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TMI BlogConsolidated FDI PolicyX X X X Extracts X X X X X X X X Extracts X X X X ..... ation of establishing a 'lasting interest' in an enterprise that is resident in an economy other than that of the investor. 1.1.2 The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/Press Releases which are 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, ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly convertible. Further, 'warrant' includes Share Warrant issued by an Indian Company in accordance to provisions of the Companies Act, as applicable. 2.1.6 'Capital account transaction' means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6 of FEMA. 2.1.7 'Competent Authority' means the concerned Administrative Ministry/Department empowered to grant government approval for foreign investment under the extant FDI Policy and FEMA Regulations. 2.1.8 'Control' shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. For the purposes of Limited Liability Partnership, 'control' will mean right to appoint majority of the designated partners, where such designated partners, with specific exclusion to others, have control over all the policies of the LLP. 2.1.9 'Convertible Note' means an instrument issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh depository receipt mechanism) Scheme, 1993 and subscribed by a non-resident entity in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part. 2.1.14 'FDI' means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations,2000 (Original notification is available at https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=174. Subsequent amendment notifications are available at https://rbi.org.in/Scripts/BS_FemaNotifications.aspx). 2.1.15 'FDI linked performance conditions' means the sector specific conditions for companies receiving foreign investment. 2.1.16 'FEMA' means the Foreign Exchange Management Act, 1999 (42 of 1999). 2.1.17 'Foreign Institutional Investor'(FII) means an entity established or incorporated outside India which proposes to make investment in India and which is registered as a FII in accordance with the Securities and Exchange Board of India (SEBI) (Foreign Institutional Investor) Regulations 1995. 2.1.18 'Foreign Portfolio In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeds 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. 2.1.28 '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. 2.1.29 'Limited Liability Partnership' means a Limited Liability Partnership firm, formed and registered under the Limited Liability Partnership Act, 2008. 2.1.30 'Manufacture', with its grammatical variations, means a change in a non-living physical object or article or thing- (a) 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 (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure. 2.1.31 'Non-resident entity' means a 'person resident outside India' as defined under FEMA. 2.1.32 'Non-Resident Indian' (NRI) means an individual resident outside India who is a citizen of India or is an 'Overseas Citizen of India' cardholder within the meaning of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India. 2.1.37 'Person resident outside India' means a person who is not a Person resident in India. 2.1.38 'Portfolio Investment Scheme' means the Portfolio Investment Scheme referred to in Schedules 2, 2A& 3 of FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. 2.1.39 'RBI' means the Reserve Bank of India established under the Reserve Bank of India Act, 1934. 2.1.40 'Resident Entity' means 'Person resident in India' excluding an individual. 2.1.41 'Resident Indian Citizen' shall be interpreted in line with the definition of 'person resident in India' as per FEMA, 1999, read in conjunction with the Indian Citizenship Act, 1955. 2.1.42 'SEBI' means the Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king channels. 3.1.3 OCBs have been derecognized as a class of investors in India with effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under the adverse notice of RBI can make fresh investments under FDI Policy as incorporated non-resident entities, with the prior approval of Government of India if the investment is through Government route; and with the prior approval of RBI if the investment is through Automatic route. 3.1.4 A company, trust and partnership firm incorporated outside India and owned and controlled by NRIs can invest in India with the special dispensation as available to NRIs under the FDI Policy. 3.1.5 (i) Foreign Institutional Investor (FII) and Foreign Portfolio Investors (FPI) may in terms of Schedule 2 and 2A of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations, as the case may be, respectively, invest in the capital of an Indian company under the Portfolio Investment Scheme which limits the individual holding of an FII/FPI below 10% of the capital of the company and the aggregate limit for FII/FPI investment to 24% of the capital of the company. This aggregate limit of 24% can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange.It may also set up a domestic asset management company to manage its investments. 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. 3.1.8 A Non- Resident Indian may subscribe to National Pension System governed and administered by Pension Fund Regulatory and Development Authority (PFRDA), provided such subscriptions are made through normal banking channels and the person is eligible to invest as per the provisions of the PFRDA Act. The annuity/ accumulated saving will be repatriable. 3.2 Eligible investee entities 3.2.1 Indian Company Indian companies can issue capital against FDI. 3.2.2 Partnership Firm/Proprietary Concern (i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest in the capital of a firm or a proprietary concern in India on non-repatriation basis provided; (a) Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers/Authorized banks. (b) The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estate Investment Trusts (REITs) governed by the SEBI (REITs) Regulations, 2014, Infrastructure Investment Trusts (InvIts) governed by the SEBI (InvIts) Regulations, 2014, Alternative Investment Funds (AIFs) governed by the SEBI (AIFs) Regulations, 2012 and notified under Schedule 11 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 is permitted to receive foreign investment from a person resident outside India (other than an individual who is citizen of or any other entity which is registered / incorporated in Pakistan or Bangladesh), including an Registered Foreign Portfolio Investor (RFPI) or a non-resident Indian (NRI). 3.2.6 Startup Companies Start-ups can issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance, as per the FEMA Regulation. In addition, start-ups can issue convertible notes to person resident outside India subject to the following conditions: (i) A person resident outside India (other than an individual who is citizen of Pakistan or Bangladesh or an entity which is registered / incorporated in Pakistan or Bangladesh), may purchase convertib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res etc. Types of instruments for investment and provisions relating to issue/ transfer of shares are given at Annexure 2 & Annexure 3 respectively. Further, specific conditions of compliance for certain cases are given in Annexure-4. 