBRT)
is aimed at
attracting investments in production and marketing,
improving the
availability of such goods for the consumer, encouraging
increased sourcing
of goods from India and enhancing competitiveness of
Indian enterprises
through access to global designs, technologies and
management practices. |
100% |
[53]
[Automatic]
|
15.3.1 |
Other conditions |
|
|
|
(a) Products to be
sold should be of a 'Single
Brand' only. (b) Products
should be sold under the same
brand internationally i.e. products shall be sold under
the same brand in one
or more countries other than India. (c) 'Single Brand'
product-retail trading shall
cover only products which are branded during
manufacturing. (d) A person
resident outside India, whether
owner of the brand or otherwise, shall be permitted to
undertake single
brand product retail trading in the country for the
specific brand, either
directly by the brand owner or through a legally tenable
agreement executed
between the Indian entity undertaking single brand
retail trading and the
brand owner. (e)
[54]
[In
respect of
proposals involving foreign investment beyond 51 per
cent, sourcing of 30 per
cent. of the value of goods procured, shall be done from
India, preferably
from MSMEs, village and cottage industries, artisans and
craftsmen, in all
sectors. The quantum of domestic sourcing shall be
self-certified by the
company, to be subsequently checked, by statutory
auditors, from the duly
certified accounts which the company shall be required
to maintain. The
procurement requirement is to be met in the first
instance as an average of
five years total value of goods procured beginning 1st
April of the year of
the commencement of SBRT business (i.e. opening of first
store or start of
online retail, whichever is earlier). Thereafter, SBRT
entity shall be required
to meet the 30 per cent local sourcing norms on an
annual basis. For the purpose
of ascertaining the sourcing requirement,
the relevant entity would be the company incorporated in
India, which is the
recipient of foreign investment for the purpose of
carrying out single brand
product retail trading. (f) For the
purpose of meeting local sourcing
requirement laid down at entry (e), all procurements
made from India by the
SBRT entity for that single brand shall be counted
towards local sourcing,
irrespective of whether the goods procured are sold in
India or exported.
SBRT entity is also permitted to set off sourcing of
goods from India for
global operations against the mandatory sourcing
requirement of 30 per cent.
For this, purpose, sourcing of goods from India for
global operations shall
mean value of goods sourced from India for global
operations for that single
brand ( in INR terms) in a
particular financial year
directly by the entity undertaking SBRT or its group
companies ( resident or
non-resident), or indirectly by them through a third
party under a legally
tenable agreement. (g) A SBRT entity
operating through brick and
mortar stores, can also undertake retail
trading
through e-commerce. However, retail trading through
e-commerce can also be
undertaken prior to opening of brick
and mortar
stores, subject to the condition that the entity opens
brick and mortar
stores within two years from date of start of online
retail.] Note: (1) Conditions
mentioned at (b) and (d) above shall not be applicable
for undertaking SBRT
of Indian brands. (2) Indian
brands should be owned and controlled by resident Indian
citizens and/ or
companies which are owned and controlled by resident
Indian citizens. (3) Sourcing norms
shall not be applicable
up to three years from commencement of the business i.e.
opening of the first
store
[55]
[or
start of
online retail, whichever is earlier] for entities
undertaking single brand
retail trading of products having 'state-of-art' and
'cutting-edge'
technology and where local sourcing is not possible.
Thereafter, condition mentioned
at 15.3.1(e) above shall be
applicable. A Committee under the Chairmanship of
Secretary, DPIIT, with
representatives from NITI Aayog, concerned
Administrative Ministry and
independent technical expert(s) on the subject shall
examine the claim of
applicants on the issue of the products being in the
nature of state-of-art
and cutting-edge technology where local sourcing is not
possible and give
recommendations for such relaxation. |
||
15.4 |
Multi Brand
Retail Trading (MBRT)
|
51% |
Government |
15.4.1 |
Other Conditions |
|
|
|
(a) Fresh
agricultural produce, including
fruits, vegetables, flowers, grains, pulses, fresh
poultry, fishery and meat
products, can be unbranded. (b) Minimum amount
to be brought in as foreign
investment would be USD 100 million. (c) At least 50
percent of the total foreign
investment brought in the first tranche of USD 100
million, shall be invested
in 'back-end infrastructure' within three years, where
'back-end
infrastructure' shall include capital expenditure on all
activities, excluding
that on front-end units; for instance, back-end
infrastructure shall include
investment made towards processing, manufacturing,
distribution, design
improvement, quality control, packaging, logistics,
storage, warehouse,
agriculture market produce infrastructure etc.
Expenditure on land cost and
rentals, if any, shall not be counted for purposes of
back-end
infrastructure. Subsequent investment in the back-end
infrastructure would be
made by the MBRT retailer as needed, depending upon its
business requirements.
(d) At least 30
percent of the value of
procurement of manufactured or processed products
purchased shall be sourced
from Indian micro, small and medium industries, which
have a total investment
in plant and machinery not exceeding USD2 million. This
valuation refers to
the value at the time of installation, without providing
for depreciation.
The 'small industry' status shall be reckoned only at
the time of first
engagement with the retailer and such industry shall
continue to qualify as a
'small industry' for this purpose, even if it outgrows
the said investment of
USD2 million during the course
of its relationship
with the said retailer. Sourcing from agricultural
co-operatives and farmers
co-operatives shall also be considered in this category.
The procurement
requirement shall have to be met, in the first instance,
as an average of
five years total value of the manufactured/ processed
products purchased,
beginning 1st April of the year during which
the first tranche of
foreign investment is received. Thereafter, it shall
have to be met on an
annual basis. (e)
Self-certification is required by the
company, to ensure compliance of the conditions at
serial nos. (b), (c) and (d) above, which could be
cross-checked, as and when
required. Accordingly, the investors shall maintain
accounts, duly certified
by statutory auditors. (f) Retail sales
outlets may be set up only in
cities with a population of more than 10 lakh as per the
2011 Census or any
other cities as per the decision of the respective State
Governments,
and may also cover an area of 10 kms.
