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

Extract

..... ompany registered with the Reserve 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 j .....

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

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..... (m) “FDI linked performance conditions” means the sector specific 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 &l .....

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

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..... quo; means two or more enterprises which, directly or indirectly, are in a position to (i) exercise twenty-six per cent, or more of voting rights in other enterprise; or (ii) appoint more than fifty per cent of members of Board of Directors in the other 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; .....

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

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..... eans the following instruments; namely :- (i) all investments in equity instruments in incorporated entities: public, private, listed and unlisted; (ii) capital participation in LLP; (iii) all instruments of investment recognised in the FDI policy notified from time to time; (iv) investment in units of Alternative 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 I .....

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

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..... e rules and shall accordingly be governed by these rules: Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons and in consultation with the Central Government, permit a person resident outside India to make any investment in India subject to such conditions as may be considered necessary. 4. Restriction on receiving investment.- Save as 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 .....

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

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..... ssue or a bonus issue, provided that,- (a) the offer made by the Indian company is in compliance with the provisions of the Companies Act, 2013; (b) such issue shall not result in a breach of the sectoral cap applicable to the company; (c) the share holding on the basis of which the rights issue or the bonus issue has been made must have been acquired and held as per the provisions of these rules; (d) in case of a listed Indian 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 acqu .....

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

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..... verseas corporate body may transfer by way of sale or gift the equity instruments of an Indian company or units held by him to any person resident outside India; Explanation: It shall also include transfer of equity instruments of an Indian company pursuant to liquidation, merger, de-merger and amalgamation of entities or companies incorporated or registered 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 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 ac .....

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

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..... t of fifty-thousand US Dollars; (vi) such other conditions as considered necessary in public interest by the Central Government. (5) A person resident outside India holding equity instruments of an Indian company containing an optionality clause in accordance with these rules and exercising the option or right, may exit without any assured return, subject to the pricing guidelines prescribed in these rules and a minimum lock-in period of one year or minimum lock-in period as prescribed in these rules, whichever is higher. (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 con .....

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

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..... son or a person resident outside India who is the promoter of such Indian company or the overseas group company of such Indian company, (C) in favour of a non-banking financial company registered with the Reserve Bank to secure the credit facilities being extended to such Indian company for bona fide purposes, (D) subject to the authorised dealer bank satisfying itself of the compliance of the conditions stipulated by the Reserve Bank in this regard; (iii) in case of invocation of pledge, transfer of equity instruments of an Indian company or units shall be in accordance with 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 exch .....

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

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..... Schedule IV. Note: A NRI or an OCI may trade or invest in all exchange traded derivative contracts approved by the Securities and Exchange Board of India from time to time subject to the limits specified by Securities and Exchange Board of India and conditions prescribed in Schedule III. (3) A NRI or an OCI 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 specified in Schedule X. 13. Transfer of equity instruments by NRI or OCI - A NRI or an OCI holding equity instruments of an Indian company 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 eng .....

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

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..... dquo;relatives” within the meaning in clause (77) of section 2 of the Companies Act, 2013; (v) the value of security to be transferred by the donor together with any security transferred to any person residing outside India as gift during the financial year does not exceed the rupee equivalent of USD 50000; (vi) such other conditions as may be considered necessary in public interest by the Central Government. (4) A NRI or an OCI or an eligible investor specified under Schedule IV of these rules holding equity instruments of an Indian company or units on a non-repatriation basis, may transfer the same by way of gift to an NRI or an OCI or an eligible investor under Schedule 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. Inve .....

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

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..... m or to, a person resident in or outside India, provided the transfer takes place in accordance with the entry routes and pricing guidelines as prescribed for capital instruments. 19. Merger or demerger or amalgamation of Indian companies.- (1) 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, has been approved by the National Company Law Tribunal (NCLT) or competent authority, the transferee company or the new company, as the case may be, may issue equity instruments to the existing holders of the transferor company resident outside India, subject to the following conditions, namely:- (a) the transfer or issue is in compliance with the entry 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 com .....

