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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

Extract

..... e Bank under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (c) “authorised bank” shall have the meaning assigned to it in the Foreign Exchange Management (Deposit) Regulations,2016; (d) “authorised dealer” includes a person authorised under sub-section (1) of section 10 of the Act; (e) ‘convertible note’ means an instrument issued by a startup company acknowledging receipt of money initially as debt, repayable at the option of the holder, or which is convertible into such number of equity shares of that company, within a period not exceeding five years from the date of issue of the convertible note, upon occurrence of specified events as per other terms and conditions agreed and indicated in the instrument; (f) “debt instruments” means all instruments other than non-debt instruments defined in clause (ai) of this rule; (g) “depository receipt” means a foreign currency denominated instrument, whether listed on an international exchange or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities i .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... conditions specified in Schedule I of these rules for companies receiving foreign investment; (n) “FVCI” means a Foreign Venture Capital Investor incorporated and established outside India and registered with the Securities and Exchange Board of India under the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000; (o) “foreign central bank” means an institution or organisation or body corporate established in a country outside India and entrusted with the responsibility of carrying out central bank functions under the law for the time being in force in that country; (p) “FCNR (B) account” means a Foreign Currency Non-Resident (Bank) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016; (q) “FCCB” or “Foreign Currency Convertible Bond” means a bond issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993; (r) “FDI” or “Foreign Direct Investment” means investment through equity instruments by a person resident outside India in an unlisted Indi .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... enterprise; (x) “hybrid securities” means hybrid instruments such as optionally or partially convertible preference shares or debentures and other such instruments as specified by the Central Government from time to time, which can be issued by an Indian company or trust to a person resident outside India; (y) “Indian company” means a company incorporated in India; (z) “IDR” or “Indian Depository Receipts (IDRs)” means any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts; (aa) “Indian entity” shall mean an Indian company or a LLP ; (ab) “investing company” means an Indian company holding only investments in other Indian company/ies directly or indirectly, other than for trading of such holdings or securities; (ac) “investment” means to subscribe, acquire, hold or transfer any security or unit issued by a person resident in India; Explanation:- (i) Investment shall include to acquire, hold or transfer depository receipts issued outside India, the underlying of whi .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ternative Investment Funds (AIFs), Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InvIts); (v) investment in units of mutual funds or Exchange-Traded Fund (ETFs) which invest more than fifty per cent in equity; (vi) junior-most layer (i.e. equity tranche) of securitisation structure; (vii) acquisition, sale or dealing directly in immovable property; (viii) contribution to trusts; and (ix) depository receipts issued against equity instruments; (aj) “NRI” or “Non-Resident Indian” means an individual resident outside India who is a citizen of India; (ak) “OCI” or “Overseas Citizen of India” means an individual resident outside India who is registered as an Overseas Citizen of India Cardholder under section 7A of the Citizenship Act, 1955 ( 57 of 1955); (al) “resident Indian citizen” means an individual who is a person resident in India and is a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 ; (am) “sectoral cap” means the maximum investment including both foreign investment on a repatriation basis by persons resident outside India in equity and debt .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... s otherwise provided in the Act or rules or regulations made thereunder, an Indian entity or an investment vehicle, or a venture capital fund or a firm or an association of persons or a proprietary concern shall not receive any investment in India from a person resident outside India or record such investment in its books: Provided that the Reserve Bank may, on an application made to it and for sufficient reasons and in consultation with the Central Government, permit an Indian entity or an investment vehicle, or a venture capital fund or a firm or an association of persons or a proprietary concern to receive any investment in India from a person resident outside India or to record such investment subject to such conditions as may be considered necessary. 5. Permission for making investment by a person resident outside India.- Unless otherwise specified in these rules or the Schedules, any investment made by a person resident outside India shall be subject to the entry routes, sectoral caps or the investment limits, as the case may be, and the attendant conditionalities for such investment as laid down in these rules. CHAPTER III INVESTMENT BY PERSON RESIDENT OUTSIDE INDIA 6. Inves .