Around the municipal or urban
agglomeration limits of such cities; retail locations
shall be restricted to
conforming areas as per the Master or Zonal Plans of the
concerned cities and
provision shall be made for requisite facilities such as
transport
connectivity and parking. (g) Government
shall have the first right to
procure agricultural products. (h) The above
policy is an enabling policy only
and the State Governments or Union Territories shall be
free to take their
own decisions in regard to
implementation of the
policy. Therefore, retail sales outlets may be set up in
those States or
Union Territories which have agreed, or agree in future,
to allow foreign
investment in MBRT under this policy. The States or
Union Territories which
have conveyed their agreement are mentioned at
15.4.2. Such agreement, in future, to permit
establishment of retail outlets
under this policy, would be conveyed to the Government
of India through the
Department of Industrial Policy and Promotion and
additions shall be made to
the said list. The establishment of the retail sales
outlets shall be in compliance
of applicable
State/ Union Territory laws or regulations, such as the
Shops and
Establishments Act etc. (i)
Retail
trading, in any form, by means of e-commerce, shall not
be permissible, for
companies with foreign investment engaged in multi-brand
retail trading. (j) Applications
shall be processed in the
Department of Industrial Policy and Promotion, to
determine whether the
proposed investment satisfies the notified guidelines,
before being
considered for Government approval. |
||
15.4.2 |
States or Union territories are
Andhra Pradesh, Assam, Delhi, Haryana, Himachal Pradesh,
Jammu and Kashmir,
Karnataka, Maharashtra, Manipur, Rajasthan, Uttarakhand,
Daman and Diu and
Dadra and Nagar Haveli (Union territories) |
||
15.5
|
Duty Free Shops
|
100% |
Automatic |
15.5.1 |
Other Conditions: |
|
|
|
(a) Duty Free
Shops would mean shops set up in
custom bonded area at
International Airports or
International Seaports and Land Custom Stations where
there is transit of
international passengers. (b) Foreign
investment in Duty Free Shops is
subject to compliance of
conditions stipulated under
the Customs Act, 1962 and other laws, rules and
regulations. (c) Duty Free Shop
entity shall not engage into
any retail trading activity in the Domestic Tariff
Area of the country. |
||
16
|
Pharmaceuticals
|
|
|
16.1 |
Greenfield |
100% |
Automatic |
16.2 |
Brownfield |
100% |
Automatic up to
74%;
Government
route beyond 74% |
16.3 |
Other Conditions |
|
|
|
(a) 'Non-compete'
clause shall not be allowed
except in special circumstances with the Government
approval. (b) The
prospective investor and the
prospective investee are required to provide a
certificate given at 16.4
along with the application submitted for Government
approval. (c) Government
approval may incorporate
appropriate conditions for foreign investment in
brownfield cases. (d) Foreign
investment in brownfield
pharmaceuticals, irrespective of entry route, is further
subject to the
following conditions: (i)
The
production level of National List of Essential Medicines
(NLEM) drugs and/ or
consumables and their supply to the domestic market at
the time of induction
of foreign investment, being maintained over the next
five years at an
absolute quantitative level. The benchmark for this
level would be decided
with reference to the level of production of NLEM drugs
and/ or consumables
in the three financial years, immediately preceding the
year of induction of
foreign investment. Of these, the highest level of
production in any of these
three years shall be taken as the level. (ii) Research and
Development (R&D)
expenses being maintained in value terms for 5 years at
an absolute
quantitative level at the time of induction of foreign
investment. The
benchmark for this level would be decided with reference
to the highest level
of R&D expenses which has been incurred in any of
the three financial
years immediately preceding the year of induction of
foreign investment. (iii) The
administrative Ministry shall be
provided complete information pertaining to the transfer
of technology, if
any, along with induction of foreign investment into the
investee company. (iv) The
administrative Ministry (s) i.e.
Ministry of Health and Family Welfare, Department of
Pharmaceuticals or any
other regulatory Agency/Development as notified by
Central Government from
time to time, shall monitor the compliance of
conditionalities. Note: (1)
Foreign
investment up to 100% under the automatic route is
permitted for
manufacturing of medical devices. The abovementioned
conditions shall,
therefore, not be applicable to greenfield as well as
brownfield projects of
this industry. (2)
"Medical device" means :- (a) Any
instrument, apparatus, appliance,
implant, material or other article, whether used alone
or in combination,
including the software, intended by its manufacturer to
be used specially for
human beings or animals for one or more of the specific
purposes of:-
(aa) Diagnosis, prevention, monitoring, treatment
or alleviation of
any disease or disorder;
(ab) diagnosis, monitoring, treatment,
alleviation of, or assistance
for, any injury or disability;
(ac) investigation, replacement or modification
or support of the
anatomy or of a physiological process;
(ad) supporting or sustaining life;
(ae) disinfection of medical devices;
(af) control of conception;
and which does
not achieve its primary intended action in or on the
human body or animals by
any pharmacological or immunological or metabolic means,
but which may be
assisted in its intended function by such means;
(b) an accessory
to such an instrument,
apparatus, appliance, material or other article;
(c) in-vitro
diagnostic device
which is a reagent, reagent product, calibrator, control
material, kit,
instrument, apparatus, equipment or system, whether used
alone or in
combination thereof intended to be used for examination
and providing
information for medical or diagnostic purposes by means
of examination of
specimens derived from the human bodies or animals.
|
||
16.4 |
Certificate to be furnished by the
Prospective Investor as well as the Prospective
Recipient Entity It is certified
that the following is the complete list of all inter-se
agreements, including
the shareholders agreement, entered
into between
foreign investor(s) and investee brownfield
pharmaceutical entity 1.
2. .
3. .
