TMI BlogConsolidated FDI PolicyX X X X Extracts X X X X X X X X Extracts X X X X ..... Direct Investment, as distinguished from portfolio investment, has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor. 1.1.2 The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce Industry, Government of India makes policy pronouncements on FDI through Press Notes/Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No. FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/ Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Preference shares and convertible debentures shall be required to be fully paid, and should be mandatorily and fully convertible. Further, warrant includes Share Warrant issued by an Indian Company in accordance to provisions of the Companies Act, as applicable. 2.1.6 Capital account transaction means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6 of FEMA. 2.1.7 Competent Authority means the concerned Administrative Ministry/Department empowered to grant government approval for foreign investment under the extant FDI Policy and FEMA Regulations. 2.1.8 Control shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. For the purposes of Limited Liability Partnership, control will mean right to appoint majority of the designated partners, where such designated partners, with sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est of which is payable in foreign currency. FCCBs are issued in accordance with the Foreign Currency Convertible Bonds and ordinary shares (through depository receipt mechanism) Scheme, 1993 and subscribed by a non-resident entity in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part. 2.1.14 FDI means investment by non-resident entity/person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations,2000 (Original notification is available at https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=174. Subsequent amendment notifications are available at https://rbi.org.in/Scripts/BS_FemaNotifications.aspx). 2.1.15 FDI linked performance conditions means the sector specific conditions for companies receiving foreign investment. 2.1.16 FEMA means the Foreign Exchange Management Act, 1999 (42 of 1999). 2.1.17 Foreign Institutional Investor (FII) means an entity established or incorporated outside India which proposes to make investment in India and which is regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any holding only investments in other Indian company/(ies), directly or indirectly, other than for trading of such holdings/securities. 2.1.27 Investment on repatriable basis means investment, the sale proceeds of which, net of taxes, are eligible to be repatriated out of India and the expression investment on non-repatriable basis shall be construed accordingly. 2.1.28 Joint Venture (JV) means an Indian entity incorporated in accordance with the laws and regulations in India in whose capital a non-resident entity makes an investment. 2.1.29 Limited Liability Partnership means a Limited Liability Partnership firm, formed and registered under the Limited Liability Partnership Act, 2008. 2.1.30 Manufacture , with its grammatical variations, means a change in a non-living physical object or article or thing- (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure. 2.1.31 Non-resident entity means a person res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to stay outside India for an uncertain period; (B) A person who has come to or stays in India, in either case, otherwise than- (a) for or on taking up employment in India; or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India. 2.1.37 Person resident outside India means a person who is not a Person resident in India. 2.1.38 Portfolio Investment Scheme means the Portfolio Investment Scheme referred to in Schedules 2, 2A 3 of FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. 2.1.39 RBI means the Reserve Bank of India established under the Reserve Bank of India Act, 1934. 2.1.40 Resident Entity means Person resident in India excluding an individual. 2.1.41 Resident Indian Citizen shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval. ] 3.1.2 NRIs resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in the capital of Indian companies on repatriation basis, subject to the condition that the amount of consideration for such investment shall be paid only by way of inward remittance in free foreign exchange through normal banking channels. 3.1.3 OCBs have been derecognized as a class of investors in India with effect from September 16, 2003. Erstwhile OCBs which are incorporated outside India and are not under the adverse notice of RBI can make fresh investments under FDI Policy as incorporated non-resident entities, with the prior approval of Government of India if the investment is through Government route; and with the prior approval of RBI if the investment is through Automatic route. 3.1.4 A company, trust and partnership firm incorporated outside India and owned and controlled by NRIs can invest in India with the special dispensation as available to NRIs under the FDI Policy. 3.1.5 (i) Foreign Institutional Investor (FII) and Foreign Portfolio Investors (FPI) may in terms of Schedule 2 and 2A of FEMA (Transfer or Issue of Security by Persons Resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -ups and if a startup is organised as a partnership firm or an LLP, the investment can be made in the capital or through any profit-sharing arrangement) or units issued by a VCF or by a Category-I AIF either through purchase by private arrangement either from the issuer of the security or from any other person holding the security or on a recognised stock exchange.It may also set up a domestic asset management company to manage its investments. SEBI registered FVCIs are also allowed to invest under the FDI Scheme, as non-resident entities, in other companies, subject to FDI Policy and FEMA regulations. 3.1.8 A Non- Resident Indian may subscribe to National Pension System governed and administered by Pension Fund Regulatory and Development Authority (PFRDA), provided such subscriptions are made through normal banking channels and the person is eligible to invest as per the provisions of the PFRDA Act. The annuity/ accumulated saving will be repatriable. 3.2 Eligible investee entities 3.2.1 Indian Company Indian companies can issue capital against FDI. 3.2.2 Partnership Firm/Proprietary Concern (i) A Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatic route and there are no FDI-linked performance conditions, into an LLP is permitted under automatic route. (iv) FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008. 3.2.5 Investment Vehicle An entity being investment vehicle registered and regulated under relevant regulations framed by SEBI or any other authority designated for the purpose including Real Estate Investment Trusts (REITs) governed by the SEBI (REITs) Regulations, 2014, Infrastructure Investment Trusts (InvIts) governed by the SEBI (InvIts) Regulations, 2014, Alternative Investment Funds (AIFs) governed by the SEBI (AIFs) Regulations, 2012 and notified under Schedule 11 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 is permitted to receive foreign investment from a person resident outside India (other than an individual who is citizen of or any other entity which is registered / incorporated in Pakistan or Bangladesh), including an Registered Foreign Portfolio Investor (RFPI) or a non-resident Indian (NRI). 3.2.6 Startup Companies Start-ups can issue equity or equity linked instruments or debt inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment shall be obtained for such transfers in case the startup company is engaged in a sector which requires Government approval. (vi) The startup company issuing convertible notes shall be required to furnish reports as prescribed by Reserve Bank of India. 3.2.7 Other Entities FDI in resident entities other than those mentioned above is not permitted. 3.3 Instruments of investments, issue/transfer of shares etc. Types of instruments for investment and provisions relating to issue/ transfer of shares are given at Annexure 2 Annexure 3 respectively. Further, specific conditions of compliance for certain cases are given in Annexure-4. 3.4 Entry Routes for Investment 3.4.1 Investments can be made by non-residents in the equity shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares of an Indian company, through the Automatic Route or the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment. Under the Government Route, prior approval of the Government of India is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A (Transfer or issue of Security by Persons Resident Outside India) Regulations and such investment will also be deemed domestic investment at par with the investment made by residents. 3.5 Caps on Investments 3.5.1 Investments can be made by non-residents in the capital of a resident entity only to the extent of the percentage of the total capital as specified in the FDI policy. The caps in various sector(s) are detailed in Chapter 5 of this Circular. 