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... an company, the rights issue to persons resident outside India shall be at a price determined by the company; (e) in case of an unlisted Indian company, the rights issue to persons resident outside India shall not be at a price less than the price offered to persons resident in India; (f) such investment made through rights issue or bonus issue shall be subject to the conditions as are applicable at the time of such issue; (g) the mode of payment and attendant conditions for such transactions shall be specified by the Reserve Bank. (h). an individual who is a person resident outside India exercising a right which was issued when he or she was a person resident in India shall hold the equity instruments (other than share warrants) so acquired on exercising the option on a non-repatriation basis. Explanation: The above conditions shall also be applicable in case a person resident outside India makes investment in equity instruments (other than share warrants) issued by an Indian company as a rights issue that are renounced by the person to whom it was offered. 8. Issue of Employees Stock Options and sweat equity shares to persons resident outside India.-An Indian company may issue &l .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... engaged in a sector which requires government approval; (ii) where the equity instruments are held by the person resident outside India on a non-repatriable basis, the transfer by way of sale where the transferee intends to hold the equity instruments on a repatriable basis, shall be in compliance with and subject to the adherence to entry routes, sectoral caps or investment limits, as specified in these rules and attendant conditionalities for such investment, pricing guidelines, documentation and reporting requirements for such transfers, as may be specified by the Reserve Bank from time to time; (2) A person resident outside India, holding equity instruments of an Indian company or units in accordance with these rules may transfer the same to a person resident in India by way of sale or gift or may sell the same on a recognised stock exchange in India in the manner specified by the Securities and Exchange Board of India : Provided that. - (i) the transfer by way of sale shall be in compliance with and subject to the adherence to pricing guidelines, documentation and reporting requirements for such transfers as may be specified by the Reserve Bank in consultation with the Central .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... (6) In case of transfer of equity instruments between a person resident in India and a person resident outside India, an amount not exceeding twenty five percent of the total consideration,- (i) may be paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the transfer agreement; or (ii) may be settled through an escrow arrangement between the buyer and the seller for a period not exceeding eighteen months from the date of the transfer agreement; or (iii) may be indemnified by the seller for a period not exceeding eighteen months from the date of the payment of the full consideration, if the total consideration has been paid by the buyer to the seller : Provided that the total consideration finally paid for the shares shall be compliant with the applicable pricing guidelines. (7) In case of transfer of equity instruments between a person resident in India and a person resident outside India, a person resident outside India may open an escrow account in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016 and such escrow account may be funded by way of inward remittance through banking channels and/ or by way of gu .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions at the time of creation of pledge. CHAPTER IV INVESTMENT BY FOREIGN PORTFOLIO INVESTOR (FPI) 10. Investment by FPI - A FPI may make investments as under:- (1) A FPI may purchase or sell equity instruments of an Indian company which is listed or to be listed on a recognised stock exchange in India, and/or may purchase or sell securities other than equity instruments, in the manner and subject to the terms and conditions specified in Schedule II. Note - A FPI may trade or invest in all exchange traded derivative contracts approved by Securities and Exchange Board of India from time to time subject to the limits specified by the Securities and Exchange Board of India and the conditions prescribed in Schedule II. (2) A FPI may purchase, hold, or sell Indian Depository Receipts (IDRs) of companies resident outside India and issued in the Indian capital market, in the manner and subject to the terms and conditions as prescribed in Schedule X. 11. Transfer of equity instruments of an Indian company by FPI - A FPI holding equity instruments of an Indian company or units in accordance with t .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... or units in accordance with these rules may transfer such equity instruments or units so held by him in compliance with the conditions, if any, prescribed in the Schedules of these rules and subject to the terms and conditions prescribed hereunder : (1) A NRI or an OCI holding equity instruments of an Indian company or units on repatriation basis may transfer the same by way of sale or gift to any person resident outside India : Provided that,- (i) prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which requires Government approval; (ii) where the acquisition of equity instruments by an NRI or an OCI under the provisions of Schedule III of these rules has resulted in a breach of the applicable aggregate NRI or OCI limit or sectoral limits, the NRI or the OCI shall sell such equity instruments to a person resident in India eligible to hold such instruments within the time stipulated by the Reserve Bank of India in consultation with the Central Government and the breach of the said aggregate or sectoral limit on account of such acquisition for the period between the acquisition and sale, provided the sale is within the prescribed .