(copies of all agreements to be
enclosed) It is also
certified that none of the inter-se agreements,
including the shareholders
agreement, entered into between
foreign investor(s)
and investee brownfield pharmaceutical entity contain
any non-compete clause
in any form whatsoever. It is further
certified that there are no other contracts/agreements
between the foreign
investor(s) and investee brownfield pharma entity other
than those listed
above. The foreign
investor(s) and investee brownfield pharma entity
undertake to submit to the
FIPB any inter-se agreements that may be entered into
between them subsequent to the
submission and consideration of this
application. |
||
17
|
Railway
Infrastructure
|
|
|
17.1 |
Construction, operation and
maintenance of the following: (i) Suburban corridor
projects through PPP, (ii)
high-speed train projects, (iii) Dedicated freight
lines, (iv) Rolling stock
including train sets, and locomotives/ coaches
manufacturing and maintenance
facilities, (v) Railway Electrification, (vi) Signalling
systems, (vii) Freight terminals, (viii) Passenger
terminals, (ix)
Infrastructure in industrial park pertaining to railway
line/ sidings
including electrified railway lines and connectivity to
main railway line and
(x) Mass Rapid Transport Systems.
|
100% |
Automatic |
17.2 |
Other Conditions |
|
|
|
(a) Foreign
investment in this sector open
to private-sector participation is subject to sectoral
guidelines of Ministry
of Railways. (b) Proposals
involving foreign investment
beyond 49 percent sensitive areas from security
point of view, will be brought by the Ministry of
Railways before the Cabinet
Committee on Security (CCS) for consideration on a case to
case basis. |
||
F
|
FINANCIAL
SERVICES
Investment in financial services,
other than those indicated below, would require prior
Government approval. |
||
F.1
|
Asset
Reconstruction Companies
|
100%
|
Automatic
|
F.1.1 |
Other Conditions |
|
|
|
(a) Investment
limit of a sponsor in the
shareholding of an ARC shall be governed by the
provisions of Securitisation
and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002. Similarly,
investment by
institutional or non-institutional investors shall also
be governed by the
said Act. (b) FPIs can
invest in the Security Receipts
(SRs) issued by ARCs. FPIs may be allowed to invest up
to 100 percent of each
tranche in SRs issued by ARCs, subject to directions/
guidelines of Reserve
Bank. Such investment shall be within the relevant
regulatory cap as
applicable. (c) All
investments shall be subject to provisions of the Securitisation
and Reconstruction of Financial Assets and Enforcement
of Security Interest
Act, 2002. |
||
F.2
|
Banking -
Private sector
|
74%
|
Automatic up to
49%; Government route beyond 49% and up to 74%
|
F.2.1 |
Other conditions: |
|
|
|
(a) At all times,
at least 26 percent of the paid
up capital shall have to be held by
residents, except
in regard to a wholly-owned subsidiary of a foreign
bank. (b) In case of
NRIs individual holdings is
restricted to 5 percent of the total paid up capital
both on repatriation and
non-repatriation basis and aggregate limit cannot exceed
10 percent of the
total paid up capital both on repatriation and
non-repatriation basis.
However, NRI holdings shall be allowed up to 24 percent
of the total paid up capital
both on repatriation and non-repatriation
basis subject to a special resolution to this effect
passed by the banking
company s general body. (c)
[56]
[Applications
for foreign direct investment in private banks having
joint venture or
subsidiary in insurance sector may be addressed to the
Reserve Bank for
consideration in consultation with the Insurance
Regulatory and Development
Authority of India, in order to
ensure that the
limit of foreign investment applicable for the insurance
sector as specified
in serial number F. 8.1 and F. 8.2 is not breached.]
(d) Transfer of
shares under FDI from residents
to non-residents shall require approval of the Reserve
Bank and/ or the
Government, wherever applicable. (e) The policies
and procedures prescribed by
RBI and other institutions such as Securities and
Exchange Board of India,
Ministry of Corporate Affairs and IRDAI on these matters
shall apply. (f) RBI guidelines
relating to acquisition by
purchase or otherwise of capital instruments of a
private bank, if such
acquisition results in any person owning or controlling
5 percent or more of
the paid up capital of the
private bank shall apply
to foreign investment as well. (g) Setting up of
a subsidiary by foreign
banks: (i)
Foreign banks
shall be permitted to either have branches or
subsidiaries but not both. (ii) Foreign banks
regulated by banking
supervisory authority in the home country and meeting
Reserve Bank's
licensing criteria shall be allowed to hold 100 percent
paid-up capital to
enable them to set up a wholly-owned subsidiary in
India. (iii) A foreign
bank may operate in India through
only one of the three channels viz., (i) branches
(ii) a wholly-owned subsidiary
(iii) a subsidiary
with aggregate foreign investment up to a maximum of 74
percent in a private
bank. (iv) A foreign
bank shall be permitted to
establish a wholly-owned
subsidiary either through
conversion of existing branches into a subsidiary or
through a fresh banking
license. A foreign bank shall be permitted to establish
a subsidiary through
acquisition of shares of an existing private sector bank
provided at least 26
percent of the paid-up capital of the private sector
bank is held by residents at all
times consistent with para (c)
above. (v) A subsidiary
of a foreign bank shall be
subject to the licensing requirements and conditions
broadly consistent with
those for new private sector banks. (vi) Guidelines
for setting up a wholly-owned
subsidiary of a foreign bank shall be issued
separately by RBI. (vii) All
applications by a foreign bank for
setting up a subsidiary or for conversion of their
existing branches to
subsidiary in India shall have to be made to the RBI.
(h) The present
limit of 10 percent on voting
rights in respect banking
companies may be noted by
the potential investor. (i)
All
investments shall be subject to the guidelines
prescribed for the banking
sector under the Banking Regulation Act, 1949 and the
Reserve Bank of India
Act, 1934. |
||
F.3
|
Banking -
Public Sector
|
|
|
F.3.1 |
Banking -
Public Sector subject to Banking Companies (Acquisition
& Transfer of
Undertakings) Acts, 1970/ 80. This ceiling is also
applicable to the State
Bank of India. |
20%
|
Government
|
F.4
|
Infrastructure
Companies in the Securities Market
|
|
|
F.4.1 |
Infrastructure
companies in Securities Markets, namely, stock
exchanges, commodity
derivative exchanges, depositories and clearing
corporations, in compliance
with Securities and Exchange Board of India Regulations.