3.4 Entry Routes for Investment 3.4.1 Investments can be made by non-residents in the equity shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares of an Indian company, through the Automatic Route or the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment. Under the Government Route, prior approval of the Government of India is required. Proposals for foreign investment under Government route, are considered by respective Administrative Ministry/Department. 3.4.2 Foreign investment in sectors/activities under government approval route will be subject to government approval where: (i) An Indian company is being established with foreign investment and is not owned by a resident entity or (ii) An Indian company is being established with foreign investment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular. 3.6 Entry Conditions on Investment 3.6.1 Investments by non-residents can be permitted in the capital of a resident entity in certain sectors/activity with entry conditions. Such conditions may include norms for minimum capitalization, lock-in period, etc. The entry conditions in various sectors/activities are detailed in Chapter 5 of this Circular. 3.7 Other Conditions on Investment besides Entry Conditions 3.7.1 Besides the entry conditions on foreign investment, the investment/investors are required to comply with all relevant sectoral laws, regulations, rules, security conditions, and state/local laws/regulations. 3.7.2 For establishment of branch office, liaison office or project office or any other place of business in India if the principal business of the applicant is Defence, Telecom, Private Security or Information and Broadcasting, approval of Reserve Bank of India is not required in cases where Government approval or license/permission by the concerned Ministry/Regulator has already been granted. 3.8 Foreign Investment into/downstream Investment by eligible Indian entities 3.8.1 The Guidelines for calculation of total foreign investment, both direct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the sectors in which the latter Indian company is operating. Note: Downstream investment/s made by a banking company, as defined in clause(c) of Section 5 of the Banking Regulation Act, 1949, incorporated in India, which is owned and/or controlled by non-residents/a non-resident entity/non-resident entities, under Corporate Debt Restructuring (CDR), or other loan restructuring mechanism, or in trading books, or for acquisition of shares due to defaults in loans, shall not count towards indirect foreign investment. However, their 'strategic downstream investment' shall count towards indirect foreign investment. For this purpose, 'strategic downstream investments' would mean investment by these banking companies in their subsidiaries, joint ventures and associates. 3.8.4.2 Downstream investments by eligible Indian entities/LLPs will be subject to the following conditions: (i) Such an entity is to notify RBI and Foreign Investment Facilitation Portal of its downstream investment in the form available at www.fifp.gov.in within 30 days of such investment, even if capital instruments have not been allotted along with the modality of investment in new/existing ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Product retail trading) Department of Industrial Policy & Promotion (xi) FDI proposals by Non-Resident Indians (NRIs)/ Export Oriented Units requiring approval of the Government (xii) Applications relating to issue of equity shares under the FDI policy under the Government route for import of capital goods/machinery/equipment (excluding second-hand machinery) (xiii) Applications relating to issue of equity shares for pre-operative/pre-incorporation expenses (including payments of rent etc.) (xiv) 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 Department of Economic Affairs (xv) Applications for foreign investment into a Core Investment Company or an Indian company engaged only in the activity of investing in the capital of other India Company/ies (xvi) Banking (Public and Private) Department of Financial Services (xvii) Pharmaceuticals Department of Pharmaceuticals 4.1.2 In respect of sectors/activities which are presently under automatic route but required Government approval earlier as per the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity where prior approval of Government had been obtained earlier for the initial/original foreign investment due to requirements of Press Note 18/1998 or Press Note 1 of 2005 and prior approval of the Government under the FDI policy is not required for any other reason/purpose; and (iv) Additional foreign investment up to cumulative amount of ₹ 5000 crore into the same entity within an approved foreign equity percentage/or into a wholly owned subsidiary. 4.3 Online Filing of Applications for Government Approval 4.3.1 Guidelines for e-filing of applications, filing of amendment applications and instructions to applicants are available at the Foreign Investment Facilitation Portal (www.fifp.gov.in). Chapter 5: Sector Specific Conditions on FDI 5.1 Prohibited Sectors FDI is prohibited in: a) Lottery Business including Government/private lottery, online lotteries, etc. b) Gambling and Betting including casinos etc. c) Chit funds d) Nidhi company e) Trading in Transferable Development Rights (TDRs) f) Real Estate Business or Construction of Farm Houses 'Real estate business' shall not include development of townships, construction of residential /commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-resident entities will be subject to Government approval. Foreign investment in sectors under automatic route but with conditionalities, resulting in transfer of ownership and/or control of Indian entities from resident Indian citizens to non-resident entities, will be subject to compliance of such conditionalities. d) The sectors which are already under 100% automatic route and are without conditionalities would not be affected. e) Notwithstanding anything contained in paragraphs a) and c) above, portfolio investment, up to aggregate foreign investment level of 49% or sectoral/statutory cap, whichever is lower, will not be subject to either 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 Indian entities from resident Indian citizens to non-resident entities. Other foreign investments will be subject to conditions of Government approval and compliance of sectoral conditions as laid down in the FDI policy. f) Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/statutory cap. g) Any existing foreign investment already made in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957. (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 (3) For sale of coal, coal mining activities including associated processing infrastructure subject to the provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 as amended from time to time and other relevant Acts on the subject. 