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... IV of these rules who shall hold it on a non-repatriable basis. (5) An erstwhile OCB may transfer equity instruments subject to the directions issued by the Reserve Bank of India from time to time in this regard. Explanation: “Overseas Corporate Body (OCB)” means an entity de-recognised through Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003. CHAPTER VI INVESTMENT BY OTHER NON-RESIDENT INVESTORS 14. Investment in securities by other non-resident investors - The other non-resident investors may make investments in securities in the manner and subject to the terms and conditions specified in Schedule V. 15. Transfer of securities by other non-resident investors :- The other non-resident investors, holding securities in accordance with these rules, may transfer the securities subject to such terms and conditions prescribed in Schedule V and as specified by the Securities and Exchange Board of India and the Reserve Bank. CHAPTER VII INVESTMENT BY FOREIGN VENTURE CAPITAL INVESTOR 16. Investment by FVCI - A Foreign Venture Capital Investor (FVCI) may make investments in the manner and subject to the terms a .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... routes, sectoral caps or investment limits, as the case may be, and the attendant conditionalities of investment by a person resident outside India : Provided that where the percentage is likely to breach the sectoral caps or the attendant conditionalities, the transferor company or the transferee or new company may obtain necessary approval from the Central Government. (b) the transferor company or the transferee company or the new company shall not engage in any sector prohibited for investment by a person resident outside India. (2) where a scheme of merger or amalgamation of two or more Indian companies or a reconstruction by way of demerger or otherwise of an Indian company where any of the companies involved is listed on a recognised stock exchange in India, then the scheme of arrangement shall be in compliance with the SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015. 20. Reporting requirements - The reporting requirements for any investment in India by a person resident in India shall be as specified by the Reserve Bank. 21. Pricing guidelines - (1) The pricing guidelines specified in these rules shall not be applicable for any transfer by way of sale .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 : Provided that the price is determined for such duration as specified in the Securities and Exchange Board of India Guidelines, preceding the relevant date, which shall be the date of purchase or sale of shares; (iii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian company. Explanation: The guiding principle shall be that the person resident outside India is not guaranteed any assured exit price at the time of making such investment or agreement and shall exit at the price prevailing at the time of exit. (iv) in case of swap of equity instruments, subject to the condition that irrespective of the amount, valuation involved in the swap arrangement shall have to be made by a Merchant Banker registered with the Securities and Exchange Board of India or an investment banker outside India registered with the appropriate regulatory authority in .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... in clause (c) of section 5 of the Banking Regulation Act, 1949 ( 10 of 1949) incorporated in India, which is not owned and not controlled by resident Indian citizens or owned or controlled by persons resident outside India, shall not count towards indirect foreign investment, however, their strategic downstream investment shall be counted towards indirect foreign investment for the company in which such investment is being made. (3) Guidelines for calculating total foreign investment in Indian companies are as follows ,- (a) any equity holding by a person resident outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned for total foreign investment; (b) FCCBs and DRs having underlying of instruments in the nature of debt shall not be reckoned for total foreign investment; (c) the methodology for calculating total foreign investment shall apply at every stage of investment in Indian companies and thus in each and every Indian company; (d) for the purpose of downstream investment, the portfolio investment held as on 31st March of the previous financial year in the Indian company making the downstream investment shall be considered for com .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... isions (5) and (6) of rule 23 shall apply mutatis mutandis to a LLP. Note: Downstream investment that is treated as indirect foreign investment for the investee entity made in accordance with the guidelines in existence prior to the 13th February, 2009 shall not require any modification to conform to these rules and all such investments, after the said date, shall come under the ambit of these rules. Downstream investment that is treated as indirect foreign investment for the investee entity made between the 13th February,2009 and 21st June 2013 which is not in conformity with these rules shall have to be intimated to the Reserve Bank by 3rd October,2013 for treating such cases as compliant with these Rules. Explanation.- For the purposes of this rule,- (a) “ownership of an Indian company” shall mean beneficial holding of more than fifty percent of the equity instruments of such company and “ownership of an LLP” shall mean contribution of more than fifty percent in its capital and having majority profit share; (b) “company owned by resident Indian citizens” shall mean an Indian company where ownership is vested in resident Indian citizens and/ or .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... olled by resident Indian citizens or (ii) is owned or controlled by persons resident outside India; or (B) an investment vehicle whose sponsor or manager or investment manager (i) is not owned and not controlled by resident Indian citizens or (ii) is owned or controlled by persons resident outside India : Provided that no person resident in India other than an Indian entity can receive Indirect Foreign Investment; (j) “total foreign investment” means the total of foreign investment and indirect foreign investment and the same will be reckoned on a fully diluted basis; (k) “strategic downstream investment” means investment by banking companies incorporated in India in their subsidiaries, joint ventures and associates. CHAPTER IX ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA 24. Acquisition and transfer of property in India by a NRI or an OCI - A NRI or an OCI may - (a) acquire immovable property in India other than an agricultural land or farm house or plantation property: Provided that the consideration, if any, for transfer, shall be made out of : (i) funds received in India through banking channels by way of inward remittance from any place outsi .