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

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..... 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. (c) transferred by a person resident outside India to a person resident in India shall not exceed : (i) the price worked out in accordance with the relevant Securities and Exchange Board of India guidelines in case of a listed Indian company; (ii) the price at which a preferential allotment of shares can be made under the Securities and Exchange Board of India Guidelines, as applicable, in case of a listed Indian company or in case of a company going through a delisting process as per the Securities and 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 va .....

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

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..... tream investment - (1) Indian entity which has received indirect foreign investment shall comply with the entry route, sectoral caps, pricing guidelines and other attendant conditions as applicable for foreign investment. Explanation: Downstream investment by an LLP not owned and not controlled by resident Indian citizens or owned or controlled by persons resident outside India is allowed in an Indian company operating in sectors where foreign investment up to one hundred percent is permitted under automatic route and there are no FDI linked performance conditions. (2) With effect from the 31st day of July, 2012, downstream investment(s) made under Corporate Debt Restructuring (CDR), or other loan restructuring mechanism, or in trading book, or for acquisition of shares due to defaults in loans, by a banking company, as defined 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 indir .....

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

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..... and is not owned and not controlled by resident Indian citizens or owned or controlled by persons resident outside India. (6) The first level Indian company making downstream investment shall be responsible for ensuring compliance with the provisions of these rules for the downstream investment made by it at second level and so on and so forth and such first level company shall obtain a certificate to this effect from its statutory auditor on an annual basis and such compliance of these rules shall be mentioned in the Director’s report in the Annual Report of the Indian company. In case statutory auditor has given a qualified report, the same shall be immediately brought to the notice of the regional office of the Reserve Bank in whose jurisdiction the Registered Office of the company is located and shall also obtain acknowledgement from the Registered Office. (7) The provisions (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 confor .....

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

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..... timately owned and controlled by resident Indian citizens; (f) “company controlled by persons resident outside India” shall mean an Indian company that is controlled by persons resident outside India and “LLP controlled by persons resident outside India” shall mean an LLP that is controlled by persons resident outside India;  (g) “downstream investment” shall mean investment made by an Indian entity which has total foreign investment in it, or an Investment Vehicle in the capital instruments or the capital, as the case may be, of another Indian entity; (h) “holding company” shall have the same meaning as assigned to it under Companies Act, 2013; (i) “indirect foreign investment” means downstream investment received by an Indian entity from,- (A) another Indian entity (IE) which has received foreign investment and (i) the IE is not owned and not controlled 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 owne .....

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

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..... l land or farm house or plantation property), jointly with his or her NRI or OCI spouse : Provided that - (a) consideration for transfer, shall be made out of - (i) funds received in India through banking channels by way of inward remittance from any place outside India; or (ii) funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank; (b) no payment for any transfer of immovable property shall be made either by traveller’s cheque or by foreign currency notes or by any other mode other than those specifically permitted under this clause : Provided that the marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the acquisition of such property : Provided further that the non-resident spouse is not otherwise prohibited from such acquisition. 26. Acquisition of immovable property for carrying on a permitted activity - A person resident outside 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 a .....

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

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..... where the property is located, specifying the source of funds and that he or she is residing in India on LTV; (c) the registration documents of the property shall mention the nationality and the fact that such person is on LTV; (d) the property of such person may be attached or confiscated in the event of his or her indulgence in anti-India activities; (e) a copy of the documents of the purchased property shall be submitted to the Deputy Commissioner of Police (DCP) or Foreigners Registration Office (FRO) or Foreigners Regional Registration Office (FRRO) concerned and to the Ministry of Home Affairs (Foreigners Division); (f) such person shall be eligible to sell the property only after acquiring Indian citizenship, however, transfer of the property before acquiring Indian citizenship shall require prior approval of DCP or FRO or FRRO concerned. 29. Repatriation of sale proceeds - (1) A person referred to in sub-section (5) of section 6 of the Act, or his successor shall not, except with the general or specific permission of the Reserve Bank, repatriate outside India the sale proceeds of any immovable property referred to in that sub- section. (2) In the event of .....