100% Automatic] 5.2.3.3 Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities 5.2.3.3.1 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 5.2.3.3.2 Other Conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing 5.2.5 Manufacturing: 5.2.5.1 3[Subject to the provisions of the FDI policy, foreign investment in 'manufacturing' sector is under automatic route. 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 its products manufactured in India through wholesale and/ or retail, including through e-commerce, without Government approval.] 5.2.5.2 Notwithstanding the FDI policy provisions on trading sector, 100% FDI under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India. 5.2.6 Defence Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.6.1 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 up to 49% Government route beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king of Non-'News & Current Affairs' TV Channels/ Down-linking of TV Channels 100% Automatic 5.2.7.3 Detailed guidelines on the Broadcasting Sector are given in Annexure-7. 5.2.8 Print Media Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.8.1 Publishing of newspaper and periodicals dealing with news and current affairs 26% Government 5.2.8.2 Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Government 5.2.8.2.1 Other Conditions (i) 'Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. (ii) Foreign investment would 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 & Broadcasting on 4.12.2008. Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.8.3 Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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, piers and other structures thereon or pertaining thereto; (iii) "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; (iv) "Air Transport Undertaking" means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; (v) "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; (vi) "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; (vii) "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority in the Ministry of Civil Aviation. Note: (i) The FDI limits/entry routes, mentioned at paragraph 5.2.9.2 (1) and 5.2.9.2 (2) above, are applicable in the situation where there is no investment by foreign airlines. (ii) The dispensation for NRIs regarding FDI up to 100% will also continue in respect of the investment regime specified at para (c)(ii) above. (iii) The policy mentioned at para (c) above is not applicable to M/s Air India Limited. 5.2.10 Construction Development: Townships, Housing, Built-up Infrastructure Sector/Activity %% of Equity/ FDI Cap Entry Route 5.2.10.1 Construction-development projects (which would 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 5.2.10.2 Each phase of the construction development project would be considered as a separate project for the purposes of FDI policy. Investment will be subject to the following conditions: (A) (i)The investor will be permitted to exit on completion of the project or after development of trunk infr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not amount to real estate business. (ii) Condition of lock-in period at (A) above will not apply to Hotels &Tourist Resorts, Hospitals, Special Economic Zones (SEZs), Educational Institutions, Old Age Homes and investment by NRIs. (iii) Completion of the project will be determined as per the local bye-laws/rules and other regulations of State Governments. (iv) It is clarified that 100% FDI under automatic route is permitted in completed projects for operation and management of townships, malls/ shopping complexes and business centres. Consequent to foreign investment, transfer of ownership and/or control of the investee company from residents to non-residents is also permitted. However, there would be a lockin-period of three years, calculated with reference to each tranche of FDI, and transfer of immovable property or part thereof is not permitted during this period. (v) "Transfer", in relation to FDI policy on the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure Providers Category-I) 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) except Other Service Providers. 100% Automatic up to 49% Government route beyond 49% 5.2.14.1 Other Condition FDI in Telecom sector is subject to observance of licensing and security conditions by licensee as well as investors as notified by the Department of Telecommunications (DoT) from time to time, except "Other Service Providers", which are allowed 100% FDI on the automatic route. 5.2.15 Trading Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.15.1 Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs) 100% Automatic 5.2.15.1.1Definition: Cash & Carry Wholesale trading/Wholesal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (d) WT of goods would be permitted among companies of the same group. However, 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 can undertake retail trading, subject to the conditions as applicable. An entity undertaking wholesale/cash and carry as well as retail business will be mandated to maintain separate books of accounts for these two arms of the business and duly audited by the statutory auditors. Conditions of the FDI policy for wholesale/cash and carry business and for retail business have to be separately complied with by the respective business arms. 5.2.15.2 E-commerce activities Sector/Activity % of Equity/FDI Cap Entry Route E-commerce activities 100% Automatic 5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce. 5.2.15.2.2 Definitions: i) E-commerce- E-commerce means buying and selling of goods an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India. viii) In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller. ix) E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. x) Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 above will apply on B2B e-commerce. Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalities, sale of services through e-commerce will be under automatic route. 5.2.15.3 Single Brand Product Retail Trading 4[Sector/Activity % of Equity/ FDI Cap Entry Route Single Brand Product retail trading 100% Automatic (1) Foreign Investment in Single Brand Product retail trading 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, technologie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; 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) An 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 2 years from date of start of online retail. Note: (i) Conditions mentioned at Para 5.2.15.3 (2) (b) & 5.2.15.3 (2) (d) will not be applicable for undertaking SBRT of Indian brands. (ii) Indian brands should be owned and controlled by resident Indian citizens and/or companies which are owned and controlled by resident Indian citizens. (iii) Sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of first store or start of online retail, whichever is earlier for entities undertaking single brand retail trading of products having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment of US $ 2.00 million during the course of its relationship with the said retailer. Sourcing from agricultural co-operatives and farmers co-operatives would also be considered in this category. The procurement requirement would 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 FDI is received. Thereafter, it would have to be met on an annual basis. (v) Self-certification by the company, to ensure compliance of the conditions at serial nos. (ii), (iii) and (iv) above, which could be cross-checked, as and when required. Accordingly, the investors shall maintain accounts, duly certified by statutory auditors. (vi) Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 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/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line and (x) Mass Rapid Transport Systems. 