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ide India who has established in India in accordance with the Foreign Exchange Management (Establishment in India of a Branch office or a liaison office or a project office or any other place of business) Regulations, 2016, as amended from time to time, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office, may - (a) acquire any immovable property in India, which is necessary for or incidental to carrying on such activity: Provided that,- (i) all applicable laws, rules, regulations, for the time being in force are duly complied with; and (ii) the person files with the Reserve Bank a declaration in the Form IPI as specified by the Reserve Bank from time to time, not later than ninety days from the date of such acquisition; (b) transfer by way of mortgage to an authorised dealer as a security for any borrowing, the immovable property acquired in pursuance of clause (a) of rule 26: Provided that no person of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or Macau or Nepal or Bhutan or Democratic People’s Republic of Korea (DPRK) shall acquire immovable property, other than on lease not exce .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... repatriate outside India the sale proceeds of any immovable property referred to in that sub- section. (2) In the event of sale of immovable property other than agricultural land or farm house or plantation property in India by an NRI or an OCI, the authorised dealer may allow repatriation of the sale proceeds outside India, provided the following conditions are satisfied, namely:- (a) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition or the provisions of these rules; (b) the amount for acquisition of the immovable property was paid in foreign exchange received through banking channels or out of funds held in Foreign Currency Non-Resident Account or out of funds held in Non-Resident External Account; (c) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. (3) In the event of failure in repayment of external commercial borrowing availed by a person resident in India under the provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, as amended from time to time, a ba .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... son being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or Macau or Democratic People’s Republic of Korea (DPRK) without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease not exceeding five years : Provided that this prohibition shall not apply to an OCI. Explanation: For the purpose of this rule, the term “citizen” shall include natural persons and legal entities. 32. Miscellaneous - Any transaction involving acquisition or transfer of immovable property under these rules shall be undertaken:- (a) through banking channels in India; (b) subject to payment of applicable taxes and other duties or levies in India. 33. Savings - Any existing holding of immovable property in India by a person resident outside India made in accordance with the policy in existence at the time of such acquisition would not require any modifications to conform to these rules. SCHEDULE I (See rule 6(a)) Purchase or sale of equity instruments of an Indian company by a person resident outside India (1) Purchase or sale of equity instruments of an Indian company by a person resident ou .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... g payments of rent etc.) : Provided that the Government approval shall be obtained if the Indian investee company is engaged in a sector under Government route and the applications for approval shall be made in the manner prescribed by the Central Government from time to time. (e) An Indian company may issue equity shares against any funds payable by it to a person resident outside India, the remittance of which is permitted under the Act or the rules and regulations framed or directions issued thereunder or does not require prior permission of the Central Government or the Reserve Bank under the Act or the rules and 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: Provided that in case where permission has been granted by the Reserve Bank for making remittance, the Indian company may issue equity shares against such remittance provided all regulatory actions with respect to the delay or contravention under the Act or the rules or the regulations framed thereunder have been completed. (f) The mode of payment and other attendant conditions for remittance of .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... a and other investments by a person resident outside India shall be subject to the conditions of Government approval and compliance of sectoral conditions as laid down in these rules. (b) Sectoral caps.- (i) Sectoral cap for the sectors or activities specified in the table is the limit indicated against each sector. The total foreign investment shall not exceed the sectoral or statutory cap. (ii) Foreign investment in the following sectors or activities is subject to applicable laws or regulations, security and other conditionalities. (iii) In sectors or activities not listed below or not prohibited under paragraph (2) of Schedule I of these rules, foreign investment is permitted up to one hundred percent on the automatic route, subject to applicable laws or regulations, security and other conditionalities : Provided that foreign investment in financial services other than those indicated under serial number “F” below would require prior approval of the Government . (iv) Wherever there is a requirement of minimum capitalisation, it shall include premium received along with the face value of the equity instrument, only when it is received by the company upon issue of suc .