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TMI BlogCONSOLIDATED FDI POLICY EFFECTIVE FROM 1-10-2011.X X X X Extracts X X X X X X X X Extracts X X X X ..... notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No.FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P.Dir. (series) Circulars. The regulatory framework over a period of time thus consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc. 1.1.3 The present consolidation subsumes and supersedes all Press Notes/Press Releases/Clarifications/ Circulars issued by DIPP, which were in force as on September 30, 2011, and reflects the FDI Policy as on October 1, 2011. This Circular accordingly will take effect from October 1, 2011. Reference to any statute or legislation made in this Circular shall include modifications, amendments or re-enactments thereof. 1.1.4 Notwithstanding the rescission of earlier Press Notes/Press Releases/Clarifications/Circulars, anything done or any actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges in the US, Singapore, Luxembourg, etc. DRs listed and traded in the US markets are known as American Depository Receipts (ADRs) and those listed and traded anywhere/elsewhere are known as Global Depository Receipts (GDRs). 2.1.9 'Erstwhile Overseas Corporate Body' (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by non-resident Indian and includes overseas trust in which not less than sixty percent beneficial interest is held by non-resident Indian directly or indirectly but irrevocably and which was in existence on the date of commencement of the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003 (the Regulations) and immediately prior to such commencement was eligible to undertake transactions pursuant to the general permission granted under the Regulations. 2.1.10 'Foreign Currency Convertible Bond'(FCCB) means a bond issued by an Indian company expressed in foreign currency, the principal and interest of which is payable in foreign currency. FCCBs are issued in accordance with the Foreign Currency Convertible Bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is behalf. 2.1.20 'Investing Company' means an Indian Company holding only investments in other Indian company/ (ies), directly or indirectly, other than for trading of such holdings/securities. 2.1.21 'Investment on repatriable basis' means investment, the sale proceeds of which, net of taxes, are eligible to be repatriated out of India and the expression 'investment on non-repatriable basis' shall be construed accordingly. 2.1.22 'Joint Venture' (JV) means an Indian entity incorporated in accordance with the laws and regulations in India in whose capital a non-resident entity makes an investment. 2.1.23 'Non resident entity' means a 'person resident outside India' as defined under FEMA. 2.1.24 'Non Resident Indian' (NRI) means an individual resident outside India who is a citizen of India or is a person of Indian origin. 2.1.25 A company is considered as 'Owned' by resident Indian citizens if more than 50% of the capital in it is beneficially owned by resident Indian citizens and / or Indian companies, which are ultimately owned and controlled by resident Indian citizens; 2.1.26 'Person' includes (i) an individual (ii) a Hindu undivided family, (iii) a company (iv) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent in India' as per FEMA, 1999, read in conjunction with the Indian Citizenship Act, 1955. 2.1.34 'SEBI' means the Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992. 2.1.35 'SEZ' means a Special Economic Zone as defined in Special Economic Zone Act, 2005. 2.1.36 'SIA' means Secretariat of Industrial Assistance in DIPP, Ministry of Commerce & Industry, Government of India. 2.1.37 'Transferable Development Rights' (TDR) means certificates issued in respect of category of land acquired for public purposes either by the Central or State Government in consideration of surrender of land by the owner without monetary compensation, which are transferable in part or whole. 2.1.38 'Venture Capital Fund' (VCF) means a Fund established in the form of a Trust, a company including a body corporate and registered under Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996, which (i) has a dedicated pool of capital; (ii) raised in the manner specified under the Regulations; and (iii) invests in accordance with the Regulations. 2.1.39 "Limited Liability Partnership" means a Limited Liability Partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Person Resident Outside India) Regulations 2000, can invest/trade through a registered broker in the capital of Indian Companies on recognised Indian Stock Exchanges. 3.1.6 A SEBI registered Foreign Venture Capital Investor (FVCI) may contribute up to 100% of the capital of an Indian Venture Capital Undertaking (IVCU) and may also set up a domestic asset management company to manage the fund. All such investments can be made under the automatic route in terms of Schedule 6 to Notification No. FEMA 20. A SEBI registered FVCI can invest in a domestic venture capital fund registered under the SEBI (Venture Capital Fund) Regulations, 1996. Such investments would also be subject to the extant FEMA regulations and extant FDI policy including sectoral caps, etc. SEBI registered FVCIs are also allowed to invest under the FDI Scheme, as non-resident entities, in other companies, subject to FDI Policy and FEMA regulations. 3.2 ENTITIES INTO WHICH FDI CAN BE MADE 3.2.1 FDI in an Indian Company: Indian companies can issue capital against FDI. 3.1.2 FDI in Partnership Firm / Proprietary Concern: (i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance conditions (such as 'Non Banking Finance Companies' or 'Development of Townships, Housing, Built-up infrastructure and Construction-development projects' etc.). (b) LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business. (c) An Indian company, having FDI, will be permitted to make downstream investment in an LLP only if both-the company, as well as the LLP- are operating in sectors where 100% FDI is allowed, through the automatic route and there are no FDI-linked performance conditions. (d) LLPs with FDI will not be eligible to make any downstream investments. (e) Foreign Capital participation in LLPs will be allowed only by way of cash consideration, received by inward remittance, through normal banking channels or by debit to NRE/FCNR account of the person concerned, maintained with an authorized dealer/authorized bank. (f) Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs). (g) In case the LLP with FDI has a body corporate that is a desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI. Equity instruments issued/transferred to nonresidents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines. 3.3.3 The inward remittance received by the Indian company vide issuance of DRs and FCCBs are treated as FDI and counted towards FDI. 3.3.4 Issue of shares by Indian Companies under FCCB/ADR/GDR (i) Indian companies can raise foreign currency resources abroad through the issue of FCCB/DR (ADRs/GDRs), in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India there under from time to time. (ii) A company can issue ADRs / GDRs if it is eligible to issue shares to persons resident outside India under the FDI Policy. However, an Indian listed company, which is not eligible to raise funds from the Indian Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entities prohibited from buying, selling or dealing in securities by SEBI will not be eligible to subscribe to ADRs/ GDRs issued by Indian companies. (viii)The pricing of ADR / GDR issues should be made at a price determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. (ix) The pricing of sponsored ADRs/GDRs would be determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. 