3.6 Entry Conditions on Investment 3.6.1 Investments by non-residents can be permitted in the capital of a resident entity in certain sectors/activity with entry conditions. Such conditions may include norms for minimum capitalization, lock-in period, etc. The entry conditions in various sectors/activities are detailed in Chapter 5 of this Circular. 3.7 Other Conditions on Investment besides Entry Conditions 3.7.1 Besides the entry conditions on foreign investment, the investment/investors are required to comply with all relevant sectoral laws, regulations, rules, security conditions, and state/local laws/regulations. 3.7.2 For establishment of branch office, liaison office or project office or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance/ compliance with the relevant sectoral conditions on entry route, conditionalities and caps. 3.8.4 Downstream investment by an eligible Indian entity which is not owned and/or controlled by resident entity/ies 3.8.4.1 Downstream investment by an eligible Indian entity, which is not owned and/or controlled by resident entity/ies, into another Indian company, would be in accordance/compliance with the relevant sectoral conditions on entry route, conditionalities and caps, with regard to the sectors in which the latter Indian company is operating. Note: Downstream investment/s made by a banking company, as defined in clause(c) of Section 5 of the Banking Regulation Act, 1949, incorporated in India, which is owned and/or controlled by non-residents/a non-resident entity/non-resident entities, under Corporate Debt Restructuring (CDR), or other loan restructuring mechanism, or in trading books, or for acquisition of shares due to defaults in loans, shall not count towards indirect foreign investment. However, their 'strategic downstream investment' shall count towards indirect foreign investment. For this purpose, 'strategic downstream investments' w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Defence Production, Ministry of Defence b) Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959 Ministry of Home Affairs (iii) Broadcasting Ministry of Information Broadcasting (iv) Print Media (v) Civil Aviation Ministry of Civil Aviation (vi) Satellites Department of Space (vii) Telecommunication Department of Telecommunications (viii) Private Security Agencies Ministry of Home Affairs (ix) Applications involving investments from Countries of Concern which presently include Pakistan and Bangladesh, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time (x) Trading (Single brand, Multi brand and Food Product retail trading) Department of Industrial Policy Promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Authority. 4.1.7 In respect of proposals where the Competent Authority proposes to reject the proposals or in cases where conditions for approval are stipulated in addition to the conditions laid down in the FDI policy or sectoral laws/regulations, concurrence of DIPP shall compulsorily be sought by the Competent Authority. 4.1.8 The monitoring of the compliance of conditions under the FDI approvals, including the past cases approved by the Government, shall be done by the concerned Administrative Ministries/Departments. 4.2 Cases which do not require Fresh Approval 4.2.1 Companies may not require fresh prior approval of the Government for bringing in additional foreign investment into the same entity, in the following cases: (i) Entities the activities of which had earlier required prior approval of Government and which had, accordingly, earlier obtained prior approval of Government for their initial foreign investment but subsequently such activities/sectors have been placed under automatic route; (ii) Entities, the activities of which had sectoral caps earlier and which had, accordingly, earlier obtained prior approval of Government for their initial forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted up to100% on the automatic route, subject to applicable laws/regulations; security and other conditionalities. Wherever there is a requirement of minimum capitalization, it shall include share premium received along with the face value of the share, only when it is received by the company upon issue of the shares to the non-resident investor. Amount paid by the transferee during post-issue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalization requirement. b) Sectoral cap i.e. the maximum amount which can be invested by foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under Schedule 1 (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 9 (LLPs), 10 (DRs) and 11(Investment Vehicle) of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations. FCCBs and DRs having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Automatic 5.2.1.1 Other Conditions I. The term under controlled conditions covers the following: (i) 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. 5.2.2 Plantation Sector Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.2.1 (i) Tea sector including tea plantations (ii) Coffee plantations (iii) Rubber plantations (iv) Cardamom plantations (v) Palm oil tree plantations (vi) Olive oil tree plantations Note: Besides the above, FDI is not allowed in any other plantation sector/activity. 100% Automatic 5.2.2.2 Other C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with transfer of technology; (B) disposal of tailings during the mineral separation shall be carried out in accordance with regulations framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987. (ii) FDI will not be allowed in mining of prescribed substances listed in the Notification No. S.O. 61(E), dated 18.1.2006, issued by the Department of Atomic Energy. 2 [ (iii) Associated Processing Infrastructure as contained at Para 5.2.3.2 above includes coal washery, crushing, coal handling, and separation (magnetic and non-magnetic). ] Clarification: (1) For titanium bearing ores such as Ilmenite, Leucoxene and Rutile, manufacture of titanium dioxide pigment and titanium sponge constitutes value addition. Ilmenite can be processed to produce 'Synthetic Rutile or Titanium Slag as an intermediate value added product. (2) 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% Automatic up to 49% Government route beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be recorded 5.2.6.2 Other Conditions (i) Infusion of fresh foreign investment within the permitted automatic route level, in a company not seeking industrial license, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval. (ii) Licence applications will be considered and licences given by the Department of Industrial Policy Promotion, Ministry of Commerce Industry, in consultation with Ministry of Defence and Ministry of External Affairs. (iii) Foreign investment in the sector is subject to security clearance and guidelines of the M/o Defence. (iv) Investee company should be structured to be self-sufficient in areas of product design and development. The investee/joint venture company along with manufacturing facility, should also have maintenance and life cycle support facility of the product being manufactured in India. Services Sector 5.2.7 Broadcasting 5.2.7.1 Broadcasting Carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26% Government 5.2.8.2 Publication of Indian editions of foreign magazines dealing with news and current affairs 26% Government 5.2.8.2.1 Other Conditions (i) Magazine , for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. (ii) Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information Broadcasting on 4.12.2008. Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.8.3 Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, subject to compliance with the legal framework as applicable and guidelines issued in this regard from time to time by Ministry of Information and Broadcasting. 100% Government 5.2.8.4 Publication of facsimile edition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes Airports, Scheduled and Non-Scheduled domestic passenger airlines, Helicopter services/Seaplane services, Ground Handling Services, Maintenance and Repair organizations; Flying training institutes; and Technical training institutions. For the purposes of the Civil Aviation sector: (i) Airport means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934; (ii) Aerodrome means any definite or limited ground or water area intended to be used, either wholly or in part, for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures thereon or pertaining thereto; (iii) Air transport service means a service for the transport by air of persons, mails or any other thing, animate or inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of flights; (iv) Air Transport Undertaking means an undertaking whose business includes the carriage by air of passengers or cargo for hire or reward; (v) Aircraft compon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered and has its principal place of business within India; b) the Chairman and at least two-thirds of the Directors of which are citizens of India; and c) the substantial ownership and effective control of which is vested in Indian nationals. (v) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport services, as a result of such investment shall be cleared from security view point before deployment; and (vi) All technical equipment that might be imported into India as a result of such investment shall require clearance from the relevant authority in the Ministry of Civil Aviation. Note : (i) The FDI limits/entry routes, mentioned at paragraph 5.2.9.2 (1) and 5.2.9.2 (2) above, are applicable in the situation where there is no investment by foreign airlines. (ii) The dispensation for NRIs regarding FDI up to 100% will also continue in respect of the investment regime specified at para (c)(ii) above. (iii) The policy mentioned at para (c) above is not applicable to M/s Air India Limited. 