100% Automatic Note: (i) Foreign Direct Investment in the abovementioned activities open to private sector participation including FDI is subject to sectoral guidelines of Ministry of Railways. (ii)Proposals involving FDI beyond 49% in 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. Financial Services Foreign investment in other financial services, other than those indicated below, would require prior approval of the Government. 5.2.17 Asset Reconstruction Companies Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.17.1'Asset Reconstruction Company' (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and limits in respect of voting rights are at Annexure-9. 5.2.19 Banking- Public Sector Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.19.1 Banking- Public Sector subject to Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks. 20% Government 5.2.20 Credit Information Companies (CIC) Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.20.1 Credit Information Companies 100% Automatic 5.2.20.2 Other Conditions (1) Foreign investment in Credit Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005. (2) Foreign investment is permitted subject to regulatory clearance from RBI. (3) Such FII/FPI investment would be permitted subject to the conditions that: (a) A single entity should directly or indirectly hold below 10% equity. (b) Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement; and (c) FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding. 5.2.21 Infrastructure Company in the Securities Mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivery of goods, which is not a ready delivery contract; or * a contract for differences which derives its value from prices or indices of prices of such underlying goods or activities, services, rights, interests and events, as may be notified in consultation with SEBI by the Central Government, but does not include securities. 7[5.2.22 Insurance Sector/ Activity % of Equity/FDI cap Entry Route 5.2.22.1 Insurance Company 49% Automatic 5.2.22.2 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. 100% Automatic] 8[5.2.22.3] 9[Other Conditions (a) 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 forty-nine percent of the paid up equity capital of such Indian Insurance company. (b) The foreign investment up to forty-nine percent of the total paid-up equity of the Indian I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting in concert, will hold more than 5% of the equity in these companies; and (iii) The foreign investment would be in compliance with SEBI Regulations; other applicable laws/regulations; security and other conditionalities. 5.2.25 White Label ATM Operations Sector/Activity % of Equity/ FDI Cap Entry Route White Label ATM Operations 100% Automatic Other Conditions (i) Any non-bank entity intending to set up WLAs should have a minimum net worth of ₹ 100 crore as per the latest financial year's audited balance sheet, which is to be maintained at all times. (ii) In case the entity is also engaged in any 'Other Financial Services' as laid down at Para 5.2.26 below, then the foreign investment in the company setting up WLA, shall also have to comply with the minimum capitalization norms, if any, for foreign investments in such 'Other Financial Services'. (iii) FDI in the WLAO will be subject to the specific criteria and guidelines issued by RBI vide Circular No. DPSS.CO.PD.No. 2298/02.10.002/2011-2012, as amended from time to time. 5.2.26 Other Financial Services Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.26.1 Financial Services activities r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mestic market at the time of induction of FDI, 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 FDI. Of these, the highest level of production in any of these three years would be taken as the level. (b) R&D expenses being maintained in value terms for 5 years at an absolute quantitative level at the time of induction of FDI. 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 FDI. (c) The administrative Ministry will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company. (d) 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, will monitor the compliance of condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny Address of the Registered Office of the Investee Company with City, District and State clearly mentioned Telephone Fax e-mail State Registration No. given by Registrar of Companies and Date of Incorporation. Whether existing company or new company (strike off whichever is not applicable) If existing company, give registration number allotted by RBI for FDI, if any Existing company / New company (Brownfield) ( Greenfield) 2. Description of the main business activity NIC Code Location of the project and NIC code for the district where the project is located a)Detailed address including Name, City, District and State b) Code for District c) Code for State Percentage of FDI allowed as per FDI policy (Sectoral cap under FDI Policy) State whether FDI is allowed under Automatic Route or Approval Route (strike out whichever is not applicable) (If under approval route, give relevant approval No. with date) Automatic Route / Approval Route 3 Details of the foreign investor / collaborator2* (Details of foreign residence to be given. Indian address if any should not be given) Name Address Country Constitution / Nature of the investing Entity [Specify whether 1. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs % a) Non-Resident 01 Individuals 02 Companies 03 FIIs 04 FVCIs# 05 Foreign Trusts 06 Private Equity Funds 07 Pension/ Provident Funds 08 Sovereign Wealth Funds 09 Partnership/ 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) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time. OR b) Shares issued are bonus. OR c)Shares have been issued under a schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conditions of the Government approval, if any, have been complied with. 3. The company is eligible to issue shares / convertible debentures/others 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 Annexure-2 Types of Instruments 1. Indian companies can issue equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares subject to pricing guidelines/valuation norms prescribed under FEMA Regulations. The price/conversion formula of convertible capital instruments should be determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to that foreign depository and deposited with a domestic custodian. c) In terms of Notification No. FEMA.20/2000-RB dated May 3, 2000 as amended from time to time, a person will be eligible to issue or transfer eligible securities to a foreign depository, for the purpose of converting the securities so purchased into depository receipts in terms of Depository Receipts Scheme, 2014 and guidelines issued by the Government of India thereunder from time to time. d) A person can issue DRs, if it is eligible to issue eligible instruments to person resident outside India under Schedules 1, 2, 2A, 3, 5 and 8 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. e) The aggregate of eligible securities which may be issued or transferred to foreign depositories, along with eligible securities already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible securities under the relevant regulations framed under FEMA, 1999. f) The pricing of eligible securities to be issued or transferred to a foreign depository for the purpose of issuing depository receipts should not be at a price less than the price app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of receipt may be considered by the RBI, on the merits of the case. 2. Issue price of shares Price of shares issued to persons resident outside India under the FDI Policy, shall not be less than - a. the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company are listed on any recognised stock exchange in India; b. the fair valuation of shares done by a SEBI registered Merchant Banker or a Chartered Accountant as per any internationally accepted pricing methodology on arm's length basis, where the shares of the company are not listed on any recognised stock exchange in India; and c. the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment. However, where non-residents (including NRIs) are making investments in an Indian company in compliance with the provisions of the Companies Act, as applicable, by way of subscription to its Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme. 3. Foreign Curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a non-resident of shares/convertible debentures of an Indian company, engaged in an activity earlier covered under the Government Route but now falling under Automatic Route, as well as transfer of shares by a non-resident to an Indian company under buyback and/or capital reduction scheme of the company. (h) 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. However, in cases where the NR investor, including an NRI, acquires shares on the stock exchanges under the FDI scheme, the investee company would have to file form FC-TRS with the AD Category-I bank. (ii) The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer and the seller, an escrow arrangement may be made between the buyer and the seller for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the transfer agreement or if the total consideration is paid by the buyer to the seller, the seller may furnish an indemnity for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the payment of the full consideration. Provided the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines. 5. Prior permission of RBI in certain cases for transfer of capital instruments 5.1 Except cases mentioned in paragraph 5.2 below, the following cases require prior approval of RBI: (i) Transfer of capital instruments from resident to non-residents by way of sale where: (a) Transfer is at a price which falls outside the pricing guidelines specified by the Reserve Bank from time to time and the transaction does not fall under the exception given in para 5.2. (b) Transfer of capital instruments by the non-resident acquirer involving defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I SAST, buy back) ; and iii. Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations/guidelines as indicated above is attached to the form FC-TRS to be filed with the AD bank. B. Transfer of shares from Resident to Non-Resident: i) where the transfer of shares requires the prior approval of the Government as per the extant FDI policy provided that: a) the requisite approval of the Government has been obtained; and b) the transfer of shares adheres with the pricing guidelines and documentation requirements as specified by the Reserve Bank of India from time to time. ii) where the transfer of shares attract SEBI (SAST) Regulations subject to the adherence with the pricing guidelines and documentation requirements as specified by Reserve Bank of India from time to time. iii) where the transfer of shares does not meet the pricing guidelines under the FEMA, 1999 provided that: a) The resultant FDI is in compliance with the extant FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum capitalization, etc.) , reporting requirements, documentation etc.; b) The pricing for the transaction i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1999 or any rules/ 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 is permitted, provided that: (I) The equity shares shall be issued in accordance with the extant FDI guidelines on sectoral caps, pricing guidelines etc. as amended by Reserve bank of India, from time to time; Explanation: Issue of shares/convertible debentures that require Government approval in terms of paragraph 3 of Schedule 1 of FEMA 20 or import dues deemed as ECB or trade credit or payable against import of second hand machinery shall continue to be dealt in accordance with extant guidelines; (II) The issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes. (iii) 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 conditionalities, may issue equity shares or preference shares or convertible debentures or warrants to the said n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. SECTION 1 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 Resident in India 1.1 In order to address the concerns relating to pricing, documentation, payment/ receipt and remittance in respect of the shares/convertible debentures of an Indian company, in all sectors, transferred by way of sale, the parties involved in the transaction shall com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, if any, in this regard, the non-resident investor exercising option/right in shares or convertible debentures issued under FDI Scheme shall be eligible to exit without any assured return, as per pricing/valuation guidelines issued by RBI from time to time. 3. Responsibilities / 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 4.1The 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 FII,FPI, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi. Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with. vii. Undertaking from the FII/sub account to the effect that the individual FII/ Sub account ceiling as prescribed by SEBI has not been breached, till it gets registered as FPI. 