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

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..... he directions issued by the Reserve Bank in this regard, create a mortgage on an immovable property in India owned by an NRI or an OCI, being a director of a company outside India, for a loan to be availed by the company from the said overseas lender : Provided further that :- (i) the funds shall be used by the borrowing company only for its core business purposes overseas; (ii) in case of invocation of charge, the Indian bank shall sell the immovable property to an eligible acquirer and remit the sale proceeds to the overseas lender. (2) A person resident outside India who has acquired any immovable property in India in accordance with foreign exchange laws in force at the time of such acquisition or with the general or specific permission of the Reserve Bank may transfer such property to a person resident in India provided the transaction takes place through banking channels in India and provided further that the resident is not otherwise prohibited from such acquisition. 31. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries – No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, .....

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

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..... 100 percent foreign investment is allowed in the automatic route and there are no FDI linked performance conditions, may issue equity instruments to the said non-resident entity against pre- incorporation or pre-operative expenses incurred by the said non-resident entity up to a limit of five percent of its authorised capital or USD 500,000 whichever is less, subject to the condition that within thirty days from the date of issue of equity instruments but not later than one year from the date of incorporation or such time as the Reserve Bank permits, the Indian company shall report the transaction to the Reserve Bank as per the reporting requirements as specified by the Reserve Bank. (d). An Indian company may issue, subject to compliance with the conditions prescribed by the Central Government and/or the Reserve Bank from time to time, equity instruments to a person resident outside India, if the Indian investee company is engaged in an automatic route sector, against,- (i) swap of equity instruments; or (ii) import of capital goods or machinery or equipment (excluding second-hand machinery); or (iii) pre-operative or pre-incorporation expenses (including payments of r .....

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

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..... rmitted sectors, entry routes and sectoral caps for total foreign investment Unless otherwise specified in these Rules or the Schedules, the entry routes and sectoral caps for the total foreign investment in an Indian entity shall be as follows, namely :- (a) Entry routes.- (i) “automatic route” means the entry route through which investment by a person resident outside India does not require the prior approval of the Reserve Bank or the Central Government; (ii) “government route” means the entry route through which investment by a person resident outside India requires prior Government approval and foreign investment received under this route shall be in accordance with the conditions stipulated by the Government in its approval. (iii) Aggregate foreign portfolio investment up to forty-nine percent of the paid-up capital on a fully diluted basis or the sectoral or statutory cap, whichever is lower, shall not require Government approval or compliance of sectoral conditions as the case may be, if such investment does not result in transfer of ownership and control of the resident Indian company from resident Indian citizens or transfer of owner .....

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

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..... tions and also has not made any downstream investment that is treated as indirect foreign investment for the investee entity, may receive investment in its equity instruments from persons resident outside India under automatic route, however, approval of the Government shall be required for such companies for undertaking activities which are under Government route and as and when such a company commences business or makes downstream investment that is treated as indirect foreign investment for the investee entity, it shall have to comply with the relevant sectoral conditions on entry route, conditionalities and caps. (vii) The onus of compliance with the sectoral or statutory caps on such foreign investment and attendant conditions, if any, shall be on the company receiving foreign investment. (viii) Wherever the person resident outside India who has made foreign investment specifies a particular auditor or audit firm having international network for the audit of the Indian investee company, then audit of such investee company shall be carried out as joint audit wherein one of the auditors is not part of the same network. Table Sl. No(1) .....

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

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..... loration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals (Development and Regulation) Act, 1957. 100% Automatic 3.2 Coal and Lignite       (a) Coal and Lignite mining for captive consumption by power projects, iron and steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act, 1973. (b) 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 3.3 Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities .....