5.2.10 Construction Development: Townships, Housing, Built-up Infrastructure Sector/Activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal/Local Body concerned, which approves the building/development plans, will monitor compliance of the above conditions by the developer. Note: (i) It is clarified that FDI is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm houses and trading in transferable development rights (TDRs). Real estate business means dealing in land and immovable property with a view to earning profit there from 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. Further, earning of rent/ income on lease of the property, not amounting to transfer, will not amount to real estate business. (ii) Condition of lock-in period at (A) above will not apply to Hotels Tourist Resorts, Hospitals, Special Economic Zones (SEZs), Educational Institutions, Old Age Homes and investment by NRIs. (iii) Completion of the project will be determined as per the local bye-laws/rules and other regulations of State Governments. (iv) It is clarified that 100% FDI under automatic r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purposes of FDI policy on the sector, terms Private Security Agencies , Private Security and Armoured Car Service will have the same meaning as provided under PSAR Act, 2005, which is reproduced as under: Private Security Agency means a person or body of persons other than a government agency, department or organisation engaged in the business of providing private security services including training to private security guards or their supervisor or providing private security guards to any industrial or business undertaking or a company or any other person or property; Private Security means security provided by a person, other than a public servant, to protect or guard any person or property or both and includes provision of armoured car service; Armoured Car Service means the service provided by deployment of armed guards along with armoured car and such other related services which may be notified by the Central Government or as the case may be, the State Government from time to time. 5.2.14 Telecom Services Sector/Activity % of Equity/ FDI Cap Entry Route Teleco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority/Local Self-Government Body under that State Government should be obtained. (b) Except in case of sales to Government, sales made by the wholesaler would be considered as cash carry wholesale trading/wholesale trading with valid business customers, only when WT are made to the following entities: (I) Entities holding sales tax/ VAT registration/service tax/excise duty registration; or (II) Entities holding trade licenses i.e. a license/registration certificate/membership certificate/registration under Shops and Establishment Act, issued by a Government Authority/Government Body/Local Self-Government Authority, reflecting that the entity/person holding the license/ registration certificate/ membership certificate, as the case may be, is itself/ himself/herself engaged in a business involving commercial activity; or (III) Entities holding permits/license etc. for undertaking retail trade (like tehbazari and similar license for hawkers) from Government Authorities/Local Self Government Bodies; or (IV) Institutions having certificate of incorporation or registration as a society or registration as public trust for their self consumption. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of e-commerce means providing of an information technology platform by an e-commerce entity on a digital electronic network to act as a facilitator between buyer and seller. 5.2.15.2.3 Guidelines for Foreign Direct Investment on e-commerce sector i) 100% FDI under automatic route is permitted in marketplace model of e-commerce. ii) FDI is not permitted in inventory based model of e-commerce. 5.2.15.2.4 Other Conditions i) Digital electronic network will include network of computers, television channels and any other internet application used in automated manner such as web pages, extranets, mobiles etc. ii) Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis. iii) E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services. iv) E-commerce entity providing a marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into inventory based model. v) An e-commerce en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, 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. (e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods procured, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five years' total value of the goods procured, beginning 1st April of the year of commencement of SBRT business (i.e. opening of first store or start of online retail, whichever is earlier). Thereafter, SBRT entity shall be required to meet the 30% local sourcing norms on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is not possible and give recommendations for such relaxation. ] 5.2.15.4 Multi Brand Retail Trading Sector/Activity % of Equity/ FDI Cap Entry Route Multi Brand Retail Trading 51% Government (1) FDI in multi brand retail trading, in all products, will be permitted, subject to the following conditions: (i) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded. (ii) Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million. (iii) At least 50% of total FDI brought in the first tranche of US $ 100 million, shall be invested in 'back-end infrastructure' within three years, where back-end infrastructure will include capital expenditure on all activities, excluding that on frontend units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the policy. Therefore, retail sales outlets may be set up in those States/Union Territories which have agreed, or agree in future, to allow FDI in MBRT under this policy. The list of States/Union Territories which have conveyed their agreement is at (2) below. 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 Promotion and additions would be made to the list at (2) below accordingly. The establishment of the retail sales outlets will be in compliance of applicable State/Union Territory laws/ regulations, such as the Shops and Establishments Act etc. (ix) Retail trading, in any form, by means of e-commerce, would not be permissible, for companies with FDI, engaged in the activity of multi-brand retail trading. (2) List of States/Union Territories as mentioned in Paragraph 5.2.15.4(1)(viii) 1. Andhra Pradesh 2. Assam 3. Delhi 4. Haryana 5. Himachal Pradesh 6. Jammu Kashmir 7. Karnataka 8. Maharashtra 9. Manipur 10. Rajasthan 11. Uttarakhand 12. Daman Diu and Dadra a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2.17.1 Asset Reconstruction Company (ARC) means a company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). 