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ation of vegetables and mushrooms under controlled conditions; (b) Development and production of seeds and planting material; (c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture and Apiculture; and (d) Services related to agro and allied sectors. Note: Other than the above, foreign investment is not allowed in any other agricultural sector or activity. 100% Automatic 1.2 Other Conditions The term ‘under controlled conditions’ covers the following: ‘Cultivation under controlled conditions’ for the categories of Floriculture, Horticulture, Cultivation of vegetables and mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro-climatic conditions are regulated anthropogenically. 2. Plantation 2.1 (a) Tea sector including tea plantations (b) Coffee plantations (c) Rubber plantations (d) Cardamom plantations (e) Palm oil tree plantations (f) Olive oil tree plantation Note: .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... m Slag as an intermediate value added product. (ii) The objective is to ensure that the raw material available in the country is utilized for setting up downstream industries and the technology available internationally is also made available for setting up such industries within the country. Thus, if with the technology transfer, the objective of this Rules can be achieved, the conditions prescribed at (a)(i) above shall be deemed to be fulfilled. 4. Petroleum and Natural Gas 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 4.2 Petroleum refining by the Public Sector Undertakings (PSUs), without any disinvestment or dilution of domestic equity in the exi .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... g up-gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs)). 100% Automatic 7.1.3 Note: Infusion of fresh foreign investment for sectors specified in 7.1.1 and 7.1.2 above, beyond 49 percent in a company not seeking license/ permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval 7.2 Broadcasting Content Services 7.2.1 Terrestrial Broadcasting FM (FM Radio), subject to such terms and conditions, as specified from time to time, by Ministry of Information and Broadcasting, for grant of permission for setting up of FM Radio stations. 49% Government 7.2.2 Up-Linking of ‘News & Current Affairs’ TV Channels 49% Government 7.2.3 Up-linking of Non-'News & Current Affairs' TV Channels/ Downlinking of TV Channels 100% Automatic 7.3 Other Conditions (a) Foreign investment in companies engaged in all the afore-stated services shall be subject to relevant regulations and such terms and conditions, as may be specified from time to time, by the Ministry of Information and Broadcasting. (b) Foreign investm .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... cal publication, brought out on non-daily basis, containing public news or comments on public news. (b) Foreign investment shall 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 and Broadcasting on 4-12-2008. 8.3 Publishing or printing of Scientific and Technical Magazine or specialty journals or periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. 100% Government 8.4 Publication of facsimile edition of foreign newspapers 100% Government 8.4.1 Other conditions: (a) Foreign investment shall be made by the owner of the original foreign newspapers whose facsimile edition is proposed to be brought out in India. (b) Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 2013. (c) Publication of facsimile edition of foreign newspaper shall also be subject to the Guidelines for publication of newspapers and periodicals dealing with news and c .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... by the Ministry of Civil Aviation; (j) "Seaplane" means an aeroplane capable normally of taking off from and alighting solely on water; (k) "Ground Handling" means (i) ramp handling, (ii) traffic handling both of which shall include the activities as specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time, and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic handling 9.2 Airports (a) Greenfield projects 100% Automatic (b) Existing projects 100% Automatic 9.3 Air Transport Services (a) (i) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (ii) Regional Air Transport Service 100% Automatic up to 49% Government route beyond 49%(Automatic up to 100% for NRI’s and OCI’s) (b) Non-Scheduled Air Transport Service 100% Automatic (c) Helicopter service or seaplane services requiring Directorate General of Civil Aviation approval 100% Automatic 9.4 Other Services under Civil Aviation sector (a) Ground Handling Services subject to sectoral regulations and security clearance 100% Automatic (b) Maintenance and Repair organizations; .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... 9.5(c) above. (6) The investee company additionally shall have to follow guidelines issued by the concerned ministry of the Central Government. 10 Construction Development: Townships, Housing, Built-up infrastructure 10.1 Construction-development projects (which shall 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 10.2 Other Conditions 10.2 (a) Each phase of the construction development project shall be considered as a separate project. (b) The investor shall be permitted to exit on completion of the project or after development of trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage. (c) Notwithstanding anything contained at (b) above, a person resident outside India shall be permitted to exit and repatriate foreign investment before the completion of project under automatic route, provided that a lock-inperiod of three years, calculated with reference to each tranche of foreign investment has been completed. Further, transfer of stake from a person r .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ign investment and transfer of immovable property or part thereof is not permitted during this period. (5) "Transfer", in relation to this 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 any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (e.) any transaction, by acquiring capital instruments in a company or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of, any immovable property. (6) Real estate business’ means dealing in land and immovable property with a view to earning profit therefrom and does not include development of townships, construction of residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships; Explanation: - (a) Investment in units of Real .