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 app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by their branches together with copies of the FC-TRS Forms received from their branches to Foreign Exchange Department, Reserve Bank, Foreign Investment Division, Central Office, Mumbai in soft copy (in MS- Excel) by e-mail to [email protected] 6.5 Shares purchased / sold by FIIs/FPIs under private arrangement will be by debit /credit to their Special Non-Resident Rupee Account. Therefore, the transaction should also be reported in Form LEC by the designated bank of the FII/FPI 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. SECTION 2 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. The offer on right basis to the persons resident outside India shall be: (a) in the case of shares of a company listed on a recognized stock exchange in India, at a price as determined by the company; (b) in the case of shares of a company not listed on a recognized stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to resident shareholders. 2. Prior permission of RBI for Rights issue to erstwhile OCBs OCBs have been de-recognised as a class of investors from September 16, 2003. Therefore companies desiring to issue rights share to such erstwhile OCBs will have to take specific prior permission from RBI. As such, entitlement of rights share is not automatically available to erstwhile OCBs. However bonus shares can be issued to erstwhile OCBs without the approval of RBI. 3. Additional allocation of rights share by residents to non-residents Existing non-resident shareholders are allowed to apply for issue of additional shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares over and above their rights share entitlements. The investee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to non-resident employees/directors under the applicable rules/regulations are in compliance with the sectoral cap applicable to the said company. c. Issue of "employee's stock option"/ "sweat equity shares" by a company where foreign investment is under the approval route shall require prior approval of Government of India. d. Issue of "employee's stock option"/ "sweat equity shares" under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Government of India. e. The issuing company shall furnish to the Regional Office concerned of the Reserve Bank of India under whose jurisdiction the registered office of the company operates, within 30 days from the date of issue of employees' stock option or sweat equity shares, a return as per the Form-ESOP. 6. Share Swap In cases of investment by way of swap of shares, irrespective of the amount, valuation of the shares will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the host country. Approval of the Government will also be a prerequisite for inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the FDI policy in vogue at the time of creation of pledge; and (v) submission of a declaration/annual certificate from a Chartered Accountant/ Certified Public Accountant of the non-resident borrower that the loan proceeds will be / have been utilized for the declared purpose. Annexure-5 Total Foreign Investment i.e. Direct and Indirect Foreign Investment in eligible Indian entities 1. Investment in an eligible Indian entity can be made both by non-resident as well as resident Indian entities. Any non-resident investment in an Indian company is direct foreign investment. Investment by resident Indian entities could again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 investment less than 50%- Company X would not be taken as having any indirect foreign investment through Company Y. (B) where Company Y has foreign investment of say 75% and: (I) invests 26% in Company X, the entire 26% investment by Company Y would be treated as ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 1956 or Section 2 (72) of the Companies Act, 2013, as the case may be. 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 2 (77) of Companies Act, 2013. (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 2 (77) of Companies Act, 2013/ 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 mentioned in Sub-Clauses (I) and (II) of clause 1.2 (v) (d) (A) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am investment is made as per the FDI Policy. (iii) Downstream investment in an LLP by an Investment Vehicle that is reckoned as foreign investment has to conform to the provisions of Schedule 9 of the principal FEMA Regulations as well as the extant FDI policy for foreign investment in LLPs. (iv) An Alternative Investment Fund Category III with foreign investment shall make portfolio investment in only those securities or instruments in which a Registered Foreign Portfolio Investor is allowed to invest under the principal Regulations. (v) The Investment Vehicle receiving foreign investment shall be required to make such report and in such format to Reserve Bank of India or to SEBI as may be prescribed by them from time to time. 1.4 Any foreign investment already made in accordance with the guidelines in existence prior to February 13, 2009 (date of issue of Press Note 2 of 2009) would not require any modification to conform to these guidelines. All other investments, past and future, would come under the ambit of these new guidelines. Annexure-6 Remittance, Reporting and Violation 1. Remittance and Repatriation 1.1 Remittance of sale proceeds/Remittance on winding up/L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Reporting of FDI 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 as in Section 1 of this Annexure. (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 (Section-2) 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. Explanation: An Indian company issuing partly paid equity shares, shall furnish a report not later than 30 days from the date of receipt of each call payment. 2.2 Reporting of issue of shares (i) After issue of shares (including bonus and shares issued on rights bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet date. The details of overseas investments in the company both under direct/portfIndiao investment may be separately indicated. (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. 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 (Section-4) . 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. However, in cases where the NR investor, including an NRI, acquires shares on the stock exchanges under the FDI scheme, the investee company would have to file form FC-TRS with the AD Category-I bank. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Form FC- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 there under 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 3.1 (i) above, 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. 3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r whose jurisdiction the Registered Office of the company making the declaration is situated, not later than 30 days from the date of receipt of the amount of consideration, as specified in para 9 (I) (A) of Schedule I to Notification No. FEMA 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) 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... please furnish the share price on closing date of reference period Face Value (Per Share) Market Value (Per Share) Latest March Previous March Latest March Ordinary/Equity Share 9. Identification of the reporting Company(in terms of in ward FDI) (a) Subsidiary of Foreign entity (b)Associate of foreign entity (c) Public Private Partnership (d) Special Purpose Vehicle (e) Other 10.Whether the Company is Asset Management Company(Y/N)? 