100% Automatic 5.2.17.2 Other Conditions (i) Persons resident outside India can invest in the capital of Asset Reconstruction Companies (ARCs) registered with Reserve Bank of India, up to 100% on the automatic route. (ii) Investment limit of a sponsor in the shareholding of an ARC will be governed by the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended from time to time. Similarly, investment by institutional / non-institutional investors will also be governed by the said Act, as amended from time to time. (iii) The total shareholding of an individual FII/FPI shall be below 10% of the total paid-up capital. (iv) FIIs/FPIs can invest in the Security Receipts (SRs) issued by ARCs. FIIs/FPIs may be allowed to invest up to 100 per cent of each tranche in SRs issued by ARCs, subject to directions/gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foreign investment in Credit Information Companies is subject to the Credit Information Companies (Regulation) Act, 2005. (2) Foreign investment is permitted subject to regulatory clearance from RBI. (3) Such FII/FPI investment would be permitted subject to the conditions that: (a) A single entity should directly or indirectly hold below 10% equity. (b) Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement; and (c) FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding. 5.2.21 Infrastructure Company in the Securities Market Sector/Activity % of Equity/ FDI Cap Entry Route 5.2.21.1 Infrastructure companies in Securities Markets, namely, stock exchanges, commodity exchanges, depositories and clearing corporations, in compliance with SEBI Regulations 49% Automatic 5.2.21.2 Other Conditions (i) Foreign investment, including investment by FPIs, will be subject to the Securities Contracts (Regulations) (Stock Exchanges and Clearing C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Equity/FDI cap Entry Route 5.2.22.1 Insurance Company 49% Automatic 5.2.22.2 Intermediaries or Insurance Intermediaries including insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrator, Surveyors and Loss Assessors and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India from time to time. 100% Automatic ] 8 [5.2.22.3] 9 [ Other Conditions (a) No Indian Insurance company shall allow the aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, to exceed forty-nine percent of the paid up equity capital of such Indian Insurance company. (b) The foreign investment up to forty-nine percent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route subject to approval/verification by the Insurance Regulatory and Development Authority of India. (c) Foreign investment in this sector shall be subject to complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tities from the primary (non-insurance related) business must remain above 50 per cent of their total revenues in any financial year. (i) The insurance intermediary that has majority shareholding of foreign investors shall undertake the following: i. be incorporated as a limited company under the provisions of the Companies Act, 2013; ii. at least one from among the Chairman of the Board of Directors or the Chief Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen; iii. shall take prior permission of the Authority for repatriating dividend; iv. shall bring in the latest technological, managerial and other skills; v. shall not make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the Authority; vi. shall make disclosures in the formats to be specified by the Authority of all payments made to its group or promoter or subsidiary or interconnected or associate entities; vii. composition of the Board of Directors and key management persons shall be as specified by the concerned regulators; (j) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only; (ii) No non-resident investor/entity, including persons acting in concert, will hold more than 5% of the equity in these companies; and (iii) The foreign investment would be in compliance with SEBI Regulations; other applicable laws/regulations; security and other conditionalities. 5.2.25 White Label ATM Operations Sector/Activity % of Equity/ FDI Cap Entry Route White Label ATM Operations 100% Automatic Other Conditions (i) Any non-bank entity intending to set up WLAs should have a minimum net worth of ₹ 100 crore as per the latest financial year s audited balance sheet, which is to be maintained at all times. (ii) In case the entity is also engaged in any Other Financial Services as laid down at Para 5.2.26 below, then the foreign investment in the company setting up WLA, shall also have to comply with the minimum capitalization norms, if any, for foreign investments in such Other Financial Services . (iii) FDI in the WLAO will be subject to the specific criteria and guidelines issued by RBI vide Circular No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the prospective investee are required to provide a certificate along with the application for foreign investment as per Annexure-10 . (iii) Government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval. (iv) FDI in brownfield pharmaceuticals, under both automatic and government approval routes, is further subject to compliance of following conditions: (a) 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 FDI, being maintained over the next five years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level of production of NLEM drugs and/or consumables in the three financial years, immediately preceding the year of induction of FDI. Of these, the highest level of production in any of these three years would be taken as the level. (b) R D expenses being maintained in value terms for 5 years at an absolute quantitative level at the time of induction of FDI. The benchmark for this level would be decided with reference to the highest level of R D expenses whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dealer Category I bank with the Regional Office of the RBI under whose jurisdiction the Registered Office of the company making the declaration is situated as and when shares/convertible debentures / others are issued to the foreign investor, along with the documents mentioned in item No. 5 of the undertaking enclosed to this form. All fields are mandatory) . Permanent Account Number (PAN) of the investee company given by the Income Tax Department Date of issue of shares / convertible debentures/others No. Particulars (In Block Letters) 1. Name of the Investee Company Address of the Registered Office of the Investee Company with City, District and State clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Financial Institution 11. NRIs / PIO 12. Others (please specify)] Date of incorporation: 4. Particulars of Shares / Convertible Debentures /others Issued (a) Nature and date of issue Nature of issue Date of issue Number of shares/ convertible debentures/others 01 IPO / FPO 02 Preferential allotment / private placement 03 Rights 04 Bonus 05 Conversion of ECB 06 Conversion of royalty (inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total inflow (in Rupees) on account of issue of shares / convertible debentures/others to non-residents (including premium, if any) vide (i) Remittance through AD: (ii) Debit to NRE/FCNR/Escrow A/c with Bank_________ (iii) Others (please specify) Date of reporting of (i) and (ii) above to RBI under Para 9 (1) A of Schedule I to Notification No. FEMA 20 /2000-RB dated May 3, 2000, as amended from time to time. (e) Disclosure of fair value of shares issued** We are a listed company and the market value of a share as on date of the issue is* We are an un-listed company and the fair value of a share is* ** before issue of shares *(Please indicate as applicable) 5. Post issue pattern of shareholding Equity Compulsorily convertible Preference Shares/ Debentures/others Investor category No. of shares Amount (F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been issued under a scheme of merger and amalgamation of two or more Indian companies or reconstruction by way of de-merger or otherwise of an Indian company, duly approved by a court in India. OR d)Shares are issued under ESOP and the conditions regarding this issue have been satisfied 3. Shares have been issued in terms of Government approval No.___________________ dated ____________________ 4 The foreign investment received and reported now will be utilized in compliance with the provision of a Prevention of Money Laundering Act 2002 (PMLA) and Unlawful Activities(Prevention) Act, 1967 (UAPA). We confirm that the investment complies with the provisions of all applicable Rules and Regulations 5. We enclose the following documents in compliance with Paragraph 9 (1) (B) of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000: (i) A certificate from our Company Secretary certifying that (a) all the requirements of the Companies Act, 1956 have been complied with; (b) terms and conditions of the Government approval, if any, have been complied with; (c) the company is eligible to issue shares under these Regulations; and (d) the company has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure-2 Types of Instruments 1. Indian companies can issue equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares subject to pricing guidelines/valuation norms prescribed under FEMA Regulations. The price/conversion formula of convertible capital instruments should be determined upfront at the time of issue of the instruments. The price at the time of conversion should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with the extant FEMA regulations [as per any internationally accepted pricing methodology on arm s length basis for the unlisted companies and valuation in terms of SEBI (ICDR) Regulations, for the listed companies]. 