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

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..... nd 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 existing PSUs. 49% Automatic 5. Manufacturing 100% Automatic 5.1 A manufacturer is permitted to sell its products manufactured in India through wholesale and/ or retail, including through e-commerce without Government approval. Notwithstanding the provisions of these Rules on trading sector, 100 percent foreign investment under the government approval route is allowed for trading, including through e-commerce, in respect of food products manufactured and/ or produced in India. Applications for foreign investment in food products retail trading shall be processed in the Department of Industrial Policy and Promotion before being considered by the Government for approval 6. .....

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

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..... 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 Conditio .....

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

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..... into a legally binding agreement to act as a single unit in managing the matters of the applicant company. 8. Print Media     8.1 Publishing of newspaper and periodicals dealing with news and current affairs 26% Government 8.2 Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Government 8.2.1 Other conditions       (a) 'Magazine', for the purpose of these guidelines, shall be defined as a periodical 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 Tech .....

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

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..... hts; (d) "Air Transport Undertaking" means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; (e) "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; (f) "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; (g) "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 that they constitute a recognizably systematic series, each flight being open to use by members of the public; (h) "Non-Scheduled air transport service" means any service which is not a scheduled air transport service and will include Cargo airlines; (i) "Cargo airlines" would mean such airlines which meet the conditions as given in the Civil Aviation Requir .....

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

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..... ines are allowed to make foreign investment in Cargo airlines, helicopter and seaplane services, as per the limits and entry routes mentioned above. (c) Foreign airlines are allowed to invest in the capital of Indian companies, operating scheduled and non-scheduled air transport, services up to the limit 49 percent of the paid up capital of the Indian investee company. Such foreign investment would be subject to the following conditions, namely,:- (i) It shall be under the Government approval route. (ii) The foreign investment shall comply with the relevant regulations of Securities and Exchange Board of India as well as other applicable rules and regulations. (iii) A Scheduled Operator's Permit may be granted only to a company: (1) that is registered and has its principal place of business within India; (2) the Chairman and at least two-thirds of the Directors of which are citizens of India; and (3) the substantial ownership and effective control of which is vested in Indian citizens. (iv) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport services, as a result of such foreign inve .....

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

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..... of foreign investment has been completed. Further, transfer of stake from a person resident outside India to another person resident outside India, without repatriation of foreign investment will neither be subject to any lock-in period nor to any government approval. (d) The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, byelaws, rules, and other regulations of the State Government or  Municipal or Local Body concerned. (e) The Indian investee company shall be permitted to sell only developed plots. For the purposes of this policy "developed plots" shall mean plots where trunk infrastructure i.e. roads, water supply, street lighting, drainage and sewerage, have been made available. (f) The Indian investee company shall be responsible for obtaining all necessary approvals, including those of the building or layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requi .....

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

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..... f residential/ commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships; Explanation: - (a) Investment in units of Real Estate Investment Trusts (REITs) registered and regulated under the Securities and Exchange Board of India (REITs) regulations 2014 shall also be excluded from the definition of “real estate business”. (b) Earning of rent income on lease of the property, not amounting to transfer, shall not amount to real estate business. (c) Transfer in relation to real estate includes, (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) 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 (v) any transaction, by acquiring capital instruments in a company or by way of any agreement or any arrangement or in any other manner whatsoever, w .....

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

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..... oviding 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, natural sciences and engineering; business and management consultancy activities; and architectural, engineering and other technical activities. 11.2 Foreign investment in Industrial Parks shall not be subject to the conditionalities applicable for construction development projects etc. spelt out in para 10 above, provided the Industrial Parks meet with the undermentioned conditions: (a) it shall comprise of a minimum of 10 units and no single unit shall occupy more than 50 percent of the allocable area; (b) the minimum percentage of the area to be allocated for industrial activity shall not be less than 66 percent of the total allocable area. 12. Satellites - Establishment and operation .....

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

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..... ed to sales for 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 .....

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

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..... 15.2.2 Market place model of e-commerce 100 % Automatic 15.2.3 Other Conditions:       (a) E-commerce’ means buying and selling of goods and services including digital products over digital & electronic network; (b) ‘E-commerce entity’ means a company incorporated under Companies Act 1956 or the Companies Act, 2013 (c) ‘Inventory 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 permit .....