3.3.5 (i) Two-way Fungibility Scheme: A limited two-way Fungibility scheme has been put in place by the Government of India for ADRs / GDRs. Under this Scheme, a stock broker in India, registered with SEBI, can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on instructions received from overseas investors. Re-issuance of ADRs / GDRs wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment. 3.4.3 Foreign Currency Account - Indian companies which are eligible to issue shares to persons resident outside India under the FDI Policy may be allowed to retain the share subscription amount in a Foreign Currency Account, with the prior approval of RBI. 3.4.4 Transfer of shares and convertible debentures - (i) Subject to FDI sectoral policy (relating to sectoral caps and entry routes), applicable laws and other conditionalities including security conditions, non-resident investors can also invest in Indian companies by purchasing/acquiring existing shares from Indian shareholders or from other non-resident shareholders. General permission has been granted to non-residents/NRIs for acquisition of shares by way of transfer subject to the following: (a) A person resident outside India (other than NRI and erstwhile OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident outside India (including NRIs). (b) NRIs may transfer by way of sale or gift the shares or convertible debentures held by them to another NRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough normal banking channels, shall be subjected to a Know Your Customer (KYC) check by the remittance receiving AD Category-I bank at the time of receipt of funds. In case, the remittance receiving AD Category-I bank is different from the AD Category-I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category-I bank carrying out the transaction along with the Form FC-TRS. (iii) Escrow: AD Category-I banks have been given general permission to open Escrow account and Special account of non-resident corporate for open offers / exit offers and delisting of shares. The relevant SEBI (SAST) Regulations or any other applicable SEBI Regulations/ provisions of the Companies Act, 1956 will be applicable. AD Category-I banks have also been permitted to open and maintain, without prior approval of RBI, non-interest bearing Escrow accounts in Indian Rupees in India on behalf of residents and/or non-residents, towards payment of share purchase consideration and/or provide Escrow facilities for keeping securities to facilitate FDI transactions subject to the terms and conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval from Reserve Bank. While forwarding applications to Reserve Bank for approval for transfer of capital instruments by way of gift, the documents mentioned in Annex-3 should be enclosed. Reserve Bank considers the following factors while processing such applications: (a) The proposed transferee (donee) is eligible to hold such capital instruments under Schedules 1, 4 and 5 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. (b) The gift does not exceed 5 per cent of the paid-up capital of the Indian company/each series of debentures/each mutual fund scheme. (c) The applicable sectoral cap limit in the Indian company is not breached. (d) The transferor (donor) and the proposed transferee (donee) are close relatives as defined in Section 6 of the Companies Act, 1956, as amended from time to time. The current list is reproduced in Annex-4. (e) The value of capital instruments to be transferred together with any capital instruments already transferred by the transferor, as gift, to any person residing outside India does not exceed the rupee equivalent of USD 25,000 during the calendar year. (f) Such other conditions as stipulated by R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r capital goods into FDI being made within 180 days from the date of shipment of goods. (II) pre-operative/ pre-incorporation expenses (including payments of rent etc.), subject to compliance with the following conditions: (a) Submission of FIRC for remittance of funds by the overseas promoters for the expenditure incurred. (b) Verification and certification of the pre-incorporation/pre-operative expenses by the statutory auditor. (c) Payments should be made by the foreign investor to the company directly or through the bank account opened by the foreign investor as provided under FEMA Regulations. (d) The applications, complete in all respects, for capitalization being made within the period of 180 days from the date of incorporation of the company General conditions: (i) All requests for conversion should be accompanied by a special resolution of the company. (ii) Government's approval would be subject to pricing guidelines of RBI and appropriate tax clearance. 3.5 SPECIFIC CONDITIONS IN CERTAIN CASES 3.5.1 Issue of Rights/Bonus Shares - FEMA provisions allow Indian companies to freely issue Rights/Bonus shares to existing non-resident shareholders, subject to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctoral cap, and (ii) the transferor company or the transferee or the new company is not engaged in activities which are prohibited under the FDI policy . 3.5.5 Issue of shares under Employees Stock Option Scheme (ESOPs) - (i) Listed Indian companies are allowed to issue shares under the Employees Stock Option Scheme (ESOPs), to its employees or employees of its joint venture or wholly owned subsidiary abroad, who are resident outside India, other than to the citizens of Pakistan. ESOPs can be issued to citizens of Bangladesh with the prior approval of FIPB. Shares under ESOPs can be issued directly or through a Trust subject to the condition that: (a) The scheme has been drawn in terms of relevant regulations issued by the SEBI, and (b) The face value of the shares to be allotted under the scheme to the non-resident employees does not exceed 5 per cent of the paid-up capital of the issuing company. (ii) Unlisted companies have to follow the provisions of the Companies Act, 1956. The Indian company can issue ESOPs to employees who are resident outside India, other than to the citizens of Pakistan. ESOPs can be issued to the citizens of Bangladesh with the prior approval o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the following conditions: (i) in case of invocation of pledge, transfer of shares should be in accordance with the FDI policy in vogue at the time of creation of pledge; (ii) submission of a declaration/ annual certificate from the statutory auditor of the investee company that the loan proceeds will be / have been utilized for the declared purpose; (iii) the Indian company has to follow the relevant SEBI disclosure norms; and (iv) pledge of shares in favour of the lender (bank) would be subject to Section 19 of the Banking Regulation Act, 1949. (C) Non-resident holding shares of an Indian company, can pledge these shares in favour of an overseas bank to secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company, subject to the following: (i) loan is availed of only from an overseas bank; (ii) loan is utilized for genuine business purposes overseas and not for any investments either directly or indirectly in India; (iii) overseas investment should not result in any capital inflow into India; (iv) in case of invocation of pledge, transfer should be in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of shares to non-resident entities through amalgamation, merger/demerger, acquisition etc. (v) It is clarified that these guidelines will not apply to sectors/activities where there are no foreign investment caps, that is, 100% foreign investment is permitted under the automatic route. (vi) It is also clarified that Foreign investment shall include all types of foreign investments i.e. FDI, investment by FIIs, NRIs, ADRs, GDRs, Foreign Currency Convertible Bonds (FCCB) and fully, mandatorily & compulsorily convertible preference shares/debentures, regardless of whether the said investments have been made under Schedule 1, 2, 3 and 6 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. 