1.1 Optionality clauses are allowed in equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares under FDI scheme, subject to the following conditions: (a) There is a minimum lock-in period of one year which shall be effective from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n resident outside India under Schedules 1, 2, 2A, 3, 5 and 8 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. e) The aggregate of eligible securities which may be issued or transferred to foreign depositories, along with eligible securities already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible securities under the relevant regulations framed under FEMA, 1999. f) The pricing of eligible securities to be issued or transferred to a foreign depository for the purpose of issuing depository receipts should not be at a price less than the price applicable to a corresponding mode of issue or transfer of such securities to domestic investors under the relevant regulations framed under FEMA, 1999. g) The issue of depository receipts as per DR Scheme 2014 shall be reported to the Reserve Bank by the domestic custodian as per the reporting guidelines for DR Scheme 2014. 6. (i) Two-way Fungibility Scheme: A limited two-way Fungibility scheme has been put in place by the Government of India for ADRs/GDRs. Under this Scheme, a stock broker in India, registered with SEBI, can purchase shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arm s length basis, where the shares of the company are not listed on any recognised stock exchange in India; and c. the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment. However, where non-residents (including NRIs) are making investments in an Indian company in compliance with the provisions of the Companies Act, as applicable, by way of subscription to its Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme. 3. Foreign Currency Account Indian companies which are eligible to issue shares to persons resident outside India under the FDI Policy may be allowed to retain the share subscription amount in a Foreign Currency Account, with the prior approval of RBI. 4. Transfer of shares and convertible debentures (i) Subject to FDI sectoral policy (relating to sectoral caps and entry routes) , applicable laws and other conditionalities including security conditions, non-resident investors can also invest in Indian companies by purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timeframe would be on the transferor/transferee, resident in India. However, in cases where the NR investor, including an NRI, acquires shares on the stock exchanges under the FDI scheme, the investee company would have to file form FC-TRS with the AD Category-I bank. (ii) The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels, shall be subjected to a Know Your Customer (KYC) check by the remittance receiving AD Category-I bank at the time of receipt of funds. In case, the remittance receiving AD Category-I bank is different from the AD Category-I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category-I bank carrying out the transaction along with the Form FC-TRS. (iii) A person resident outside India including a Non-Resident Indian investor who has already acquired and continues to hold the control in accordance with the SEBI (Substantial Acquisition of Shares and Takeover) Regulations can acquire shares of a listed Indian company on the stock exchange throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the full consideration. Provided the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines. 5. Prior permission of RBI in certain cases for transfer of capital instruments 5.1 Except cases mentioned in paragraph 5.2 below, the following cases require prior approval of RBI: (i) Transfer of capital instruments from resident to non-residents by way of sale where: (a) Transfer is at a price which falls outside the pricing guidelines specified by the Reserve Bank from time to time and the transaction does not fall under the exception given in para 5.2. (b) Transfer of capital instruments by the non-resident acquirer involving deferment of payment of the amount of consideration. Further, in case approval is granted for a transaction, the same should be reported in Form FC-TRS, to an AD Category-I bank for necessary due diligence, within 60 days from the date of receipt of the full and final amount of consideration. (ii) Transfer of any capital instrument, by way of gift by a person resident in India to a person resident outside India. While forwarding applications to Reserve Bank for approval for transfer of capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) the transfer of shares adheres with the pricing guidelines and documentation requirements as specified by the Reserve Bank of India from time to time. ii) where the transfer of shares attract SEBI (SAST) Regulations subject to the adherence with the pricing guidelines and documentation requirements as specified by Reserve Bank of India from time to time. iii) where the transfer of shares does not meet the pricing guidelines under the FEMA, 1999 provided that: a) The resultant FDI is in compliance with the extant FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum capitalization, etc.) , reporting requirements, documentation etc.; b) The pricing for the transaction is compliant with the specific/explicit, extant and relevant SEBI regulations/guidelines (such as IPO, Book building, block deals, delisting, exit, open offer/substantial acquisition/SEBI SAST) ; and c) Chartered Accountants Certificate to the effect that compliance with the relevant SEBI regulations/guidelines as indicated above is attached to the form FC-TRS to be filed with the AD bank. iv) where the investee company is in the financial sector prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convertible debentures that require Government approval in terms of paragraph 3 of Schedule 1 of FEMA 20 or import dues deemed as ECB or trade credit or payable against import of second hand machinery shall continue to be dealt in accordance with extant guidelines; (II) The issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes. (iii) A wholly owned subsidiary set up in India by a non-resident entity, operating in a sector where 100 percent foreign investment is allowed in the automatic route and there are no FDI linked conditionalities, may issue equity shares or preference shares or convertible debentures or warrants to the said non-resident entity against pre-incorporation/ pre-operative expenses incurred by the said non-resident entity up to a limit of five percent of its capital or USD 500,000 whichever is less, subject to the conditions laid down below. a. Within thirty days from the date of issue of equity shares or preference shares or convertible debentures or warrants but not later than one year from the date of incorporation or such time as Reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of incorporation of the company. General conditions: (i) All requests for conversion should be accompanied by a special resolution of the company. (ii) Government s approval would be subject to pricing guidelines of RBI and appropriate tax clearance. SECTION 1 Terms and conditions for Transfer of Shares/Convertible Debentures, by way of Sale, from a Person Resident in India to a Person Resident Outside India and from a Person Resident Outside India to a Person Resident in India 1.1 In order to address the concerns relating to pricing, documentation, payment/ receipt and remittance in respect of the shares/convertible debentures of an Indian company, in all sectors, transferred by way of sale, the parties involved in the transaction shall comply with the guidelines set out below. 1.2 Parties involved in the transaction are (a) seller (resident/non-resident) , (b) buyer (resident/non-resident) , (c) duly authorized agent/s of the seller and/or buyer, (d) Authorised Dealer bank (AD) branch and (e) Indian company, for recording the transfer of ownership in its books. 2. Pricing Guidelines 2.1 The under noted pricing guidelines are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponsibility to ensure that the relevant regulations under FEMA are complied with and consequent on transfer of shares, the relevant individual limit/sectoral caps/foreign equity participation ceilings as fixed by Government are not breached. Settlement of transactions will be subject to payment of applicable taxes, if any. 4. Method of payment and remittance/credit of sale proceeds 4.1The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels. In case the buyer is a FII,FPI, payment should be made by debit to its Special Non-Resident Rupee Account. In case the buyer is a NRI, the payment may be made by way of debit to his NRE/FCNR (B) accounts. However, if the shares are acquired on non-repatriation basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR (B) /NRO accounts. 