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ity buildings, industrial canteens, convention/ conference halls, parking, travel desks, security service, first aid centre, ambulance and other safety services, training facilities and such other facilities meant for common use of the units located in the Industrial Park. (d) "Allocable area" in the Industrial Park means- (i) in the case of plots of developed land - the net site area available for allocation to the units, excluding the area for common facilities. (ii) in the case of built up space - the floor area and built-up space utilized for providing common facilities. (iii) 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. (e) "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 research and development on bio-technology, pharmaceutical sciences or life sciences, n .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... or the purpose of personal consumption. The yardstick to determine whether the sale is wholesale or not shall be the type of customers to whom the sale is made and not the size and volume of sales. Wholesale trading shall include resale, processing and thereafter sale, bulk imports with export/ ex-bonded warehouse business sales and B2B e-Commerce. 15.1.2 Other Conditions (a) For undertaking ‘WT', requisite licenses/ registration/ permits, as specified under the relevant Acts or Regulations or Rules or Orders of the State Government or Government Body or Government Authority or Local Self-Government Body under that State Government shall be obtained. (b) Except in cases of sales to Government, sales made by the wholesaler shall be considered as 'cash and carry wholesale trading/ wholesale trading' with valid business customers, only when WT is made to the following entities: (i) Entities holding sales tax or VAT registration or service tax or excise duty or Goods and Services Tax (GST) registration; or (ii) Entities holding trade licenses i.e. a license or registration certificate or membership certificate or registration under Shops and Establishment Act, issued .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... tory based model of e-commerce’ means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly; (d) ‘Market place model of e-commerce’ means providing of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller. (e) Digital and electronic network shall include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc. (f) Marketplace e-commerce entity shall be permitted to enter into transactions with sellers registered on its platform on B2B basis. (g) E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services. (h) E-commerce entity providing a marketplace shall not exercise ownership over the inventory i.e. goods purported to be sold. Explanation: Inventory of a vendor shall be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ities. 15.3 Single Brand Product Retail Trading Foreign investment in Single Brand Product Retail Trading (SBRT) 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, technologies and management practices. 100% Automatic up to 49%; Government route beyond 49% 15.3.1 Other conditions (a) Products to be sold should be of a 'Single Brand' only. (b) Products should be sold under the same brand internationally i.e. products shall be sold under the same brand in one or more countries other than India. (c) 'Single Brand' product-retail trading shall cover only products which are branded during manufacturing. (d) A person resident outside India, whether owner of the brand or otherwise, shall be permitted to undertake ‘single brand’ product retail trading in the country for the specific brand, either directly by the brand owner or through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading and the brand owner. .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... f products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, condition mentioned at 15.3.1(e) above shall be applicable. A Committee under the Chairmanship of Secretary, DPIIT, with representatives from NITI Aayog, concerned Administrative Ministry and independent technical expert(s) on the subject shall examine the claim of applicants on the issue of the products being in the nature of ‘state-of-art’ and ‘cutting-edge’ technology where local sourcing is not possible and give recommendations for such relaxation. 15.4 Multi Brand Retail Trading (MBRT) 51% Government 15.4.1 Other Conditions (a) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, can be unbranded. (b) Minimum amount to be brought in as foreign investment would be USD 100 million. (c) At least 50 percent of the total foreign investment brought in the first tranche of USD 100 million, shall be invested in 'back-end infrastructure' within three years, where 'back-end infrastructure' shall include capital expenditure on all activities, excl .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... Government shall have the first right to procure agricultural products. (h) The above policy is an enabling policy only and the State Governments or Union Territories shall be free to take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those States or Union Territories which have agreed, or agree in future, to allow foreign investment in MBRT under this policy. The States or Union Territories which have conveyed their agreement are mentioned at 15.4.2. Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed to the Government of India through the Department of Industrial Policy and Promotion and additions shall be made to the said list. The establishment of the retail sales outlets shall be in compliance of applicable State/ Union Territory laws or regulations, such as the Shops and Establishments Act etc. (i) Retail trading, in any form, by means of e-commerce, shall not be permissible, for companies with foreign investment engaged in multi-brand retail trading. (j) Applications shall be processed in the Department of Industrial Policy and Promotion, to determine wheth .