3.7 CAPS ON INVESTMENTS 3.7.1 Investments can be made by non-residents in the capital of a resident entity only to the extent of the percentage of the total capital as specified in the FDI policy. The caps in various sector(s) are detailed in Chapter 6 of this circular. 3.8 ENTRY CONDITIONS ON INVESTMENT 3.8.1 Investments by non-residents can be permitted in the capital of a resident entity in certain sectors/activity with entry conditions. Such conditions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian companies would be in accordance/ compliance with the relevant sectoral conditions on entry route, conditionalities and caps. 3.10.4 Downstream investment by an Indian company which is owned and/or controlled by non resident entity/ies: 3.10.4.1 Downstream investment by an Indian company, which is owned and/ or controlled by non-resident entity/ies, into another Indian company, would be in accordance/compliance with the relevant sectoral conditions on entry route, conditionalities and caps, with regard to the sectors in which the latter Indian company is operating. 3.10.4.2 Downstream investments by Indian companies will be subject to the following conditions: (i) Such a company is to notify SIA, DIPP and FIPB of its downstream investment in the form available at http://www.fipbindia.com within 30 days of such investment, even if capital instruments have not been allotted along with the modality of investment in new/existing ventures (with/without expansion programme); (ii) downstream investment by way of induction of foreign equity in an existing Indian Company to be duly supported by a resolution of the Board of Directors as also a shareholders Agreement, if any; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d controlled by resident Indian citizens. (b) For cases where condition (a) above is not satisfied or if the investing company is owned or controlled by 'non resident entities', the entire investment by the investing company into the subject Indian Company would be considered as indirect foreign investment, provided that, as an exception, the indirect foreign investment in only the 100% owned subsidiaries of operating-cum-investing/investing companies, will be limited to the foreign investment in the operating-cum-investing/ investing company. This exception is made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company and the downstream investment should be a mirror image of the holding company. This exception, however, is strictly for those cases where the entire capital of the downstream subsidiary is owned by the holding company. Illustration To illustrate, if the indirect foreign investment is being calculated for Company X which has investment through an investing Company Y having foreign investment, the following would be the method of calculation: (A) where Company Y has foreign investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by resident Indian citizens. (A) For this purpose, the equity held by the largest Indian shareholder would have to be at least 51% 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. The term 'largest Indian shareholder', used in this clause, will include any or a combination of the following: (I) In the case of an individual shareholder, (aa) The individual shareholder, (bb) A relative of the shareholder within the meaning of Section 6 of the Companies Act, 1956. (cc) A company/ group of companies in which the individual shareholder/HUF to which he belongs has management and controlling interest. (II) In the case of an Indian company, (aa) The Indian company (bb) A group of Indian companies under the same management and ownership control. (B) For the purpose of this Clause, "Indian company" shall be a company which must have a resident Indian or a relative as defined under Section 6 of the Companies Act, 1956/ HUF, either singly or in combination holding at least 51% of the shares. (C) Provided that, in case of a combination of all or any of the entities me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 The CCEA would also consider the proposals which may be referred to it by the FIPB/ the Minister of Finance (in-charge of FIPB). 5.3 CASES WHICH DO NOT REQUIRE FRESH APPROVAL 5.3.1 Companies may not require fresh prior approval of the Government i.e. Minister in-charge of FIPB/CCEA for bringing in additional foreign investment into the same entity, in the following cases: (i) Entities the activities of which had earlier required prior approval of FIPB/CCFI/CCEA and which had, accordingly, earlier obtained prior approval of FIPB/CCFI/CCEA for their initial foreign investment but subsequently such activities/sectors have been placed under automatic route; (ii) Entities the activities of which had sectoral caps earlier and which had, accordingly, earlier obtained prior approval of FIPB/CCFI/CCEA for their initial foreign investment but subsequently such caps were removed/increased and the activities placed under the automatic route; provided that such additional investment alongwith the initial/original investment does not exceed the sectoral caps; and (iii) Additional foreign investment into the same entity where prior approval of FIPB/CCFI/CCEA had been obtained earlier for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Development and production of Seeds and planting material; (c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions; and (d) Services related to agro and allied sectors Note: Besides the above, FDI is not allowed in any other agricultural sector/activity 100% Automatic 6.2.1.1 Other conditions: I. For companies dealing with development of transgenic seeds/vegetables, the following conditions apply: (i) When dealing with genetically modified seeds or planting material the company shall comply with safety requirements in accordance with laws enacted under the Environment (Protection) Act on the genetically modified organisms. (ii) Any import of genetically modified materials if required shall be subject to the conditions laid down vide Notifications issued under Foreign Trade (Development and Regulation) Act, 1992. (iii) The company shall comply with any other Law, Regulation or Policy governing genetically modified material in force from time to time. (iv) Undertaking of business activities involving the use of genetically engineered cells and material shall be subject to the receipt of approvals from Genetic Engi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its ores; subject to the Mines and Minerals (Development & Regulation) Act, 1957. 100% Automatic 6.2.3.2 Coal and Lignite (1) Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act, 1973 100% Automatic (2) 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. 