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

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..... elines on cash and carry wholesale trading as given in Sl. No. 15.1.2 above shall apply to B2B e-commerce activities. (o) No e-commerce marketplace entity shall mandate any seller to sell any of their product exclusively on its platform. (p) All existing investments shall have to be in compliance with the above conditions from the date of issue of this Notification. Note: Foreign investment is not permitted in inventory based model of e-commerce. 15.2.4 Sale of services through e-commerce shall be under automatic route subject to the sector specific conditions, applicable laws/ regulations, security and other conditionalities.  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% Auto .....

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

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..... emental sourcing shall mean the increase in terms of value of such global sourcing from India for that single brand (in INR terms) in a particular financial year from India over the preceding financial year, by the non-resident entities undertaking single brand retail trading, either directly or through their group companies. After completion of this 5 years period, the SBRT entity shall be required to meet the 30% sourcing norms directly towards its India’s operation, on an annual basis. Note: (1) Conditions mentioned at (b) and (d) above shall not be applicable for undertaking SBRT of Indian brands. (2) Indian brands should be owned and controlled by resident Indian citizens and/ or companies which are owned and controlled by resident Indian citizens. (3) Sourcing norms shall not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of 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 Chairmansh .....

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

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..... l co-operatives and farmers co-operatives shall also be considered in this category. The procurement requirement shall 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 foreign investment is received. Thereafter, it shall have to be met on an annual basis. (e) Self-certification is required by the company, to ensure compliance of the conditions at serial nos. (b), (c) and (d) above, which could be cross-checked, as and when required. Accordingly, the investors shall maintain accounts, duly certified by statutory auditors. (f) Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 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 or urban agglomeration limits of such cities; retail locations shall be restricted to conforming areas as per the Master or Zonal Plans of the concerned cities and provision shall be made for requisite facilities such as transport connectivity and parking. .....

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

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..... 16 Pharmaceuticals     16.1 Greenfield 100% Automatic 16.2 Brownfield 100% Automatic up to 74%; Government route beyond 74% 16.3 Other Conditions       (a) 'Non-compete' clause shall not be allowed except in special circumstances with the Government approval. (b) The prospective investor and the prospective investee are required to provide a certificate given at 16.4 along with the application submitted for Government approval. (c) Government approval may incorporate appropriate conditions for foreign investment in brownfield cases. (d) Foreign investment in brownfield pharmaceuticals, irrespective of entry route, is further subject to the following conditions : (i) The production level of National List of Essential Medicines (NLEM) drugs and/ or consumables and their supply to the domestic market at the time of induction of foreign i .....

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

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..... immunological or metabolic means, but which may be assisted in its intended function by such means; (b) an accessory to such an instrument, apparatus, appliance, material or other article; (c) “in-vitro diagnostic device which is a reagent, reagent product, calibrator, control material, kit, instrument, apparatus, equipment or system, whether used alone or in combination thereof intended to be used for examination and providing information for medical or diagnostic purposes by means of examination of specimens derived from the human bodies or animals. 16.4 Certificate to be furnished by the Prospective Investor as well as the Prospective Recipient Entity  It is certified that the following is the complete list of all inter-se agreements, including the shareholders agreement, entered into between foreign investor(s) and investee brownfield pharmaceutical entity    1. ………………  2. ……………….  3. ……………….  (copies of all agreements to be enclosed .....

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

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..... (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 institutional or  non-institutional investors shall also be governed by the said Act. (b) FPIs can invest in the Security Receipts (SRs) issued by ARCs. FPIs may be allowed to invest up to 100 percent of each tranche in SRs issued by ARCs, subject to directions/ guidelines of Reserve Bank. Such investment shall be within the relevant regulatory cap as applicable. (c) All investments shall be subject to provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. F.2 Banking - Private sector 74% Automatic up to 49% Government route beyond 49% and up to 74% F.2.1 Other conditions:       (a) At all times, at least 26 percent of the paid up capital shall have to be held .....