4.2. The sale proceeds of shares (net of taxes) sold by a person resident outside India may be remitted outside India. In case of FII/FPI, the sale proceeds may be credited to its special Non-Resident Rupee Account. In case of NRI, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, till it gets registered as FPI. 5.2. For sale of shares by a person resident outside India i. Consent Letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. ii. Where the Consent Letter has been signed by their duly appointed agent the Power of Attorney Document authorizing the agent to purchase/sell shares by the seller/buyer. In case there is no formal Sale Agreement, letters exchanged to this effect may be kept on record. iii. If the sellers are NRIs/OCBs, the copies of RBI approvals evidencing the shares held by them on repatriation/non-repatriation basis. The sale proceeds shall be credited NRE/NRO account, as applicable. iv. Certificate indicating fair value of shares from a Chartered Accountant. v. No Objection / Tax Clearance Certificate from Income Tax authority/Chartered Account. vi. Undertaking from the buyer to the effect that the Pricing Guidelines have been adhered to. 6. Reporting requirements 6.1 Reporting of transfer of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bit /credit to their Special Non-Resident Rupee Account. Therefore, the transaction should also be reported in Form LEC by the designated bank of the FII/FPI concerned. 6.6 Shares/convertible debentures of Indian companies purchased under Portfolio Investment Scheme by NRIs, OCBs cannot be transferred, by way of sale under private arrangement. 6.7 On receipt of statements from the AD, the Reserve Bank may call for such additional details or give such directions as required from the transferor/transferee or their agents, if need be. SECTION 2 Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift i. Name and address of the transferor (donor) and the transferee (donee) . ii. Relationship between the transferor and the transferee. iii. Reasons for making the gift. iv. In case of Government dated securities and treasury bills and bonds, a certificate issued by a Chartered Accountant on the market value of such security. v. In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from the issuer on the Net Asset Value of such security. vi. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange in India, at a price which is not less than the price at which the offer on right basis is made to resident shareholders. 2. Prior permission of RBI for Rights issue to erstwhile OCBs OCBs have been de-recognised as a class of investors from September 16, 2003. Therefore companies desiring to issue rights share to such erstwhile OCBs will have to take specific prior permission from RBI. As such, entitlement of rights share is not automatically available to erstwhile OCBs. However bonus shares can be issued to erstwhile OCBs without the approval of RBI. 3. Additional allocation of rights share by residents to non-residents Existing non-resident shareholders are allowed to apply for issue of additional shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares over and above their rights share entitlements. The investee company can allot the additional rights share out of unsubscribed portion, subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap. 4. Acquisition of shares under Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under the approval route shall require prior approval of Government of India. d. Issue of employee s stock option / sweat equity shares under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Government of India. e. The issuing company shall furnish to the Regional Office concerned of the Reserve Bank of India under whose jurisdiction the registered office of the company operates, within 30 days from the date of issue of employees stock option or sweat equity shares, a return as per the Form-ESOP. 6. Share Swap In cases of investment by way of swap of shares, irrespective of the amount, valuation of the shares will have to be made by a Merchant Banker registered with SEBI or an Investment Banker outside India registered with the appropriate regulatory authority in the host country. Approval of the Government will also be a prerequisite for investment by swap of shares for sector under Government approval route. No approval of the Government is required for investment in automatic route sectors by way of swap of shares. 7. Pledge of Shares (A) A person being a promoter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) loan is availed of only from an overseas bank; (ii) loan is utilized for genuine business purposes overseas and not for any investments either directly or indirectly in India; (iii) overseas investment should not result in any capital inflow into India; (iv) in case of invocation of pledge, transfer should be in accordance with the FDI policy in vogue at the time of creation of pledge; and (v) submission of a declaration/annual certificate from a Chartered Accountant/ Certified Public Accountant of the non-resident borrower that the loan proceeds will be / have been utilized for the declared purpose. Annexure-5 Total Foreign Investment i.e. Direct and Indirect Foreign Investment in eligible Indian entities 1. Investment in an eligible Indian entity can be made both by non-resident as well as resident Indian entities. Any non-resident investment in an Indian company is direct foreign investment. Investment by resident Indian entities could again comprise of both resident and non-resident investment. Thus, such an Indian company would have indirect foreign investment if the Indian investing company has foreign investment in it. The indirect investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies, will be limited to the foreign investment in the operating-cum-investing/ investing company. This exception is made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company and the downstream investment should be a mirror image of the holding company. This exception, however, is strictly for those cases where the entire capital of the downstream subsidiary is owned by the holding company. Illustration To illustrate, if the indirect foreign investment is being calculated for Company X which has investment through an investing Company Y having foreign investment, the following would be the method of calculation: (A) where Company Y has foreign investment less than 50%- Company X would not be taken as having any indirect foreign investment through Company Y. (B) where Company Y has foreign investment of say 75% and: (I) invests 26% in Company X, the entire 26% investment by Company Y would be treated as indirect foreign investment in Company X; (II) invests 80% in Company X, the indirect foreign investment in Company X would be taken as 80%; (III) where Company X is a wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the following: (I) In the case of an individual shareholder, (aa) The individual shareholder, (bb) A relative of the shareholder within the meaning of Section 2 (77) of Companies Act, 2013. (cc) A company/group of companies in which the individual shareholder/HUF to which he belongs has management and controlling interest. (II) In the case of an Indian company, (aa) The Indian company (bb) A group of Indian companies under the same management and ownership control. (B) For the purpose of this Clause, Indian company shall be a company which must have a resident Indian or a relative as defined under Section 2 (77) of Companies Act, 2013/ HUF, either singly or in combination holding at least 51% of the shares. (C) Provided that, in case of a combination of all or any of the entities mentioned in Sub-Clauses (I) and (II) of clause 1.2 (v) (d) (A) above, each of the parties shall have entered into a legally binding agreement to act as a single unit in managing the matters of the applicant company. (e) If a declaration is made by persons as per section 187C of the Companies Act,1956 or section 89 of the Companies Act, 2013, as the case may be abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has to conform to the provisions of Schedule 9 of the principal FEMA Regulations as well as the extant FDI policy for foreign investment in LLPs. (iv) An Alternative Investment Fund Category III with foreign investment shall make portfolio investment in only those securities or instruments in which a Registered Foreign Portfolio Investor is allowed to invest under the principal Regulations. (v) The Investment Vehicle receiving foreign investment shall be required to make such report and in such format to Reserve Bank of India or to SEBI as may be prescribed by them from time to time. 1.4 Any foreign investment already made in accordance with the guidelines in existence prior to February 13, 2009 (date of issue of Press Note 2 of 2009) would not require any modification to conform to these guidelines. All other investments, past and future, would come under the ambit of these new guidelines. Annexure-6 Remittance, Reporting and Violation 1. Remittance and Repatriation 1.1 Remittance of sale proceeds/Remittance on winding up/Liquidation of Companies: (i) Sale proceeds of shares and securities and their remittance is remittance of asset governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside India for issuing shares/convertible debentures/preference shares under the FDI Scheme, should report the details of the amount of consideration to the Regional Office concerned of the Reserve Bank not later than 30 days from the date of receipt in the Advance Reporting Form as in Section 1 of this Annexure. (ii) Indian companies are required to report the details of the receipt of the amount of consideration for issue of shares/convertible debentures, through an AD Category-I bank, together with a copy/ies of the FIRC/s evidencing the receipt of the remittance along with the KYC report (Section-2) on the non-resident investor from the overseas bank remitting the amount. The report would be acknowledged by the Regional Office concerned, which will allot a Unique Identification Number (UIN) for the amount reported. Explanation: An Indian company issuing partly paid equity shares, shall furnish a report not later than 30 days from the date of receipt of each call payment. 