100% Automatic 6.2.3.3 Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities 6.2.3.3.1 Mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals (Development and Regulation Act 1957) 100% Government 6.2.3.3.2 Other conditions: India has large reserves of beach sand minerals in the coastal stretches aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made available for setting up such industries within the country. Thus, if with the technology transfer, the objective of the FDI Policy can be achieved, the conditions prescribed at (i) (A) above shall be deemed to be fulfilled. 6.2.4 Petroleum & Natural Gas 6.2.4.1 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 6.2.4.2 Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs. 49% Government MANUFACTURING 6.2.5 Manufacture of items reserved for production in Micro and Small Enterprises (MSEs) 6.2.5.1 FDI in MSEs will be subject to the sectoral caps, entry routes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking into account the category of weapons and equipment that are proposed to be manufactured. (vii) There would be a three-year lock-in period for transfer of equity from one non-resident investor to another non-resident investor (including NRIs & erstwhile OCBs with 60% or more NRI stake) and such transfer would be subject to prior approval of the Government. (viii)The Ministry of Defence is not in a position to give purchase guarantee for products to be manufactured. However, the planned acquisition programme for such equipment and overall requirements would be made available to the extent possible. (ix) The capacity norms for production will be provided in the licence based on the application as well as the recommendations of the Ministry of Defence, which will look into existing capacities of similar and allied products. (x) Import of equipment for pre-production activity including development of prototype by the applicant company would be permitted. (xi) Adequate safety and security procedures would need to be put in place by the licensee once the licence is granted and production commences. These would be subject to verification by authorized Government agencies. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Broadcasting 49% (FDI, NRI & PIO investments and portfolio investment) Government 6.2.7.3 Direct-to-Home subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting 49% (FDI, NRI & PIO investments and portfolio investment) Within this limit, FDI component not to exceed 20% Government 6.2.7.4 Headend-In-The-Sky (HITS) Broadcasting Service refers to the multichannel downlinking and distribution of television programme in C-Band or Ku Band wherein all the pay channels are downlinked at a central facility (Hub/teleport) and again uplinked to a satellite after encryption of channel. At the cable headend these encrypted pay channels are downlinked using a single satellite antenna, transmodulated and sent to the subscribers by using a land based transmission system comprising of infrastructure of cable/optical fibres network. 6.2.7.4.1 FDI limit in (HITS) Broadcasting Service is subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting. 74% (total direct and indirect foreign investment including portfolio and FDI) Automatic up to 49% Government rout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated or registered in India under the provisions of the Companies Act, 1956. (iii) Publication of facsimile edition of foreign newspaper would 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 & Broadcasting on 31.3.2006, as amended from time to time. 6.2.9 CIVIL AVIATION 6.2.9.1 The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services / Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions. For the purposes of the Civil Aviation sector: (i) "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; (ii) "Aerodrome" means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-Scheduled Air Transport Services except Cargo airlines. (c) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services. (1) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline 49% FDI (100% for NRIs) Automatic (2) Non-Scheduled Air Transport Service 74% FDI (100% for NRIs) Automatic up to 49% Government route beyond 49% and up to (3) Helicopter services/seaplane services requiring DGCA approval 100% Automatic 6.2.9.4 Other services under Civil Aviation sector (1) Ground Handling Services subject to sectoral regulations and security clearance 74% FDI (100% for NRIs) Automatic up to 49% Government route beyond 49% and up to 74% (2) Maintenance and Repair organizations; flying training institutes; and technical training institutions 100% Automatic 6.2.10 Courier services for carrying packages, parcels and other items which do not come within the ambit of the Indian Post Office Act, 1898 and excluding the activity relating to the distribution of letters. 100% Government 6.2.11 Construction Development: Townships, Housing, Built-up infrastructure 6.2.11.1 Townships, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /investee company shall be responsible for obtaining all necessary approvals, including those of the building/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/ Municipal/Local Body concerned. (7) The State Government/ Municipal/ Local Body concerned, which approves the building / development plans, would monitor compliance of the above conditions by the developer. Note: (i) The conditions at (1) to (4) above would not apply to Hotels & Tourism, Hospitals, Special Economic Zones (SEZs), Education Sector, Old age Homes and investment by NRIs. (ii) FDI is not allowed in Real Estate Business. 6.2.12 Industrial Parks - New and existing 100% Automatic 6.2.12.1 (i) "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. (ii) "Infrastructure" refers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 6.2.13.1 Satellites - Establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO 74% Government 6.2.14 Private Security Agencies 49 % Government 6.2.15 Telecom Services Investment caps and other conditions for specified services are given below. However, licensing and security requirements notified by the Department of Telecommunications will need to be complied with for all services. 6.2.15.1 (i) Telecom services 74% Automatic up to 49% Government route beyond 49% and up to 74% 6.2.15.1.1 Other conditions: (1) General Conditions: (i) This is applicable in case of Basic, Cellular, Unified Access Services, National/ International Long Distance, V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and other value added Services. (ii) Both direct and indirect foreign investment in the licensee company shall be counted for the purpose of FDI ceiling. Foreign Investment shall include investment by Foreign Institutional Investors (FIIs), Non-resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /billing) (Note: it does not restrict a statutorily required disclosure of financial nature) ; and (b) User information (except pertaining to foreign subscribers using Indian Operator's network while roaming). (ix) The Company must provide traceable identity of their subscribers. However, in case of providing service to roaming subscriber of foreign Companies, the Indian Company shall endeavour to obtain traceable identity of roaming subscribers from the foreign company as a part of its roaming agreement. (x) On request of the licensor or any other agency authorised by the licensor, the telecom service provider should be able to provide the geographical location of any subscriber (BTS location) at a given point of time. (xi) The Remote Access (RA) to Network would be provided only to approved location(s) abroad through approved location(s) in India. The approval for location(s) would be given by the Licensor (DOT) in consultation with the Ministry of Home Affairs. (xii) Under no circumstances, should any RA to the suppliers/manufacturers and affiliate(s) be enabled to access Lawful Interception System(LIS), Lawful Interception Monitoring(LIM), Call contents of the traffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice providers shall submit a compliance report on the aforesaid conditions to the licensor on 1st day of July and January on six monthly basis. 