|
49% |
Automatic
|
F.4.2 |
Other conditions: |
|
|
|
(a) Foreign
investment, including investment by
FPIs, shall be subject to the Guidelines or Rules or
Regulations issued by
the Central Government, Securities and Exchange Board of
India and the
Reserve Bank from time to time. (b) Words and
expressions used herein and not
defined in these rules but defined in the Companies Act,
2013 (18 of 2013) or
the Securities Contracts (Regulation) Act, 1956 (42 of
1956) or the
Securities and Exchange Board of India Act, 1992 (15 of
1992) or the
Depositories Act, 1996 (22 of 1996) or in the concerned
Regulations issued by
Securities and Exchange Board of India shall have the
same meanings
respectively assigned to them in those Acts or
Regulations. |
||
F.5 |
Commodities Spot Exchange |
49% |
Automatic |
F.5.1 |
Investment shall be subject to
guidelines prescribed by the Central or State
Government. |
||
F.6
|
Power Exchanges
|
|
|
|
Power Exchanges
under the Central Electricity Regulatory Commission
(Power Market)
Regulations, 2010. |
49% |
Automatic |
F.6.1 |
Other conditions |
|
|
|
(a) A person
resident outside India including
persons acting in concert should not hold more than 5
percent. (b) The investment
shall be
in compliance with Securities and
Exchange Board of India Regulations,
other applicable laws/ rules/ regulations, security and
other
conditionalities. |
||
F.7
|
Credit
Information Companies
|
100% |
Automatic
|
F.7.1 |
Other conditions |
|
|
|
(a) Foreign
investment in Credit Information
Companies is subject to the Credit Information Companies
(Regulation) Act,
2005 and regulatory clearance from the Reserve Bank.
(b) FPI investment
shall be permitted subject
to the following conditions: (i)
A single
entity shall directly or indirectly hold below 10
percent equity;
(ii) Any
acquisition in
excess of 1 percent shall have to be
reported to Reserve Bank as a
mandatory requirement; and (iii) FPIs
investing in Credit Information
Companies shall not seek a representation on the Board
of Directors based
upon their shareholding. |
||
F.8
|
Insurance
|
|
|
F.8.1 |
[57]
[Insurance
Company] |
[58]
[74%]
|
Automatic
|
[59]
[F8.1A
|
Life Insurance
Corporation of India |
20% |
Automatic] |
F.8.2 |
[60]
[Intermediaries
or Insurance Intermediaries including insurance brokers,
re-insurance
brokers, insurance consultants, corporate agents, third
party administrator,
Surveyors and Loss Assessors and such other entities, as
may be notified by
the Insurance Regulatory and Development Authority of
India from time to
time.] |
[61]
[100%] |
[62]
[Automatic] |
[63]
[F.8.3.1 |
Other
conditions applicable to Indian insurance companies and
intermediaries or
insurance intermediaries] |
||
|
(a)
[64]
[No
Indian
Insurance company shall allow the aggregate holdings by
way of total foreign
investment in its equity shares by foreign investors,
including portfolio
investors, to exceed
[65]
[seventy-four]
percent of the paid up equity
capital of such Indian
Insurance Company. (b) The foreign
investment up to
[66]
[seventy-four]
percent of the total paid-up equity of the Indian
Insurance Company shall be
allowed on the automatic route subject to approval or
verification by the
Insurance Regulatory and Development Authority of India.
(c) Foreign
investment in this sector shall be
subject to compliance with the provisions of the
Insurance Act, 1938 and the
condition that Companies receiving FDI shall obtain
necessary license or
approval from the Insurance Regulatory and Development
Authority of India for
undertaking insurance and related activities. (d)
[67]
[(I)
In an
Indian Insurance Company having foreign investment,-
(i) A majority of
its directors;
(ii) A majority of its
Key
Management Persons; and (iii) At least one
among the Chairperson of its Board, its Managing
Director and its Chief
Executive Officer, shall be
Resident Indian Citizens. Explanation: For the above
purposes, the expression- Key
Management Person
shall
have the same meaning as assigned to it in guidelines
made by the Insurance
Regulatory and Development Authority of India on
corporate governance for
insurers in India. (II) An Indian
Insurance company having foreign investment shall comply
with the provisions
under the Indian Insurance Companies (Foreign
Investment) Rules, 2015, as
amended from time to time and applicable rules and
regulations notified by
the Department of Financial Services or the Insurance
Regulatory and
Development Authority of India from time to time.] (e) Foreign
portfolio investment in an Indian
Insurance company shall be governed by the provisions
contained in Chapter-IV, rule
10 and rule 11 read with Schedule-II of
these rules and provisions of the Securities and
Exchange Board of India
(Foreign Portfolio Investors) Regulations,
[68]
[2019].