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

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..... 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 separately by RBI. (vii) All applications by a foreign bank for setting up a subsidiary or for conversion of their existing branches to subsidiary in India shall have to be made to the RBI. (h) The present limit of 10 percent on voting rights in respect banking companies may be noted by the potential investor. (i) All investments shall be subject to the guidelines prescribed for the banking sector under the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934. F.3 Banking - Public Sector     F.3.1 .....

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

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..... icity Regulatory Commission (Power Market) Regulations, 2010. 49% Automatic F.6.1 Other conditions        (a) A person resident outside India including persons acting in concert should not hold more than 5 percent. (b) The investment shall be in compliance with Securities and Exchange Board of India Regulations, other applicable laws/ rules/ regulations, security and other conditionalities. F.7 Credit Information Companies  100% Automatic F.7.1 Other conditions       (a) Foreign investment in Credit 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 acqu .....

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

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..... esident Entity', 'Public Financial Institution', 'Resident Indian Citizen', 'Total Foreign Investment' will have the same meaning as provided in Notification No. G.S.R 115 (E), dated 19th February, 2015 issued by Department of Financial Services and regulations issued by Insurance Regulatory and Development Authority of India from time to time. F.9 Pension Sector 49% Automatic  F.9.1 Other conditions       (a) Foreign investment in this sector shall be in accordance with the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013. (b) Foreign investment in Pension Funds shall be subject to the condition that entities investing in capital instruments issued by an Indian Pension Fund as per Section 24 of the PFRDA Act, 2013 shall obtain necessary registration from the PFRDA and comply with other requirements as per the PFRDA Act, 2013 and Rules and Regulations framed under it for so participating in Pension Fund Management activities in India. .....

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

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..... the following conditions, namely:- (i) The total holding by each FPI or an investor group, shall be less than 10 percent of the total paid-up equity capital on a fully diluted basis or less than 10 percent of the paid-up value of each series of debentures or preference shares or share warrants issued by an Indian company and the total holdings of all FPIs put together, including any other direct and indirect foreign investments in the Indian company permitted under these rules, shall not exceed 24 per cent of paid-up equity capital on a fully diluted basis or paid up value of each series of debentures or preference shares or share warrants. The said limit of 10 percent and 24 percent shall be called the individual and aggregate limit, respectively. (ii) With effect from the 1st April, 2020, the aggregate limit shall be the sectoral caps applicable to the Indian company as laid out in sub-paragraph (b) of paragraph 3of Schedule I of these rules, with respect to its paid-up equity capital on a fully diluted basis or such same sectoral cap percentage of paid up value of each series of debentures or preference shares or share warrants: Provided that the aggregate limit as pro .....

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

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..... nd sale or conversion to FDI within the prescribed time, shall not be reckoned as a contravention under these Rules. (iv) The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government or its related entities for the purpose of calculation of 10 percent limit for FPI investments in a single company, if they form part of an investor group. However, certain foreign Government agencies and its related entities may be exempt from such clubbing requirements and other investment conditions either by way of an agreement or treaty with other sovereign governments or by an order of the Central Government. (v) A FPI may purchase equity instruments of an Indian company through public offer or private placement, subject to the individual and aggregate limits specified under this Schedule: Provided that - (A) in case of public offer, the price of the shares to be issued is not less than the price at which shares are issued to residents, and (B) in case of issue by private placement, the price is not less than- (a) the price arrived in terms of guidelines issued by the Securities and Exchange Board of India, or (b) the fair price worke .....