6.2.15.2 (a) ISP with gateways (b) ISP's not providing gateways i.e. without gate-ways (both for satellite and marine cables) Note: The new guidelines of August 24, 2007 Department of Telecommunications provide for new ISP licenses with FDI up to 74%. (c) Radio paging (d) End-to-End bandwidth 74% Automatic up to 49% Government route beyond 49% and up to 74% 6.2.15.3 (a) Infrastructure provider providing dark fibre, right of way, duct space, tower (IP Category I) (b)Electronic Mail (c) Voice Mail Note: Investment in all the above activities is subject to the conditions that such companies will divest 26% of their equity in favour of Indian public in 5 years, if these companies are listed in other parts of the world. 100% Automatic up to 49% Government route beyond 49% 6.2.16 TRADING 6.2.16.1 (i) Cash & Carry Wholesale Trading/ Wholesale Trading (including sourcing from MSEs) 100% Automatic 6.2.16.1.1 Definition: Cash & Carry Wholesale trading/Wholesale trading, would mean sale of goods/merchandise to retailers, indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, such WT to group companies taken together should not exceed 25% 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/Cash & carry trader cannot open retail shops to sell to the consumer directly. 6.2.16.2 E-commerce activities 100% Automatic 6.2.16.2.1 E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. 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. 6.2.16.3 Test marketing of such items for which a company has approval for manufacture, provided such test marketing facility will be for a period of two years, and investment in setting up manufacturing facility commences simultaneously with test marketing. 100% Government 6.2.16.4 Single Brand product trading 51% Government (1) Foreign Investment in Single Brand product trading is aimed at attracting investments in production and marketing, improvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve Bank. FIIs can invest up to 49 per cent of each tranche of scheme of SRs, subject to the condition that investment by a single FII in each tranche of SRs shall not exceed 10 per cent of the issue. (iii) Any individual investment of more than 10% would be subject to provisions of section 3(3) (f) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 6.2.18 Banking -Private sector 6.2.18.1 Banking -Private sector 74% including investment by FIIs Automatic up to 49% Government route beyond 49% and up to 74% 6.2.18.2 Other conditions: (1) This 74% limit will include investment under the Portfolio Investment Scheme (PIS) by FIIs, NRIs and shares acquired prior to September 16, 2003 by erstwhile OCBs, and continue to include IPOs, Private placements, GDR/ADRs and acquisition of shares from existing shareholders. (2) The aggregate foreign investment in a private bank from all sources will be allowed up to a maximum of 74 per cent of the paid up capital of the Bank. At all times, at least 26 per cent of the paid up capital will have to be held by residents, except in regard to a wholly-owned subsidiary of a foreign bank. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both. (b) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve Bank's licensing criteria will be allowed to hold 100 per cent paid up capital to enable them to set up a wholly-owned subsidiary in India. (c) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary and (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 per cent in a private bank. (d) A foreign bank will 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 will be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 per cent of the paid capital of the private sector bank is held by residents at all times consistent with para (i) (b) above. (e) A subsidiary of a foreign bank will be subject to the licensing requirements and conditions broadly consistent with those for new private sector banks. (f) Guidelines for setting up a wholly-owned subsidiary of a foreign bank will be issued separately by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity Exchange 49% (FDI & FII) [Investment by Registered FII under Portfolio Investment Scheme (PIS) will be limited to 23% and Investment under FDI Scheme limited to 26% ] Government 6.2.20.3 Other conditions: (i) FII purchases shall be restricted to secondary market only and (ii) No non-resident investor/ entity, including persons acting in concert, will hold more than 5% of the equity in these companies. 6.2.21 Credit Information Companies (CIC) 6.2.21.1 Credit Information Companies 49% (FDI & FII) Government 6.2.21.2 Other Conditions: (1) Foreign investment in Credit Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005. (2) Foreign investment is permitted under the Government route, subject to regulatory clearance from RBI. (3) Investment by a registered FII under the Portfolio Investment Scheme would be permitted up to 24% only in the CICs listed at the Stock Exchanges, within the overall limit of 49% for foreign investment. (4) Such FII investment would be permitted subject to the conditions that: (a) No single entity should directly or indirectly hold more than 10% equity. (b) Any acquisition in excess of 1% will ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstream subsidiaries. (v) Joint Venture operating NBFCs that have 75% or less than 75% foreign investment can also set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries also complying with the applicable minimum capitalisation norm mentioned in (i), (ii) and (iii) above and (vi) below. (vi) Non- Fund based activities : US $0.5 million to be brought upfront for all permitted non-fund based NBFCs irrespective of the level of foreign investment subject to the following condition: It would not be permissible for such a company to set up any subsidiary for any other activity, nor it can participate in any equity of an NBFC holding/operating company. Note: The following activities would be classified as Non-Fund Based activities: (a) Investment Advisory Services (b) Financial Consultancy (c) Forex Broking (d) Money Changing Business (e) Credit Rating Agencies (vii) This will be subject to compliance with the guidelines of RBI. Note: Credit Card business includes issuance, sales, marketing & design of various payment products such as credit cards, charge cards, debit cards, stored value cards, smart card, value added cards etc. (2) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble without any restrictions (net of applicable taxes). The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time. 7.2. REPORTING OF FDI 7.2.1 Reporting of Inflow (i) An Indian company receiving investment from outside India for issuing shares/convertible debentures/preference shares under the FDI Scheme, should report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank not later than 30 days from the date of receipt in the Advance Reporting Form enclosed as Annex 5. (ii) Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares/convertible debentures, through an AD Category-I bank, together with a copy/ies of the FIRC/s evidencing the receipt of the remittance along with the KYC report (enclosed as Annex 6) on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported. 