11.Whether the Company has Technical Foreign collaboration(Y/N)? 12.Whether the company has any business activity during the latest financial year(April-March)(Y/N)? Section II (Financial Details) Block1:Financial Detail of Reporting Company CARE: Information should be reported for all the reference period, i.e. Previous March and Latest March. If reporting period is different from Account Closing Period, then information should be given on internal assessment basis for the reference period Block1A:Total Paid-up Capital of Indian Company: End-of Previous March End-of Latest March Item Number of Shares in actual Amount in Rs lakh Number of Shares in actual Amount in Rslakh 1.0 Total Paid-up Capital (=1.1+ 1.2) 1.1 Total Equit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies, Own Fund of Book Value(OFBV) Method should be used for equity valuation. Block-2A: Investment in India under Foreign Direct Investment(FDI) scheme(10%or more Equity Participation). [Please furnish here the outstanding investments made under the FDI Scheme in India by Non-resident Direct investors, who were individually holding 10 percent or more ordinary/equity & preference shares of your company on the reference date] Name of the non- resident Company/ Individual Type of Capital Country of non-resident investor Equity & Participating Preference share capital holding percent as at the end of latest year(%) Amount in Rslakh as at the end of Previous March Latest March 1.0 Equity Capital (=1.1-1.2) 1.1 Liabilities to Direct 1.2 Claims on Direct Investor (Reverse investment) 2.0 Other Capital# 2..1 Liabilities to Direct Investor 2.2 Claims on Direct Investor Note: (i) If the information is to be furnished for more than one invest or,then add separate Block with same format (ii):Other capital, item 2.1&2.2 of Block-2A includes all other liabilities and claims at Nominal value, except equity and participating preference shares,(i.e. trade credit, loan, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k-2C must be equal to the item 3.0 of Block-1A for the latest march. Section IV (FOREIGN ASSETS) 1. Please use the exchange rate as at end-March Previous FY and end-March Latest FY(as applicable)of reporting year while reporting the foreign Assets in Rs lakh. 2. If over seas company is listed;equity should be valued using share price on closing date of reference period (Item 1.1 of Block 4A & 4B and Item 1.1 of Block 5). 3. If overseas company is unlisted, Own Fund of Book Value(OFBV) Method should be used for valuation of equity investment (Item 1.1 of Block 4A & 4B and Item 1.1 of Block 5).. Block-3:Equity Capital (PUC), Reserves & Surplus of Direct Investment Enterprise(DIE) Abroad(10%or more equity holding by Indian Reporting company) [Please report here the total equity of DIE, equity held by your company, reserves (excluding P&L Account) and P&L Account of those DIE sin each of which your company hold 10% or more equity shares on the reference date.] Name of the DIE Item Currency Amount in Foreign Currency as at the end of (in actual) Previous March Latest March 3.1 Total Equity of DIE (Paid up capital of DIE) 3.2 Equity of DIE held by you (at face value) 3.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) #:Other capital, item2.1&2.2ofBlock-4B includes all other liabilities and claims at Nominal value, except equity, (i.e. trade credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting company with non-resident companies where Indian company holds lessthan10percentequityandalso with related parties. Block-5:Portfolio Investment Abroad Please furnish here the market value of out standing investments in non-resident enterprises,other than those made under ODI scheme reported in Block-4. Portfolio Investment Country of non-resident enterprise Amount in Rs lakh as at the end of Previous March Latest March 1.0 Equity Securities (at Market Value) 2.0 Debt Securities (=2.1+2.2) 2.1 Money Market Instruments (original maturity upto1year) 2.2 Bonds and Other instruments (originalmaturitymorethan1year) Note: (i) Country wise consolidated information pertaining to each type of investment should be reported separately. (ii) If the information is to be furnish for more than one country, thenusetheADDBlock5withthesameformat.. Section IV-A Outward Foreign Affiliates Trade Statistics (Outward FATS) Please pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence shares / debentures/others under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with. vi. Declaration from the FII/sub account to the effect that the individual FII / Sub account ceiling as prescribed has not been breached. Additional documents in respect of sale of shares / compulsorily and mandatorily convertible preference shares / debentures / others by a person resident outside India vii. If the sellers are NRIs/OCBs, the copies of RBI approvals, if applicable, evidencing the shares held by them on repatriation/non-repatriation basis. viii. No Objection/Tax Clearance Certificate from Income Tax Authority/ Chartered Account. 1 Name of the company Address (including e-mail , telephone Number, Fax no) Activity NIC Code No. 2 Whether FDI is allowed under Automatic route Sectoral Cap under FDI Policy 3 Nature of transaction (Strike out whichever is not applicable) Transfer from resident to non resident / Transfer from non resident to resident 4 Name of the buyer Constitution / Nature of the investing Entity Specify whether 1. Individual 2. Company 3. FII 4. FVCI# 5. Foreign Trust 6. Private Equity Fund 7. Pensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy and the pricing guidelines have been adhered to. Signature of the Declarant or his duly authorised agent Date: Note: In respect of the transfer of shares / compulsorily and mandatorily convertible preference shares / compulsorily and mandatorily convertible debentures/ others from resident to non resident the declaration has to be signed by the non resident buyer, and in respect of the transfer of shares / compulsorily and mandatorily convertible preference shares / compulsorily and mandatorily convertible debentures/ other from non-resident to resident the declaration has to be signed by the non-resident seller. Certificate by the AD Branch It is certified that the application is complete in all respects. The receipt / payment for the transaction are in accordance with FEMA Regulations / Reserve Bank guidelines. Signature Name and Designation of the Officer Date : Name of the AD Branch AD Branch Code 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 an Individual) Registered Address (Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Name and address of the Lead Manager/ Investment/Merchant Banker 9. Name and address of the Sub-Managers to the issue 10. Details of Government approval (If foreign investment in the company is subject to Government approval) 11. Whether any overall sectoral cap for foreign investment is applicable. If yes, please give details. 