(f) Any increase
in foreign investment in an
Indian Insurance company shall be in accordance with the
pricing guidelines
specified in these rules. (g) The foreign
equity investment cap of 100
per cent shall apply on the same terms as above to
insurance brokers,
re-insurance brokers, insurance consultants, corporate
agents, third party
administrator, Surveyors and Loss Assessors and such
other entities, as may
be notified by the Insurance Regulatory and Development
Authority of India
from time to time. However,
[69]
[the
composition of the Board of Directors and key management
persons of
Intermediaries or Insurance Intermediaries], as
specified in clause (d)
above, shall not be applicable to Intermediaries and
Insurance Intermediaries
and composition of the Board of Directors and key
management persons shall be
as specified by the concerned regulators from time to
time. (h) The foreign
direct investment proposals
shall be allowed under the automatic route subject to
verification by the
Authority and the foreign investment in intermediaries
or insurance
intermediaries shall be governed by the same terms as
provided under rules 7
and 8 of the Indian Insurance Companies (Foreign
Investment) Rules, 2015, as
amended from time to time: Provided that where an
entity like a Bank, whose primary business is outside
the insurance area, is
allowed by the Authority to function as an insurance
intermediary, the
foreign equity investment caps applicable in that sector
shall continue to
apply, subject to the condition that the revenues of
such entities from the
primary (non-insurance related) business must remain
above 50 per cent of
their total revenues in any financial year. (i)
The insurance
intermediary that has majority shareholding of foreign
investors shall
undertake the following: (i)
be
incorporated as a limited company under the provisions
of the Companies Act, 2013;
(ii) at least one
from among the Chairman of
the Board of Directors or the Chief Executive Officer or
Principal Officer or
Managing Director of the insurance intermediary shall be
a resident Indian citizen;
(iii) shall take
prior permission of the
Authority for repatriating dividend;
(iv) shall bring
in the latest technological,
managerial and other skills;
(v) shall not make
payments to the foreign
group or promoter or subsidiary or interconnected or
associate entities
beyond what is necessary or permitted by the Authority;
(vi) shall make
disclosures in the formats to be
specified by the Authority of all payments made to its
group or promoter or
subsidiary or interconnected or associate entities;
(vii) composition
of the Board of Directors and
key management persons shall be as specified by the
concerned regulators (j) The other
condition under the heading
Banking-Private Sector specified against serial number
F.2.1 shall be
applicable in respect of bank promoted insurance
companies. (k)
[70]
[*]
[71]
[Terms
Equity
Share Capital , ‟Foreign Direct
Investment (FDI), Foreign Investors ,
‟Foreign
Portfolio Investment , Indian Insurance Company ,
‟Indian
Company , Non-resident Entity , Public Financial
Institution , Resident
Indian Citizen and Total Foreign Investment shall have
the same meaning as
specified in the rules under the Insurance Act, 1938 or
in the regulations
issued by Insurance Regulatory and Development Authority
of India from time
to time, in respect of foreign investment in Indian
Insurance Companies and
intermediaries or insurance intermediaries.].] |
||
[72]
[F8.3.2 |
Other
conditions applicable to the Life Insurance
Corporation of India (LIC) (a) Foreign
investment in LIC shall be subject to the provisions of
the Life Insurance
Corporation Act, 1956, (LIC Act) as amended from time to
time (LIC Act) and
such provisions of the Insurance Act, 1938, as amended
from time to time, as
are applicable to LIC. (b) Provisions
of clauses (e) and (f) under Sl. No. F.8.3.1, shall also
apply to LIC, as if
reference therein to an Indian Insurance Company is a
reference to LIC. (c)
The
terms referred to in clause (k) under Sl. No. F.8.3.1
shall have the same
meaning as referred to therein. Explanation:
For the purposes of this Sl. No., any reference to
Indian insurance company
or company referred to in clause (k) under Sl. No.
F.8.3.1, shall be
construed as a reference to LIC. .]
|
||
F.9
|
Pension Sector
|
49% |
Automatic |
F.9.1 |
Other conditions |
|
|
|
(a) Foreign
investment in this sector shall be
in accordance with the Pension Fund Regulatory and
Development Authority
(PFRDA) Act, 2013. (b) Foreign
investment in Pension Funds shall
be subject to the condition that entities investing in
capital instruments
issued by an Indian Pension Fund as per Section 24 of
the PFRDA Act, 2013
shall obtain necessary registration from the PFRDA and
comply with other
requirements as per the PFRDA Act, 2013 and Rules and
Regulations framed
under it for so participating in Pension Fund Management
activities in India.
(c) An Indian
pension fund shall ensure that
its ownership and control remains at all times with
resident Indian entities as determined by the Government
of India/ PFRDA as
per the rules or regulation issued by them. |
||
F.10
|
Other Financial
Services
|
100% |
Automatic |
F.10.1 |
Other
Conditions
|
|
|
|
(a) Other
Financial Services shall mean
financial services activities regulated by financial
sector regulators, viz.,
Reserve Bank, Securities and Exchange Board of India,
Insurance Regulatory
and Development Authority, Pension Fund Regulatory and
Development Authority,
National Housing Bank or any other financial sector
regulator as may be
notified by the Government of India. (b) Foreign
investment in 'Other Financial
Services' activities shall be subject to
conditionalities, including minimum
capitalization norms, as specified by the concerned
Regulator / Government
Agency. (c) 'Other
Financial Services'
activities need to be regulated by one of the Financial
Sector Regulators. In
all such financial services activity which are not
regulated by any Financial
Sector Regulator or where only part of the financial
services activity is
regulated or where there is doubt regarding the
regulatory oversight, foreign
investment up to 100 percent will be allowed under
Government approval route
subject to conditions including minimum capitalization
requirement, as may be
decided by the Government. (d) Any activity
which is specifically
regulated by an Act, the foreign investment limits shall
be restricted to
those levels/ limit that may be
specified in that
Act, if so mentioned. (e) Downstream
investments by any of these
entities engaged in "Other Financial Services"
that is treated as indirect
foreign investment for the investee
entity shall be subject to these rules. |
||
[73]
[F.11 |
White Label ATM
Operations (WLAO) |
100% |
Automatic |
F11.1 |
Other
Conditions |
|
|
|
(a) Any non-bank
entity intending to set up
White Label ATMs (WLAs) should have a minimum net worth
of one hundred crore
rupees as per the latest financial year s audited
balance sheet, to be maintained at all
times. (b) In case the
entity is also engaged in any
Other Financial Services referred to in Sl. No. F.10
above, then the
foreign investment in the company setting up WLA shall
also comply with the
minimum capitalisation norms,
if any, for foreign
investments in such Other Financial Services . (c) FDI in the
WLAO will be subject to the
specific criteria and guidelines issued by the Reserve
Bank under the Payment
and Settlement Systems Act, 2007 (51 of 2007).] |
SCHEDULE II
Investments by
Foreign Portfolio Investors
(1) Purchase or sale
of equity instruments
by Foreign Portfolio Investors
(a) Purchase and sale
of equity instruments.- A FPI
may
purchase or sell equity instruments of an Indian company listed or to be listed
on a recognised stock exchange in India subject to
the following conditions, namely:-
(i) The total
holding by each FPI or an investor group, shall be less than 10 percent of the
total paid-up equity capital on a fully diluted basis or less than 10 percent
of the paid-up value of each series of debentures or preference shares or share
warrants issued by an Indian company
[74]
[by FPIs] and the
total holdings of all FPIs put together, including any other direct and
indirect foreign investments in the Indian company
[75]
[by FPIs]
permitted under these rules, shall not exceed 24 per cent of paid-up equity
capital on a fully diluted basis or paid up value of each series of debentures
or preference shares or share warrants.
The said limit of
10 percent and 24 percent shall be called the individual and aggregate limit,
respectively:
[76]
[Provided
the aggregate limit of 24 per cent may be increased by the Indian company
concerned up to the sectoral cap/ statutory ceiling, as applicable, with the
approval of its Board of Directors and its General Body through a resolution
and a special resolution, respectively.]