7.2.2 Reporting of issue of shares (i) After issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicated. (e) Issue of bonus/rights shares or stock options to persons resident outside India directly or on amalgamation/merger/demerger with an existing Indian company, as well as issue of shares on conversion of ECB/royalty/lumpsum technical know-how fee/import of capital goods by units in SEZs, has to be reported in Form FC-GPR. 7.2.3 Reporting of transfer of shares Reporting of transfer of shares between residents and non-residents and vice versa is to be done in Form FC-TRS (Annex 8). The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor/transferee, resident in India. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Form FC-TRS and submit a monthly report to the Reserve Bank. 7.2.4 Reporting of Non-Cash Details of issue of shares against conversion of ECB have to be reported to the Regional Office concerned of the RBI, as indicated below: (i) In case of full conversion of ECB into equity, the company shall report the conversion in Form FC-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h amount is quantifiable, or up to two lakh Rupees where the amount is not quantifiable, and where such contraventions is a continuing one, further penalty which may extend to five thousand Rupees for every day after the first day during which the contraventions continues. (ii) Where a person committing a contravention of any provisions of this Act or of any rule, direction or order made thereunder is a company (company means any body corporate and includes a firm or other association of individuals as defined in the Companies Act), every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. (iii) Any Adjudicating Authority adjudging any contraventions under 6.3.1(i), may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government. 7.3.2 Adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are issued to the foreign investor, along with the documents mentioned in item No. 4 of the undertaking enclosed to this Form) Permanent Account Number (PAN) of the investee company given by the Income-tax Department Date of issue of shares/convertible debentures No. Particulars (In Block Letters) 1. Name Address of the Registered Office State Registration No. given by Registrar of Companies Whether existing company or new company (strike off whichever is not applicable) Existing company/New company If existing company, give registration number allotted by RBI for FDI, if any Telephone Fax e-mail 2. Description of the main business activity NIC Code Location of the project and NIC code for the district where the project is located Percentage of FDI allowed as per FDI policy State whether FDI is allowed under Automatic Route or Approval Route (strike out whichever is not applicable) Automatic Route/Approval Route 3. Details of the foreign investor/collaborator* Name Address Country Constitution/Nature of the investing Entity [Specify whether 1. Individual 2. Company 3. FII 4. FVCI 5. Foreign Trust 6. Private Equity Fund 7. Pension/Providen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p/Proprietorship Firms 10 Financial Institutions 11 NRIs/PIO 12 Others (please specify) Sub Total (b) Resident Total DECLARATION TO BE FILED BY THE AUTHORISED REPRESENTATIVE OF THE INDIAN COMPANY: (Delete whichever is not applicable and authenticate) We hereby declare that: 1. We comply with the procedure for issue of shares/convertible debentures as laid down under the FDI scheme as indicated in Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time. 2. The investment is within the sectoral cap/statutory ceiling permissible under the Automatic Route of RBI and we fulfil all the conditions laid down for investments under the Automatic Route namely (strike off whichever is not applicable). (a) Foreign entity/entities--(other than individuals), to whom we have issued shares have existing joint venture or technology transfer or trade mark agreement in India in the same field and Conditions stipulated at Para 4.2 of Consolidated FDI policy Circular of Government of India have been complied with. OR Foreign entity/entities--(other than individuals), to whom we have issued shares do not have any existing joint venture or technology transfer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FICATE TO BE FILED BY THE COMPANY SECRETARY3 OF THE INDIAN COMPANY ACCEPTING THE INVESTMENT: (As per Para 9(1)(B) (i) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000) In respect of the abovementioned details, we certify the following : 1. All the requirements of the Companies Act, 1956 have been complied with. 2. Terms and conditions of the Government approval, if any, have been complied with. 3. The company is eligible to issue shares/convertible debentures under these Regulations. 4. The company has all original certificates issued by AD Category-I banks in India, evidencing receipt of amount of consideration in accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000. (Name & Signature of the Company Secretary) (Seal) FOR USE OF THE RESERVE BANK ONLY: Registration Number for the FC-GPR: Unique Identification Number allotted to the Company at the time of reporting receipt of remittance R Annex - 2 Terms and conditions for Transfer of Shares/Convertible Debentures, by way of Sale, from a Person Resident in India to a Person Resident Outside India and from a Person Resident Outside India to a Person Reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Obligations of the parties All the parties involved in the transaction would have the responsibility to ensure that the relevant regulations under FEMA are complied with and consequent on transfer of shares, the relevant individual limit/sectoral caps/foreign equity participation ceilings as fixed by Government are not breached. Settlement of transactions will be subject to payment of applicable taxes, if any. 4. Method of payment and remittance/credit of sale proceeds 4.1 The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels. In case the buyer is a Foreign Institutional Investor (FII), payment should be made by debit to its Special Non-Resident Rupee Account. In case the buyer is a NRI, the payment may be made by way of debit to his NRE/FCNR (B) accounts. However, if the shares are acquired on non-repatriation basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR (B)/NRO accounts. 4.2. The sale proceeds of shares (net of taxes) sold by a person resident outside India may be remitted outside India. In case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the individual FII/Sub account ceiling as prescribed by SEBI has not been breached. 