Regulation 11 - Investment by capitalization - Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

11. Investment by capitalization (1) An Indian Party may make direct investment outside India in accordance with the Regulations in Part I by way of capitalisation in full or part of the amount due to the Indian Party from the foreign entity towards: - i. payment for export of plant, machinery, equipment and other goods/software to the foreign entity; ii. fees, royalties, commissions or other entitlements due to the Indian Party from the foreign entity for the supply of technical know-how, consultancy, managerial or other services Provided that where the 1 [export proceeds have remained' unrealized beyond the prescribed period of realization], and fees, royalties, commissions or other entitlements of the Indian party have remained unrealised from the date on which such payment is due, such proceeds shall not be capitalised without the prior permission of the Reserve Bank. (2) An Indian Software exporter may receive in the form of shares upto 25% of the value of exports to an overseas software start up company without entering into JV agreement by filing an application with the Reserve Bank through the Authorised Dealer. ********************* Note : 1. For the words "export proceeds have remained unrealized beyond a period of six months from the date of export" the words "export proceeds have remained' unrealized beyond the prescribed period of realization" has been substituted vide Notification No. 181/2008 dated 1/10/2008 (w.e.f. 3rd day of June 2008)