(ii) With effect
from the 1st
April, 2020, the aggregate limit shall be the sectoral caps applicable to the
Indian company as laid out in sub-paragraph (b) of paragraph 3 of Schedule I of
these rules, with respect to its paid-up equity capital on a fully diluted
basis or such same sectoral cap percentage of paid up value of each series of
debentures or preference shares or share warrants:
Provided that the aggregate
limit as provided above may be decreased by the Indian company concerned to a
lower threshold limit of 24% or 49% or 74% as deemed fit, with the approval of
its Board of Directors and its General Body through a resolution and a special
resolution, respectively before 31st March,
2020:
Provided further, that the Indian
company which has decreased its aggregate limit to 24% or 49% or 74%, may
increase such aggregate limit to 49% or 74% or the sectoral cap or statutory
ceiling respectively as deemed fit, with the approval of its Board of Directors
and its General Body through a resolution and a special resolution,
respectively:
Provided also that once the
aggregate limit has been increased to a higher threshold, the Indian company
cannot reduce the same to a lower threshold:
Provided also that the
aggregate limit with respect to an Indian company in a sector where FDI is
prohibited shall be 24 per cent.
[77]
[Explanation: In case two or
more FPI s including foreign Governments or their
related entities are having common ownership, directly or indirectly, of more
than fifty percent or common control, all such FPI s shall be treated as
forming part of an investor group.]
(iii)
[78]
[The FPIs
investing in breach of the prescribed limit shall have the option of divesting
their holdings within five trading days from the date of settlement of the
trades causing the breach. In case the FPI chooses not to divest, then the
entire investment in the company by such FPI and its investor group shall be
considered as investment under Foreign Direct Investment (FDI) and the FPI and
its investor group shall not make further portfolio investment in the company
concerned. The FPI, through its designated custodian, shall bring the same to
the notice of the depositories as well as the concerned company for effecting
necessary changes in their records, within -seven trading days from the date of
settlement of the trades causing the breach. The divestment of holdings by the
FPI and the reclassification of FPI investment as FDI shall be subject to
further conditions, if any, specified by Securities and Exchange Board of India
and the Reserve Bank in this regard. The breach of the said aggregate or
sectoral limit on account of such acquisition for the period between the
acquisition and sale or conversion to FDI within the prescribed time, shall not
be reckoned as a contravention under these rules.]
(iv) The investment
by foreign Government
agencies shall be clubbed with the investment by the foreign Government or its
related entities for the purpose of calculation of 10 percent limit for FPI
investments in a single company, if they form part of an investor group.
However, certain foreign Government agencies and its related entities may be
exempt from such clubbing requirements and other investment conditions either
by way of an agreement or treaty with other sovereign governments or by an
order of the Central Government.
(v) A FPI may
purchase equity instruments of an
Indian company through public offer or private placement, subject to the
individual and aggregate limits specified under this Schedule:
Provided that -
(A) in case of
public offer, the price of the
shares to be issued is not less than the price at which shares are issued to
residents, and
(B) in case of issue
by private placement,
the price is not less than- (a) the price arrived in terms of guidelines issued
by the Securities and Exchange Board of India, or (b) the fair price worked out
as per any internationally accepted pricing methodology for valuation of shares
on arm s length basis, duly certified by a Merchant Banker or Chartered
Accountant or a practicing Cost Accountant, as applicable registered with the
Securities and Exchange Board of India
(vi) A FPI may,
undertake short selling as well
as lending and borrowing of securities subject to such conditions as may be
stipulated by the Reserve Bank and the Securities and Exchange Board of India
from time to time.
(vii) Investments
made under this Schedule shall be
subject to the limits and margin requirements specified by the Reserve Bank or
the Securities and Exchange Board of India as well as the stipulations
regarding collateral securities as specified by the Reserve Bank from time to
time.
(b) Purchase or sale
of securities other than equity instruments by FPIs.-
(i) A FPI may
purchase units of domestic mutual funds or Category III Alternative Investment
Fund or offshore fund for which no objection is issued in accordance with the
SEBI (Mutual Fund) Regulations, 1996, which in turn invest more than 50 percent
in equity instruments on repatriation basis subject to the terms and conditions
specified by the Securities and Exchange Board of India and the Reserve Bank.
(ii) An FPI may
purchase units of REITs and InVITs on repatriation
basis subject to the terms and
conditions specified by the Securities and Exchange Board of India.
(2) The mode of payment and other attendant conditions for remittance of sale
or maturity proceeds shall be specified by the Reserve Bank.
SCHEDULE III
Investments by
Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on
repatriation
basis
(1) Purchase or sale
of equity instruments
of a listed Indian company
A Non-resident Indian (NRI) or an Overseas
Citizen of India (OCI) may purchase or sell equity instruments of a listed
Indian company on repatriation basis, on a recognized stock exchange in India,
subject to the following conditions, namely:-
(a) NRIs or OCIs may
purchase and sell equity
instruments through a branch designated by an Authorized Dealer for the purpose;
(b) The total
holding by any individual NRI or
OCI shall not exceed 5 percent of the total paid-up equity capital on a fully
diluted basis or shall not exceed 5 percent of the paid-up value of each series
of debentures or preference shares or share warrants issued by an Indian
company and the total holdings of all NRIs and OCIs put together shall not
exceed ten percent of the total paid-up equity capital on a fully diluted basis
or shall not exceed ten percent of the paid-up value of each series of
debentures
or preference shares or share warrants:
Provided that the aggregate
ceiling of 10 percent may be raised to 24 percent if a special resolution to
that effect is passed by the General Body of the Indian company.
(2) Purchase or sale
of units of domestic
mutual funds
A Non-resident Indian (NRI) or an Overseas
Citizen of India (OCI) may without limit purchase or sell units of domestic
mutual funds which invest more than 50 percent in equity.
(3) Purchase or sale
of shares in public
sector enterprises
A Non-resident Indian (NRI) or an Overseas
Citizen of India (OCI) may, without limit purchase or sell shares in public
sector enterprises being disinvested by the Central Government, provided the
purchase is in accordance with the terms and conditions stipulated in the
notice inviting bids.