5.2. For sale of shares by a person resident outside India (i) Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. (ii) Where the Consent Letter has been signed by their duly appointed agent the Power of Attorney Document authorizing the agent to purchase/sell shares by the seller/buyer. In case there is no formal Sale Agreement, letters exchanged to this effect may be kept on record. (iii) If the sellers are NRIs/OCBs, the copies of RBI approvals evidencing the shares held by them on repatriation/non-repatriation basis. The sale proceeds shall be credited NRE/NRO account, as applicable. (iv) Certificate indicating fair value of shares from a Chartered Accountant. (v) No Objection/Tax Clearance Certificate from Income-tax authority/Chartered Account. (vi) Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to. 6. Reporting requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angement will be by debit /credit to their Special Non Resident Rupee Account. Therefore, the transaction should also be reported in Form LEC (FII) by the designated bank of the FII concerned. 6.6 Shares/convertible debentures of Indian companies purchased under Portfolio Investment Scheme by NRIs, OCBs cannot be transferred, by way of sale under private arrangement. 6.7 On receipt of statements from the AD, the Reserve Bank may call for such additional details or give such directions as required from the transferor/transferee or their agents, if need be. Annex- 3 Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift (i) Name and address of the transferor (donor) and the transferee (donee). (ii) Relationship between the transferor and the transferee. (iii) Reasons for making the gift. (iv) In case of Government dated securities and treasury bills and bonds, a certificate issued by a Chartered Accountant on the market value of such security. (v) In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from the issuer on the Net Asset Value of such security. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A 20/2000- RB dated May 3, 2000) Permanent Account Number (PAN) of the investee company given by the IT Department No. Particulars (In Block Letters) 1. Name of the Indian company Address of the Registered Office Fax Telephone e-mail 2 Details of the foreign investor/collaborator Name Address Country 3. Date of receipt of funds 4. Amount In foreign currency In Indian Rupees 5. Whether investment is under Automatic Route or Approval Route If Approval Route, give details (ref. No. of approval and date) Automatic Route/Approval Route 6. Name of the AD through whom the remittance is received 7. Address of the AD A Copy of the FIRC evidencing the receipt of consideration for issue of shares/convertible debentures as above is enclosed. (Authorised signatory of the investee company) (Stamp) (Authorised signatory of the AD) (Stamp) FOR USE OF THE RESERVE BANK ONLY: Unique Identification Number for the remittance received: Annex - 6 Know Your Customer (KYC) Form in respect of the non-resident investor Registered Name of the Remitter/Investor (Name, if the investor is an Individual) Registration Number (Unique Identification Number* in case remitter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry & Mining ( ) 8. Food Processing Industry ( ) 9. Transportation ( ) 10. Petroleum & Natural Gas ( ) 11. Chemicals (other than fertilizers) ( ) 12. Construction ( ) 13. Software and ITES/BPO ( ) 14. Pharmaceutical ( ) 15. Other ( ) For RBI's use (Industry Code) 8. Whether your company is listed in India [please tick (ü)]? Yes No 9. Whether your company has any Foreign Collaboration? Yes No If yes, please indicate whether it is (please tick the appropriate one) (a) Technical collaboration (b) Financial collaboration (foreign equity participation) (c) Both Block 1A : Total Paid up Capital of Indian Company Item End-March of previous FY End-March current FY Number of Shares Amount in lakh Number of Shares Amount in lakh 1.0 Total Paid-up Capital [(i)+(ii)] (i) Ordinary/Equity Share (ii) Preference Share [(a)+(b)] (a) Participating (b) Non-participating 2.0 Non-resident Equity Holdings 1 Individuals 2 Companies 3 FIIs 4 FVCIs 5 Foreign Trusts 6 Private Equity Funds 7 Pension/Provident Funds 8 Sovereign Wealth Fund (SWF)§ 9Partnership/Proprietorship firms 10 Financial Institutions 11 NRIs/PIO 12 Others (ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estor 1.2 Liabilities to Direct Investor 2.0 Other Capital(2.0 = 2.2-2.1) 2.1 Claims on Direct Investor 2.2 Liabilities to Direct Investor 3.0 Disinvestments in India during the year Note: (i) if investor is a company, then country is the country of incorporation; (ii) Please use different sheet using same format to report different non-resident company/individual. 3. Portfolio and Other Liabilities to Non-residents (i.e. position with unrelated parties) Block 3A: Portfolio Investment Please furnish here the outstanding investments by non-resident investors made under the Portfolio Investment Scheme in India. In case of listed companies, equity should be valued using share price on closing date of reference period, while in case of unlisted companies, Own Fund of Book Value (OFBV) Method should be used. (see the attached guidelines for details) Portfolio Investment Country of nonresident investor Amount in lakh as at the end of March Current FY March Previous FY 1.0 Equity Securities 2.0 Debt Securities(2.0 = 2.1+2.2) 2.1 Bonds and Notes (original maturity more than 1year) 2.2 Money Market Instruments (original maturity upto1year) 3.0 Disinvestments in India dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched guidelines for details) Block 4: Direct Investment Abroad under Overseas Direct Investment Scheme Block 4A: Direct Investment Abroad (10 % or more Equity holding) [Please furnish here your outstanding investments in Non-resident enterprises [Direct Investment Enterprises (DIE)], made under the Overseas Direct Investment Scheme, in each of which your company hold 10 per cent or more Equity shares on the reporting date]. If this block is Non-NIL, then please furnish the information in BLOCK 6. Name of the non-resident Direct Investment Enterprise (DIE) Type of Capital Country of non-resident DIE Equity holding (%) Amount in lakh as at the end of March Previous FY December Current FY March Current FY 1.0 Equity Capital (1.0 = 1.1-1.2) 1.1 Claims on Direct Investment Enterprise 1.2 Liabilities to Direct Investment Enterprise 2.0 Other Capital(2.0 = 2.1-2.2) 2.1 Claims on Direct Investment Enterprise 2.2 Liabilities to Direct Investment Enterprise 3.0 Disinvestments made abroad during the year Note: Please use separate sheets in the above format to report for separate DIEs Block 4B: Foreign Direct Investment Abroad (Less than 10% Equity holding) [Please furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Value (ii) Mark to market value Note: If particular type(s) of investment spreads over more than one country, it should be reported in the above format using separate additional sheet for each country. Block 5C: Other Investment (Outstanding claims on Unrelated Parties): This is a residual category that includes all financial outstanding claims not considered as direct investment or portfolio investment. Other Investment Country of non-resident enterprise Amount in lakh as at the end of March Previous FY March Current FY 4.0 Trade Credit (4.0=4.1+4.2) 4.1 Short Term (4.1=4.1.1+4.1.2) 4.1.1. Up to 6 Months 4.1.2. 