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... enses which has been incurred in any of the three financial years immediately preceding the year of induction of foreign investment. (iii) The administrative Ministry shall be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company. (iv) 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, shall monitor the compliance of conditionalities. Note : (1) Foreign investment up to 100% under the automatic route is permitted for manufacturing of medical devices.The abovementioned conditions shall, therefore, not be applicable to greenfield as well as brownfield projects of this industry. (2) Medical device means :- (a) Any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including the software, intended by its manufacturer to be used specially for human beings or animals for one or more of the specific purposes of:- (aa) Diagnosis, prevention, monitoring, treatment or alleviation of any disease .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... / coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signalling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/ sidings including electrified railway lines and connectivity to main railway line and (x) Mass Rapid Transport Systems. 100% Automatic 17.2 Other Conditions (a) Foreign investment in this sector open to private-sector participation is subject to sectoral guidelines of Ministry of Railways. (b) Proposals involving foreign investment beyond 49 percent 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. F FINANCIAL SERVICES Investment in financial services, other than those indicated below, would require prior Government approval. F.1 Asset Reconstruction Companies 100% Automatic F.1.1 Other Conditions (a) Investment limit of a sponsor in the shareholding of an ARC shall be governed by the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Similarly, investment by institutio .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... bsidiaries but not both. (ii) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve Bank's licensing criteria shall be allowed to hold 100 percent paid-up capital to enable them to set up a whollyowned subsidiary in India. (iii) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a wholly-owned subsidiary (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 percent in a private bank. (iv) A foreign bank shall 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 shall be permitted to establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 percent of the paid-up capital of the private sector bank is held by residents at all times consistent with para (c) above. (v) A subsidiary of a foreign bank shall be subject to the licensing requirements and conditions broadly consistent with those for new private sector banks. (vi) Guidelines for setting up a wholly-owned subsidiary of a foreign bank shall be issued .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005 and regulatory clearance from the Reserve Bank. (b) FPI investment shall be permitted subject to the following conditions: (i) A single entity shall directly or indirectly hold below 10 percent equity; (ii) Any acquisition in excess of 1 percent shall have to be reported to Reserve Bank as a mandatory requirement; and (iii) FPIs investing in Credit Information Companies shall not seek a representation on the Board of Directors based upon their shareholding. F.8 Insurance F.8.1 (a) Insurance Company (b) Insurance Brokers (c) Third Party Administrators (d) Surveyors and Loss Assessors (e) Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999 (41 of 1999). 49% Automatic F.8.2 Other Conditions (a) Foreign investment in this sector shall be subject to compliance with the provisions of the Insurance Act, 1938 and subject to necessary license or approval from the Insurance Regulatory and Development Authority of India for undertaking insurance and related activities. (b) An Indian Insurance company shall ensure that its ownership .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... s 100% Automatic F.10.1 Other Conditions (a) Other Financial Services shall mean financial services activities regulated by financial sector regulators, viz., Reserve Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, National Housing Bank or any other financial sector regulator as may be notified by the Government of India. (b) Foreign investment in 'Other Financial Services' activities shall be subject to conditionalities, including minimum capitalization norms, as specified by the concerned Regulator/Government Agency (c) 'Other Financial Services' activities need to be regulated by one of the Financial Sector Regulators. In all such 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, foreign investment up to 100 percent will be allowed under Government approval route subject to conditions including minimum capitalization requirement, as may be decided by the Government. (d) Any activity which is specifically reg .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... irectors and its General Body through a resolution and a special resolution, respectively: Provided also that once the aggregate limit has been increased to a higher threshold, the Indian company cannot reduce the same to a lower threshold: Provided also that the aggregate limit with respect to an Indian company in a sector where FDI is prohibited shall be 24 per cent. Explanation: In case, two or more FPI’s including foreign Governments/their related entities are having common ownership, directly or indirectly, of more than fifty percent or common control, all such FPI’s shall be treated as forming part of an investor group. Control includes the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of shareholding or management rights or shareholders agreements or voting agreements or in any other manner. (iii) The FPIs investing in breach of the prescribed limit shall have the option of divesting their holdings within 5 trading days from the date of settlement of the trades causing the breach. In case the FPI chooses n .