2.2 Reporting of issue of shares (i) After issue of shares (including bonus and shares issued on rights basis and shares issued under ESOP and against Convertible Notes) /fully, mandatorily compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/portfIndiao investment may be separately indicated. (e) Issue of bonus/rights shares or stock options to persons resident outside India directly or on amalgamation/merger/demerger with an existing Indian company, as well as issue of shares on conversion of ECB/royalty/lumpsum technical know-how fee/import of capital goods by units in SEZs, has to be reported in Form FC-GPR. 2.3 Reporting of transfer of shares Reporting of transfer of shares between residents and non-residents and vice- versa is to be done in Form FC-TRS (Section-4) . The Form FC-TRS should be submitted to the AD Category-I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the Form FC-TRS within the given timeframe would be on the transferor/transferee, resident in India. However, in cases where the NR investor, including an NRI, acquires shares on the stock exchanges under the FDI scheme, the investee company would have to file form FC-TRS with the AD Category-I bank. The AD Category-I bank, would forward the same to its link office. The link office would consolidate the Form FC-TRS and submit a monthly report to the Reserve Bank. 2.4 Reporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not quantifiable, and where such contraventions is a continuing one, further penalty which may extend to five thousand Rupees for every day after the first day during which the contraventions continues. (ii) Where a person committing a contravention of any provisions of this Act or of any rule, direction or order made there under is a company (company means any body corporate and includes a firm or other association of individuals as defined in the Companies Act) , every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. (iii) Any Adjudicating Authority adjudging any contraventions under 3.1 (i) above, may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government. 3.2 Adjudication and Appeals (i) For the purpose of adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company making the declaration is situated, not later than 30 days from the date of receipt of the amount of consideration, as specified in para 9 (I) (A) of Schedule I to Notification No. FEMA 20/2000- RB dated May 3, 2000) Permanent Account Number (PAN) of the investee company given by the IT Department No. Particulars (In Block Letters) Name of the Indian company Address of the Registered Office Fax Telephone e-mail 2 Details of the foreign investor/ collaborator Name Address Country 3. Date of receipt of funds 4. Amount In foreign currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (Respondents are encouraged to submit the e-form of this return, which can be downloaded from the FEMA Forms section under the Forms category on the RBI website, www.rbi.org.in)The e-form is easy-to-fill with user guidance and consistency checks. The duly filled-in e-form should be emailed to fla@rbi.org.in. Section I ( Identification Particulars ) 1. Name and Address of the Indian Company: Name of the Company: _______________________________ Address: _______________________________________________________ State: City: Pin: 2. PAN Number of Company given by Income Tax Department(10digit) 3. CIN Number allotted by Ministry of Corp.Affairs,Govt.ofIndia(21digit) 4. Contact Details Contact Person Name : Designation: Telephone No : Fax: e-mail : RP51Q sWeb-Site(if any): 5. Account closing date (DD/MM/YYYY) 6. Nature of Business:________________________________________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Ordinary/Equity Share* (b) Participating Preference Share 1.2 Non-participating Preference Share# 2.0Non-residentHoldings(atfacevaluein Rslakh) Equity Participating Preference share capital(Sumofitem-1toitem-12) 1 Individuals 2 Companies 3 Foreign Institutional Investors (FIIs) 4 Foreign Venture Capital Investors (FVCIs) 5 Foreign Trusts 6 Private Equity Funds 7 Pension/Provident Funds 8 Sovereign Wealth Fund(SWF) 9 Partnership/Proprietorship firms 10 Financial Institutions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is different from reference period, then information should be reported on internal assessment basis for the reference period. 2. Investments made in India: (i) Incase of listed companies, equity should be valued using share price on closing date of reference period. (ii) Incase of unlisted companies, Own Fund of Book Value(OFBV) Method should be used for equity valuation. Block-2A: Investment in India under Foreign Direct Investment(FDI) scheme(10%or more Equity Participation). [Please furnish here the outstanding investments made under the FDI Scheme in India by Non-resident Direct investors, who were individually holding 10 percent or more ordinary/equity preference shares of your company on the reference date] Name of the non- resident Company/ Individual Type of Capital Country of non-resident investor Equity Participating Preference share capital holding percent as at the end of latest year(%) Amount in Rslakh as at the end of Previous March Latest March 1.0 Equity C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate Block-2Bwith same format. (ii) #:Other capital,item2.1 2.2 of Block-2Bincludes all other liabilities and claims at Nominal value, except equity and participating preference shares,(i.e. trade credit, loan, debentures, Non-participating share capital, other accounts receivable and payables etc.) of Indian reporting company with non-resident investors holding lessthan10percent equity and related parties. Block 2C.Portfolio Investment in India Please furnish here the outstanding investments by non-resident investors, other than those made under Foreign Direct Investment Scheme in India (i.e. other than those reported in Block-2A Block-2B). Portfolio Investment Equity Participating Preference share capital holding percent as at the end of latest year(%) Amount in Rs lakh as at the end of Previous March Latest March 1.0 Equity Securities (at Market Value) 2.0 Debt Securities (=2.1+2.2) 2.1 Money Market Instruments (original maturity upto1year) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment(ODI)Scheme Block-4A:Direct Investment Abroad (10%or more equity holding) Please furnish here the market value of outstanding investments in DIE, made by your company under the ODI Scheme, in each of which your company hold 10%or more equity shares on the reference date. Name of the non-resident DIE Country of Type of Capital non-resident DIE Equity holding per Cent as at the end of latest year (%) Amount in Rs lakh as at the end of Previous March Latest March 1.0 Equity Capital (=1.1-1.2) 1.1 Claims on Direct Investment Enterprise 1.2 Liabilities to Direct Investment Enterprise (Reverse investment) 2.0 Other Capital (=2.1-2.2)# 2.1 Claims on Direct Investment Enterprise 2.2 Liabilities to Direct Investment Enterprise Note: (i) If the information is to be furnished for mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.0 Equity Securities (at Market Value) 2.0 Debt Securities (=2.1+2.2) 2.1 Money Market Instruments (original maturity upto1year) 2.2 Bonds and Other instruments (originalmaturitymorethan1year) Note: (i) Country wise consolidated information pertaining to each type of investment should be reported separately. (ii) If the information is to be furnish for more than one country, thenusetheADDBlock5withthesameformat.. Section IV-A Outward Foreign Affiliates Trade Statistics (Outward FATS) Please provide the amount in foreign currency (in actual) in all blocks of Section IV-A Block-3B: Imports, Exports, Total Sales and Total Purchase of Direct Investment Enterprise (DIE) Abroad (more than 50% equity holding by Indian reporting company) Name of the DIE Item Currency Amount in Foreign Currency actual (During the year) Previous Year (April-March) Latest Year (April-March) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ii. The shareholding pattern of the investee company after the acquisition of shares by a person resident outside India. iii. Certificate indicating fair value of shares from a Chartered Accountant. iv. Copy of Broker's note