6 Months to 1 Year 4.2 Long Term 5.0 Loans (5.0=5.1+5.2) 5.1 Short Term (Up to 1 year) 5.2 Long Term 6.0 Other Assets (6.0=6.1+6.2) 6.1 Currency & Deposits 6.2 Others Note: (i) Data pertaining to each type of investment are to be reported consolidating the information country wise. If particular type(s) of investment spreads over more than one country, it should be reported in the above format using separate additional sheet for each country. Block 6: Equity Capital, Free Reserves & Surplus of Direct Investment Enterprise Abroad [Please report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st one production establishment in the country and must plan to operate the establishment indefinitely or over a long period of time. Free Reserves and Surplus (Block 1B, Item 3.1) Free Reserves and Surplus should include all unencumbered reserves such as (i) General Reserve net of losses, if any (ii) Capital Reserve (iii) Development Rebate Reserve (iv) Premium on shares (v) Dividend Equalization Reserve (vi) Investment Allowance (utilized) Reserve. Free Reserves and Surplus should exclude Tax provisions and other items such as (i) provision for deferred taxation (ii) Tax Equalization Reserve (iii) Investment Allowance (unutilized) and (iv) Revaluation Reserve Retained Profit (Block 1B, Item 3.4) Retained profit = Profit after tax - Dividend declared (excluding tax on dividend) (i.e. Item 3.4 = Item 3.2 minus Item 3.3 of Block 1B) A. Direct Investment: Direct investment is a category of international investment in which a resident entity in one economy (direct investor (DI) acquires a lasting interest in an enterprise resident in another economy (Direct Investment Enterprise (DIE). It consists of two components, viz., Equity capital and Other Capital. (i) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if its share is less than 10 per cent of equity capital of reporting company, then it is called as reverse investment and same should be reported under item 1.2 (liabilities to DIE) of the respective block i.e. Block 4A or 4B. (ii) Other Capital under Direct Investment (Block 2A, 2B, 4A and 4B) The other capital (inter-company debt transactions) component of direct investment covers the outstanding liabilities or claims arising due borrowing and lending of funds, investment in debt securities including non-participating preference shares, trade credits, financial leasing, share application money, between direct investors and DIEs and between two DIEs that share the same Direct Investor. Non-participating preferred shares owned by the direct investor are treated as debt securities & should be included in Other Capital. B. Portfolio Investment: (i) Portfolio Investment (Block 3A & 5A) It covers external claims by or liabilities to reporting Indian company in equity and debt securities other than those included in direct investment (Block 2A, 2B and 4A, 4B). Debt securities include long-term bonds and notes, short-term money market instruments. Any investment is made by the non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a residual category that includes all financial outstanding not considered as direct investment or portfolio investment such as: (i) Trade Credits (Block 3C & 5C, Item 4.0) Trade credits are assets and liabilities that arise from the direct extension of credit from a supplier to a buyer for transactions in goods and services and advance payments by buyers for transactions in goods and services and for work in progress. Trade credit assets are advance payments made by importer (you) for (your) imports or credit extended by exporter (you) directly to (your) importer. Trade credit liabilities are advance payment received by the exporter (you) for (your) exports or credit received by importer (you) directly from (your) exporter. It may be noted here that funding provided by an enterprise other than the supplier for the purpose of purchasing goods or services is treated as a loan and not as trade credit. (ii) Loans (Block 3C & 5C, Item 5.0) Loans are direct lending of funds by a creditor to a debtor through arrangements. These include, loans to finance trade (i.e. Buyers' credit in which a bank or a financial institution or an export credit agency in the exporting country extends a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntees are part of contingent foreign liabilities. In this case, under column 1 of block 7, ―"Loan Guarantee" needs to be mentioned. Country should relate to the country of location of the non-resident creditor involved in the transaction. To illustrate, as mentioned above, if the contingent foreign liability is in connection with guarantees on loans, the country of location of the non-resident creditor to whom such guarantees are given, needs to be reported in column 2. Seal/ Annex - 8 Form FC-TRS Declaration regarding transfer of shares/compulsorily and mandatorily convertible preference shares (CMCPS)/debentures by way of sale from resident to non resident/non-resident to resident (to be submitted to the designated AD branch in quadruplicate within 60 days from the date of receipt of funds) The following documents are enclosed For sale of shares/compulsorily and mandatorily convertible preference shares/debentures by a person resident in India i. Consent Letter duly signed by the seller and buyer or their duly appointed agent and in the latter case the Power of Attorney Document. ii. The shareholding pattern of the investee company after the acquisition of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s CMCPS/ debentures Face value in Rs. Negotiated Price for the transfer**in Rs. Amount of consideration in Rs. 8 Foreign Investments in the company No. of shares Percentage Before the transfer After the transfer 9 Where the shares/ CMCPS/debentures are listed on Stock Exchange Name of the Stock exchange Price Quoted on the Stock exchange Where the shares/CMCPS /debentures are Unlisted Price as per Valuation guidelines* Price as per Chartered Accountants */** Valuation report (CA Certificate to be attached) Declaration by the transferor/transferee I/We hereby declare that: i. The particulars given above are true and correct to the best of my/our knowledge and belief. ii. I/We, was/were holding the shares compulsorily and mandatorily convertible preference shares/debentures as per FDI Policy under FERA/FEMA Regulations on repatriation/non repatriation basis. iii. I/We, am/are eligible to acquire the shares compulsorily and mandatorily convertible preference shares/debentures of the company in terms of the FDI Policy. It is not a transfer relating to shares compulsorily and mandatorily convertible preference shares/debentures of a company engaged in financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is applicable. If yes, please give details 12. Details of the Equity Capital Before Issue After Issue (a) Authorised Capital (b) Issued and Paid-up Capital (i) Held by persons Resident in India (ii) Held by foreign investors other than FIIs/NRIs/PIOs/OCBs (a list of foreign investors holding more than 10 per cent of the paid-up capital and number of shares held by each of them should be furnished) (iii) Held by NRIs/PIOs/OCBs (iv) Held by FIIs Total Equity held by non-residents (c) Percentage of equity held by non-residents to total paid-up capital 13. Whether issue was on private placement basis. If yes, please give details of the investors and GDRs/ADRs issued to each of them 14. Number of GDRs/ADRs issued 15. Ratio of GDRs/ADRs to underlying shares 16. Issue Related Expenses (a) Fee paid/payable to Merchant Bankers/Lead Manager (i) Amount (in US$) (ii) Amount as percentage to the total issue (b) Other expenses 17. Whether funds are kept abroad. If yes, name and address of the bank 18. Details of the listing arrangement Name of Stock Exchange Date of commencement of trading 19. The date on which GDRs/ADRs issue was launched 20. Am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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