12. If the issue of DR increases the equity capital of the company or is sponsored by the company: 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 percent of the paid-up capital and number of shares held by each of them should be furnished) (iii) Held by NRIs/PIOs (iv) Held by FIIs/QFIs/registered FPIs Total Equity held by non-residents c Percentage of equity held by non-residents to total paid-up capital d Details of repatriation/utilisation of the proceeds 13. Number of DRs issued 14. Ratio of DRs to underlying securities 15. Whether funds are kept abroad. If yes, name and address of the bank 16. Whether the DR is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves like Managing Director/Chief Executive Officer, Chief Financial Officer (CFO), Chief Security Officer (CSO), Chief Technical Officer (CTO), Chief Operating Officer (COO), etc., as may be specified by the Ministry of Information and Broadcasting from time to time, prior permission of the Ministry of Information and Broadcasting shall have to be obtained. It shall be obligatory on the part of the company to also take prior permission from the Ministry of Information and Broadcasting before effecting any change in the Board of Directors. (iv) The Company shall be required to obtain security clearance of all foreign personnel likely to be deployed for more than 60 days in a year by way of appointment, contract, and consultancy or in any other capacity for installation, maintenance, operation or any other services prior to their deployment. The security clearance shall be required to be obtained every two years. Permission vis-à-vis Security Clearance (v) The permission shall be subject to permission holder/licensee remaining security cleared throughout the currency of permission. In case the security clearance is withdrawn, the permission granted is liable to be termi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be confined only to security related aspects, including screening of objectionable content. (xiv)The inspection will ordinarily be carried out by the Government of India, Ministry of Information & Broadcasting or its authorized representative after reasonable notice, except in circumstances where giving such a notice will defeat the very purpose of the inspection. (xv)The company shall submit such information with respect to its services as may be required by the Government or its authorized representative, in the format as may be required, from time to time. (xvi)The permission holder/licensee shall be liable to furnish the Government of India or its authorized representative or TRAI or its authorized representative, such reports, accounts, estimates, returns or such other relevant information and at such periodic intervals or such times as may be required. (xvii)The service providers should familiarize/train designated officials or the Government or officials of TRAI or its authorized representative(s) in respect of relevant operations/features of their systems. National Security Conditions (xviii)It shall be open to the licensor to restrict the Licensee Company f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cilities and such other facilities meant for common use of the units located in the Industrial Park. (iv) "Allocable area" in the Industrial Park means- (a) in the case of plots of developed land- the net site area available for allocation to the units, excluding the area for common facilities. (b) in the case of built up space- the floor area and built up space utilized for providing common facilities. (c) 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. (v)"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 R&D on bio-technology, pharmaceutical sciences/life sciences, natural sciences and engineering; business and management consultancy activities; and architectural, engineering and other technical activities. 1.2 FDI in Industrial Parks would not be subject to the conditionaliti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) RBI guidelines relating to acquisition by purchase or otherwise of shares of a private bank, if such acquisition results in any person owning or controlling 5 per cent or more of the paid up capital of the private bank will apply to non-resident investors as well. (ii) Setting up of a subsidiary by foreign banks (a) Foreign banks will be permitted to either have branches or subsidiaries but not 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the words or acronyms FPI or FII occur in this document, the meaning and implications must be according to the above Regulations/Notifications, particularly during the transition period as prescribed in these Regulations. 2 SWF means a Government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves of the monetary authorities. 4 If the company doesn't have full time Company Secretary, a certificate from practicing Company Secretary may be submitted 5 To the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai 6In terms of AP (DIR Series) Circular No 5 dated July 17, 2014, NIC 2008 codes may be reported * If there is more than one foreign investor/collaborator, separate Annexure may be included for items 3 and 4 of the Form. # The investment/s is/are made by FVCI under FDI Scheme in terms of Schedule I to Notification No. FEMA 20/2000-RB dated May 3, 2000. ¶ SWF mean a Government investment vehicle which is funded by foreign exchange assets, and which manages those assets separately from the official reserves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single brand product retail trading. The onus for ensuring compliance with this condition will rest with the Indian entity carrying out singlebrand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/franchise/sub-licence agreement, specifically indicating compliance with the above condition. The requisite evidence should be filed with the RBI for the automatic route and to competent authority for cases involving approval. (e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-09-2019 6. Re-numbered vide Press Note No. 4 (2019 Series) dated 18-09-2019 before it was read as "5.2.7.2.3" 7. Substituted vide Press Note No. 1 (2020 Series) dated 21-02-2020 before it was read as "5.2.22 Insurance Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.22.1 (i) Insurance Company (ii) Insurance Brokers (iii) Third Party Administrators (iv) Surveyors and Loss Assessors (v)Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) 49% Automatic" 8. Re-numbered vide Press Note No. 1 (2020 Series) dated 21-02-2020 before it was read as "5.2.22.2" 9. Substituted vide Press Note No. 1 (2020 Series) dated 21-02-2020 before it was read as "Other Conditions (a) 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 forty-nine percent of the paid up equity capital of such Indian Insurance company. (b) The foreign investment up to forty-nine percent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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