(4) Subscription to
National Pension System.-
A NRI or an OCI
may subscribe to the National Pension System governed and administered by
Pension Fund Regulatory and Development Authority (PFRDA), provided such person
is eligible to invest as per the provisions of the Pension Fund Regulatory and
Development Authority Act. The annuity/ accumulated saving will be repatriable:
Provided that NRIs or OCIs may
offer such instruments as permitted by the Reserve Bank from time to time as
collateral to the recognised Stock Exchanges in India
for their transactions in exchange traded derivative contracts as prescribed in
sub-clause (2) of clause 12 of these Rules.
(5) The mode of
payment and attendant conditions for remittance of sale or maturity proceeds
shall be specified by the Reserve Bank.
SCHEDULE IV
Investment by NRI
or OCI on non-repatriation
basis
A. Purchase or
sale of equity instruments of an Indian company or units or contribution
to the
capital of a LLP by Non-Resident Indian (NRI)
or
Overseas Citizen of India (OCI) on Non-repatriation basis.
(1) Purchase or
sale of equity instruments or convertible notes or units or contribution
to the
capital of a LLP.
(a) A Non-resident
Indian (NRI) or an
Overseas Citizen of India (OCI), including a company, a trust and a partnership
firm incorporated outside India and owned and controlled by NRIs or OCIs, may
purchase or contribute, as the case may be, on non-repatriation basis the
following, namely:-
(i) a equity instrument issued by a
company without any limit either on the stock exchange or outside it;
(ii) units issued by
an investment vehicle without
any limit, either on the stock exchange or outside it;
(iii) The capital of
a Limited Liability Partnership
without any limit;
(iv) convertible
notes issued by a startup company
in accordance with these rules.
(b) The investment
detailed at sub-paragraph (a) of paragraph (1) above
shall be deemed
to be domestic investment at par with the investment made by residents.
(2) Purchase or
sale of units of domestic mutual funds
A Non-resident Indian (NRI) or an Overseas
Citizen of India (OCI) may without limit purchase or sell units of domestic
mutual funds on non-repatriation basis which invest more than 50% in equity.
(3) Prohibition on purchase of
equity instruments of certain companies.
Notwithstanding anything contained in
paragraph 1, a NRI or an OCI including a company, a trust and a partnership
firm incorporated outside India and owned and controlled by NRIs or OCIs, shall
not make any investment, under this Schedule, in equity instruments or units of
a Nidhi company or a company engaged in agricultural or plantation activities
or real estate business or construction of farm houses or dealing in transfer
of development rights.
Explanation: Real estate
business shall have the same meaning as specified in sub-paragraph (b) of
paragraph (3) of Schedule 1.
(4)
The mode of
payment and attendant conditions for remittance of sale or maturity proceeds
shall be specified by the Reserve Bank.
B.
Investment in a firm or a proprietary concern.
(1)
Contribution to
capital of a firm or a
proprietary concern.
A NRI or an OCI
may invest on a non-repatriation basis, by way of contribution to the capital
of a firm or a proprietary concern in India provided such firm or proprietary
concern is not engaged in any agricultural or plantation activity or print
media or real estate business.
Explanation: Real estate
business shall have the same meaning as specified in sub paragraph (b) of
paragraph (3) of Schedule I.
(2)
The mode of
payment and attendant conditions
for remittance of sale or maturity proceeds shall be specified by the Reserve
Bank.
SCHEDULE V
Investment by
other non-resident investors
Permission to
other non-resident investors for purchase of securities
(1) Long term
investors like Sovereign Wealth
Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension
Funds and Foreign Central Banks may purchase securities subject to such terms
and conditions as may be specified by the Reserve Bank and the Securities and
Exchange Board of India.
(2) Eligible Foreign Entity
(EEE) as
defined in SEBI circular dated the 9th
October 2018 and having actual exposure to Indian physical commodity market may
participate in domestic commodity derivative markets in accordance with
framework specified by the Securities and Exchange Board of India.
(3) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
SCHEDULE VI
Investment in a
Limited Liability Partnership
(LLP)
(i) A person
resident outside India (other than a citizen of Pakistan or Bangladesh) or an
entity incorporated outside India (other than an entity incorporated in
Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a
Foreign Venture Capital Investor (FVCI), may contribute to the capital of an
LLP operating in sectors or activities where foreign investment up to 100 per
cent is permitted under automatic route and there are no FDI linked performance
conditions.
(ii) Investment by
way of profit share
shall fall under the category of reinvestment of earnings.
(iii) Investment in
a
LLP is subject to the compliance of the conditions of Limited Liability
Partnership Act, 2008.
(iv) A company
having foreign investment,
engaged in a sector where foreign investment up to 100 percent is permitted
under the automatic route and there are no FDI linked performance conditions,
may be converted into a LLP under the automatic route.
(v) A LLP having
foreign investment, engaged in a sector where foreign investment up to 100 per
cent is permitted under the automatic route and there are no FDI linked
performance conditions, may be converted into a company under the automatic
route.
(vi) Investment in a
LLP either by way of
capital contribution or by way of acquisition or transfer of profit shares,
should not be less than the fair price worked out as per any valuation norm
which is internationally accepted or adopted as per market practice
(hereinafter referred to as fair price of capital contribution or profit share
of a LLP ) and a valuation certificate to that effect shall be issued by the
Chartered Accountant or by a practising Cost
Accountant or by an approved valuer from the panel maintained by the Central
Government.
(vii) In case of
transfer of capital
contribution or profit share from a person resident in India to a person
resident outside India, the transfer shall be for a consideration not less than
the fair price of capital contribution or profit share of a
LLP. Further, in case of transfer of capital contribution or profit share from
a person resident outside India to a person resident in India, the transfer
shall be for a consideration which is not more than the fair price of the
capital contribution or profit share of an LLP.
