Ministry of Finance issues comprehensive Foreign Exchange Management Non-debt Instruments Rules 2019 for foreign investment guidelines

The Ministry of Finance issued the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 on October 17, 2019, superseding earlier regulations on foreign investment. These rules establish comprehensive guidelines for foreign investment in India's non-debt instruments including equity shares, convertible debentures, preference shares, and investments in limited liability partnerships. The rules specify sectoral caps, entry routes (automatic or government approval), and conditions for various investor categories including Foreign Portfolio Investors, Non-Resident Indians, and Foreign Venture Capital Investors. Key provisions include restrictions on investments from Pakistan and Bangladesh, pricing guidelines for transactions, downstream investment regulations, and specific conditions for real estate acquisition by non-residents. The rules also detail reporting requirements, transfer procedures, and compliance obligations for different types of foreign investments in Indian entities.

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