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... t to the limits and margin requirements specified by the Reserve Bank or the Securities and Exchange Board of India as well as the stipulations regarding collateral securities as specified by the Reserve Bank from time to time. (b) Purchase or sale of securities other than equity instruments by FPIs.- (i) A FPI may purchase units of domestic mutual funds or Category III Alternative Investment Fund or offshore fund for which no objection is issued in accordance with the SEBI (Mutual Fund) Regulations, 1996, which in turn invest more than 50 percent in equity instruments on repatriation basis subject to the terms and conditions specified by the Securities and Exchange Board of India and the Reserve Bank. (ii) An FPI may purchase units of REITs and InVITs on repatriation basis subject to the terms and conditions specified by the Securities and Exchange Board of India. (2) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank. SCHEDULE III (See rule 12(1)) Investments by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis (1) Purchase or sale of equity instruments of a listed .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank. SCHEDULE IV (See rule 12(2)) Investment by NRI or OCI on non-repatriation basis A. Purchase or sale of equity instruments of an Indian company or units or contribution to the capital of a LLP by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on Non-repatriation basis. (1) Purchase or sale of equity instruments or convertible notes or units or contribution to the capital of a LLP. (a) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI), including a company, a trust and a partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, may purchase or contribute, as the case may be, on non-repatriation basis the following, namely:- (i) a equity instrument issued by a company without any limit either on the stock exchange or outside it; (ii) units issued by an investment vehicle without any limit, either on the stock exchange or outside it; (iii) The capital of a Limited Liability Partnership without any limit; (iv) convertible notes issued by a startup company in accordance with these rules. (b) The investment detailed at sub-paragraph (a) of parag .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... rket may participate in domestic commodity derivative markets in accordance with framework specified by the Securities and Exchange Board of India. (3) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank. SCHEDULE VI (See rule 6(b)) Investment in a Limited Liability Partnership (LLP) (a) A person resident outside India (other than a citizen of Pakistan or Bangladesh)or an entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a Foreign Venture Capital Investor (FVCI), may contribute to the capital of an LLP operating in sectors or activities where foreign investment up to 100 per cent is permitted under automatic route and there are no FDI linked performance conditions. (b) Investment by way of “profit share” shall fall under the category of reinvestment of earnings. (c) Investment in a LLP is subject to the compliance of the conditions of Limited Liability Partnership Act, 2008. (d) A company having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted under .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... ition of ‘start-up’ shall be as per Department for Promotion of Industry and Internal Trade’s Notification No. G.S.R. 364(E), dated the 11th April, 2018 : Provided that if the investment is in equity instruments, then the sectoral caps, entry routes and attendant conditions shall apply. (2) A FVCI may purchase the securities or instruments mentioned above either from the issuer of these securities/ instruments or from any person holding these securities or instruments. The FVCI may invest in securities on a recognised stock exchange subject to the provisions of the Securities and Exchange Board of India (FVCI) Regulations, 2000. (3) The FVCI may acquire, by purchase or otherwise, from, or transfer, by sale or otherwise, to, any person resident in or outside India, any security or instrument it is allowed to invest in, at a price that is mutually acceptable to the buyer and the seller/ issuer. The FVCI may also receive the proceeds of the liquidation of VCFs or of Cat-I AIFs or of schemes or funds set up by the VCFs or Cat-I AIFs. (4) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Ban .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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..... tment managers” of the AIF are individuals, for the treatment of down- stream investment by such AIF as domestic, “sponsors” and “manager or investment managers” should be resident Indian citizens. (5) An Alternative Investment Fund Category III which has received any foreign investment shall make portfolio investment in only those securities or instruments in which a FPI is allowed to invest under the Act or rules or regulations made thereunder. (6) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank . SCHEDULE IX (See rule 6(d)) Investment in Depository Receipts by a person resident outside India (1) Issue or transfer of eligible instruments to a foreign depository for the purpose of issuance of depository receipts by eligible person(s).- (a) Any security or unit in which a person resident outside India is allowed to invest under these rules shall be eligible instruments for issue of Depository Receipts in terms of Depository Receipts Scheme, 2014 (DR Scheme,2014). (b) A person shall be eligible to issue or transfer eligible instruments to a foreign depository for the p .....

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Foreign Exchange Management (Non-debt Instruments) Rules, 2019. - S.O. 3732 (E) - Foreign Exchange Management

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