(viii) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
SCHEDULE VII
Investment by a
Foreign Venture Capital Investor (FVCI)
(1) Subject to
the
terms and conditions as may
be laid down by the Central Government, a Foreign Venture Capital Investor
(FVCI) may purchase,- -
(i)
securities,
issued by an Indian company engaged in any sector mentioned in paragraph (4) of
this Schedule and whose securities are not listed on a recognised
stock exchange at the time of issue of the said securities;
(ii) units
of a
Venture Capital Fund (VCF) or of
a Category I Alternative Investment Fund (Cat-I AIF) or units of a scheme or of
a fund set up by a VCF or by a Cat-I AIF.
(iii)
[79]
[ equity or
equity linked instrument or debt instrument issued by an Indian startup company
irrespective of the sector in which the startup company is engaged:
Provided that if the
investment is in equity instruments, then the sectoral caps, entry routes and
attendant conditions shall apply.]
(2) A FVCI may
purchase the securities or
instruments mentioned above either from the issuer of these securities/
instruments or from any person holding these securities or instruments. The
FVCI may invest in securities on a recognised stock
exchange subject to the provisions of the Securities and Exchange Board of
India (FVCI) Regulations, 2000.
(3) The FVCI
may
acquire, by purchase or
otherwise, from, or transfer, by sale or otherwise, to, any person resident in
or outside India, any security or instrument it is allowed to invest in, at a
price that is mutually acceptable to the buyer and the seller/ issuer. The FVCI
may also receive the proceeds of the liquidation of VCFs or of Cat-I AIFs or of
schemes or funds set up by the VCFs or Cat-I AIFs.
(4) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank of India.
(5) List of
sectors
in which a Foreign Venture
Capital Investor is allowed to invest is as follows :-
(a) biotechnology;
(b) IT
related to
hardware and software development;
(c) nanotechnology;
(d) seed
research
and development;
(e) research
and
development of new chemical
entities in pharmaceutical sector.
(f) dairy
industry;
(g) poultry
industry;
(h)
production of
bio-fuels;
(i)
hotel-cum-convention
centres with seating capacity of more than three thousand;
(j)
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 the March 27, 2012
as amended or updated.
SCHEDULE VIII
Investment by a
person resident outside India in an Investment Vehicle
(1) A person
resident outside India (other than
a citizen of Pakistan or Bangladesh) or an entity incorporated outside India
(other than an entity incorporated in Pakistan or Bangladesh) may invest in
units of Investment Vehicles.
(2) A person
resident outside India who has
acquired or purchased units in accordance with this Schedule may sell or
transfer in any manner or redeem the units as per regulations framed by the
Securities and Exchange Board of India or directions issued by the Reserve
Bank.
(3) An Investment
vehicle may 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.
(4) Investment made
by an Investment Vehicle
into an Indian entity shall be reckoned as indirect foreign investment for the
investee Indian entity if the Sponsor or the Manager or the Investment Manager
(i) is not owned and not controlled by resident
Indian citizens or (ii) is owned or controlled by persons resident outside
India.
Provided that for sponsors or
managers or investment managers organised in a form
other than companies or LLPs, Securities and Exchange Board of India shall
determine whether the sponsor or manager or investment manager is foreign owned
and controlled.
Explanation: Control
of the AIF should be in the hands of sponsors and managers or investment
managers , with the general exclusion to others. In case the sponsors and
managers or investment managers of the AIF are individuals, for the treatment
of down- stream investment by such AIF as domestic, sponsors and manager or
investment managers should be resident Indian citizens.
(5) An Alternative
Investment Fund Category III
which has received any foreign investment shall make portfolio investment in
only those securities or instruments in which a FPI is allowed to invest under
the Act or rules or regulations made thereunder.
(6) The mode of
payment and other attendant
conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
SCHEDULE IX
Investment in
Depository Receipts by a person resident outside India
(1) Issue
or transfer of eligible instruments to a foreign depository for
the purpose of
issuance of depository receipts by eligible person(s).-
(a) Any security or
unit in which a person
resident outside India is allowed to invest under these rules shall be eligible
instruments for issue of Depository Receipts in terms of Depository Receipts
Scheme, 2014 (DR Scheme,2014).
(b) A person shall
be eligible to issue or
transfer eligible instruments to a foreign depository for the purpose of
issuance of depository receipts in accordance with the DR Scheme, 2014 and
guidelines issued by the Central Government in this regard.
(c) A domestic
custodian may purchase eligible
instruments on behalf of a person resident outside India, for the purpose of
converting the instruments so purchased into depository receipts in terms of DR
Scheme, 2014.
(d) The aggregate of
eligible instruments which
may be issued or transferred to foreign depositories, along with eligible
instruments already held by persons resident outside India, shall not exceed
the limit on foreign holding of such eligible instruments under the Act, rules
or regulations framed thereunder.
(e) The eligible
instruments shall not be issued
or transferred to a foreign depository for the purpose of issuing depository
receipts at a price less than the price applicable to a corresponding mode of
issue or transfer of such instruments to domestic investors under the
applicable laws.
(2) Saving.- Depository
Receipts issued under the Issue of Foreign Currency Convertible Bonds and
Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 shall be
deemed to have been issued under the corresponding provisions of DR Scheme 2014
and have to comply with the provisions specified in this Schedule.
SCHEDULE X
Issue of Indian
Depository Receipts
(1) Issue of IDRs.-Companies
incorporated outside India may issue IDRs through a Domestic Depository,
to
persons resident in India and outside India, subject to the following
conditions:
(a) the issue of
IDRs is in compliance with the
Companies (Registration of Foreign Companies) Rules, 2014 and the Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;
(b) any issue of
IDRs by financial or banking
companies having presence in India, either through a branch or subsidiary,
shall require prior approval of the sectoral regulator(s);
(c) IDRs shall be
denominated in Indian rupee only;
(d) the proceeds of
the issue of IDRs shall be
immediately repatriated outside India by the companies issuing such IDRs.
(2) Purchase or sale
of IDRs.-
A FPI or a NRI or an OCI may purchase, hold, or sell IDRs, subject to
the
following terms and conditions, namely:-
(a) the mode of
payment and attendant conditions
for remittance of sale or maturity proceeds shall be as specified by the
Reserve Bank;
(b) limited two way
fungibility of IDRs shall be permissible subject to the terms and conditions
stipulated by the Reserve Bank in this regard;