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TMI BlogOverseas Direct Investment – Liberalisation / RationalisationX X X X Extracts X X X X X X X X Extracts X X X X ..... d March 27, 2006. 2. With a view to providing more operational flexibility to Indian corporates having investments abroad, it has been decided to further liberalise / rationalise the following regulations relating to overseas direct investment: i) Performance Guarantees issued by the Indian Party At present, financial commitment of the Indian Party includes contribution to the capital of the overseas Joint Venture (JV) / Wholly Owned Subsidiary (WOS), loan granted to the JV / WOS and 100 per cent of guarantees issued to or on behalf of the JV/WOS. Keeping in mind the utility and usage of the instrument of performance guarantees in project executions abroad and also considering the risks associated with such guarantees vis- -vis f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement fees in respect of the JV /WOS, even while such JV /WOS continue to function as under: (i) Listed Indian companies are permitted to write off capital and other receivables up to 25 per cent of the equity investment in the JV /WOS under the Automatic Route; and (ii) Unlisted companies are permitted to write off capital and other receivables up to 25 per cent of the equity investment in the JV /WOS under the Approval Route. The write-off / restructuring have to be reported to the Reserve Bank through the designated AD bank within 30 days of write-off/ restructuring. The write-off / restructuring is subject to the condition that the Indian Party should submit the following documents for scrutiny along with the applications to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rore and investment in an overseas JV/WOS not exceeding USD 10 million, for disinvestment under the Automatic Route with the requirement that the Indian Party shall report the disinvestment through its designated AD Category I bank within 30 days from the date of disinvestment. (b) It is also clarified that disinvestment cases falling under the Automatic Route would also include cases where the amount repatriated after disinvestment is less than the original amount invested, provided the corporate falls under the above mentioned categories. iv) Issue of guarantee by an Indian Party to step down subsidiary of JV /WOS under general permission (a) Currently Indian Parties are permitted to issue corporate guarantees on behalf of their f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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