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

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..... res or preference shares or share warrants issued by an Indian company and the total holdings of all NRIs and OCIs put together shall not exceed ten percent of the total paid-up equity capital on a fully diluted basis or shall not exceed ten percent of the paid-up value of each series of debentures or preference shares or share warrants: Provided that the aggregate ceiling of 10 percent may be raised to 24 percent if a special resolution to that effect is passed by the General Body of the Indian company. (2) Purchase or sale of units of domestic mutual funds A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may without limit purchase or sell units of domestic mutual funds which invest more than 50 percent in equity. (3) Purchase or sale of shares in public sector enterprises A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may, without limit purchase or sell shares in public sector enterprises being disinvested by the Central Government, provided the purchase is in accordance with the terms and conditions stipulated in the notice inviting bids. (4) Subscription to National Pension System.- A NRI or an OCI may subscribe to the Na .....

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

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..... partnership firm incorporated outside India and owned and controlled by NRIs or OCIs, shall not make any investment, under this Schedule, in equity instruments or units of a Nidhi company or a company engaged in agricultural or plantation activities or real estate business or construction of farm houses or dealing in transfer of development rights. Explanation: Real estate business shall have the same meaning as specified in sub-paragraph (b) of paragraph (3) of Schedule 1. (4) The mode of payment and attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank. B. Investment in a firm or a proprietary concern. (1) Contribution to capital of a firm or a proprietary concern. A NRI or an OCI may invest on a non-repatriation basis, by way of contribution to the capital of a firm or a proprietary concern in India provided such firm or proprietary concern is not engaged in any agricultural or plantation activity or print media or real estate business. Explanation: Real estate business shall have the same meaning as specified in sub paragraph (b) of paragraph (3) of Schedule I. (2) The mode of payment and attendant condition .....

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

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..... ition or transfer of profit shares, should not be less than the fair price worked out as per any valuation norm which is internationally accepted or adopted as per market practice (hereinafter referred to as “fair price of capital contribution or profit share of a LLP”) and a valuation certificate to that effect shall be issued by the Chartered Accountant or by a practising Cost Accountant or by an approved valuer from the panel maintained by the Central Government. (g) In case of transfer of capital contribution or profit share from a person resident in India to a person resident outside India, the transfer shall be for a consideration not less than the fair price of capital contribution or profit share of a LLP. Further, in case of transfer of capital contribution or profit share from a person resident outside India to a person resident in India, the transfer shall be for a consideration which is not more than the fair price of the capital contribution or profit share of an LLP. (h) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank . SCHEDULE VII (See rule 16) Investment .....

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

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..... (i) hotel-cum-convention centres with seating capacity of more than three thousand; (j) Infrastructure sector. The term “Infrastructure Sector” has the same meaning as given in the Harmonised Master List of Infrastructure sub-sectors approved by Government of India vide notification F. No. 13/06/2009- INF, dated the March 27, 2012 as amended or updated. SCHEDULE VIII (See Rule 6(c)) Investment by a person resident outside India in an Investment Vehicle (1) 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) may invest in units of Investment Vehicles. (2) A person resident outside India who has acquired or purchased units in accordance with this Schedule may sell or transfer in any manner or redeem the units as per regulations framed by the Securities and Exchange Board of India or directions issued by the Reserve Bank. (3) An Investment vehicle may issue its units to a person resident outside India against swap of equity instruments of a Special Purpose Vehicle (SPV) proposed to be acquired by such Investment Vehicle. .....

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

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..... in terms of DR Scheme, 2014. (d) The aggregate of eligible instruments which may be issued or transferred to foreign depositories, along with eligible instruments already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible instruments under the Act, rules or regulations framed thereunder. (e) The eligible instruments shall not be issued or transferred to a foreign depository for the purpose of issuing depository receipts at a price less than the price applicable to a corresponding mode of issue or transfer of such instruments to domestic investors under the applicable laws. (2) Saving.- Depository Receipts issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 shall be deemed to have been issued under the corresponding provisions of DR Scheme 2014 and have to comply with the provisions specified in this Schedule. SCHEDULE X (See rule 10(2)) Issue of Indian Depository Receipts (1) Issue of IDRs.-Companies incorporated outside India may issue IDRs through a Domestic Depository, to persons resident in India and outside India, subject .....

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

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