if sale is made on Stock Exchange. v. Declaration from the buyer to the effect that he is eligible to acquire shares / compulsorily and mandatorily convertible preference shares / debentures/others under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with. vi. Declaration from the FII/sub account to the effect that the individual FII / Sub account ceiling as prescribed has not been breached. Additional documents in respect of sale of shares / compulsorily and mandatorily convertible preference shares / debentures / others by a person resident outside India vii. If the sellers are NRIs/OCBs, the copies of RBI approvals, if applicable, evidencing the shares held by them on repatriation/non-repatriation basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. NRIs/PIOs 12. Others i Date and Place of Incorporation Address of the seller (including e-mail, telephone Number Fax no) 6 Particulars of earlier Reserve Bank / Government approvals 7 Details regarding shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures/ others (such as FDI compliant instruments like participating interest rights in oil fields, etc.) to be transferred Date of the transaction Number of shares CMCPS / debentures /others Face value in Rs. Negotiated Price for the transfer**in Rs. Amount of consideration in Rs. 8 Foreign Investments in the company No. of shares Percentage Before the transfer Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date : Name of the AD Branch AD Branch Code Know Your Customer (KYC) Form in respect of the non-resident investor Registered Name of the Remitter / Investor (Name, if the investor is an Individual) Registration Number (Unique Identification Number* in case remitter is an Individual) Registered Address (Permanent Address if remitter Individual) Name of the Remitter s Bank Remitter s Bank Account No. Period of banking relationship with the Remitter *Passport No., Social Security No, or any Unique No. certifying the bonafides of the remitter as prevalent in the remitter s country. We confirm that all the information furnished above is true and accurate as provided by the overseas remitting bank of the non-resident investor. (Signature of the Authorised Official of the AD bank receiving the remittance) Date: Place: Stamp : Proforma Statement of inflows/outflows on account of remittance received/made in connection with transfer of shares / compulsorily and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the Security: 4. Details of the issuer of the security 5. Activity of the issuer of security (please give the NIC Code of the activity in which the company is predominantly engaged)6 6. Whether sponsored or unsponsored 7. If sponsored, name and address of the sponsorer. 8. Name and address of the Lead Manager/ Investment/Merchant Banker 9. Name and address of the Sub-Managers to the issue 10. Details of Government approval (If foreign investment in the company is subject to Government approval) 11. Whether any overall sectoral cap for foreign investment is applicable. If yes, please give details. 12. If the issue of DR increases the equity capital of the company or is sponsored by the company: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 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. 1.2 The foreign investment (FI) limit in companies engaged in the aforestated activities shall include, in addition to FDI, investment by Foreign Institutional Investors (FIIs), Foreign Portfolio Investors (FPIs), Qualified Foreign Investors(QFIs), Non-Resident Indians (NRIs), Foreign Currency Convertible Bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entities. 1.3 Foreign investment in the aforestated broadcasting carriage services will be subject to the following security conditions/terms: Mandatory Requirement for Key Executives of the Company (i) The majority of Directors on the Board of the Company shall be Indian citizens. (ii) The Chief Executive Officer (CEO), Chief Officer in-charge of technical network operations and Chief Security Officer should be resident Indian citizens. Security Clearance of Personnel (iii) The Company, all Directors on the Board of Directors and such key executives like Managing Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia citizens. (viii) Details of infrastructure/network diagram (technical details of the network) could be provided, on a need basis only, to equipment suppliers/manufactures and the affiliate of the licensee company. Clearance from the licensor would be required if such information is to be provided to anybody else. (ix) The Company shall not transfer the subscribers databases to any person/place outside India unless permitted by relevant law. (x) The Company must provide traceable identity of their subscribers. Monitoring, Inspection and Submission of Information (xi) The Company should ensure that necessary provision (hardware/software) is available in their equipment for doing the lawful interception and monitoring from a centralized location as and when required by Government. (xii)The company, at its own costs, shall, on demand by the government or its authorized representative, provide the necessary equipment, services and facilities at designated place(s) for continuous monitoring or the broadcasting service by or under supervision of the Government or its authorized representative. (xiii)The Government of India, Ministry of Information Broadcastin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xx)Licensor reserves the right to modify these conditions or incorporate new conditions considered necessary in the interest of national security and public interest or for proper provision of broadcasting services. (xxi)Licensee will ensure that broadcasting service installation carried out by it should not become a safety hazard and is not in contravention of any statute, rule or regulation and public policy. Annexure-8 Conditions for Industrial Parks 1.1(i) Industrial Park is a project in which quality infrastructure in the form of plots of developed land or built up space or a combination with common facilities, is developed and made available to all the allottee units for the purposes of industrial activity. (ii) Infrastructure refers to facilities required for functioning of units located in the Industrial Park and includes roads (including approach roads), railway line/sidings including electrified railway lines and connectivities to the main railway line, water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power, air conditioning. (iii) Common Facilities refer to the facilities availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be as follows: (i) In the case of FIIs/FPIs, as hitherto, individual FII/FPI holding is restricted to below 10 per cent of the total paid-up capital, aggregate limit for all FIIs/FPIs cannot exceed 24 per cent of the total paid-up capital, which can be raised up to sectoral limit of 74 percent of the total paid-up capital by the bank concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body. (a) In the case of NRIs, as hitherto, individual holding is restricted to 5 per cent of the total paid-up capital both on repatriation and non-repatriation basis and aggregate limit cannot exceed 10 per cent of the total paid-up capital both on repatriation and non-repatriation basis. However, NRI holding can be allowed up to 24 per cent of the total paid-up capital both on repatriation and non-repatriation basis provided the banking company passes a special resolution to that effect in the General Body. (b) Applications for foreign direct investment in private banks having joint venture/subsidiary in insurance sector may be addressed to the Reserve Bank of India (RBI) for consideration in consultation with the Insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of banking companies, and this should be noted by potential investor. Any change in the ceiling can be brought about only after final policy decisions and appropriate Parliamentary approvals. Annexure - 10 Certificate to be Furnished by the Prospective Investor as well as the Prospective Recipient Entity (Para 5.2.27.3 (ii)) 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) It is also certified that none of the inter-se agreements, including the shareholders agreement, entered into between foreign investor(s) and investee brownfield pharmaceutical entity contain any non-compete clause in any form whatsoever. It is further certified that there are no other contracts/agreements between the foreign investor(s) and investee brownfield pharma entity other than those listed above. The foreign investor(s) and investee brownfield pharma entity undertake to submit to the Government any inter-se agreements that ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplying raw coal to coal processing plants for washing or sizing. 100% Automatic 2. Inserted vide Press Note No. 4 (2019 Series) dated 18-09-2019 3. Substituted vide Press Note No. 4 (2019 Series) dated 18-09-2019 before it was read as 5.2.5.1 Subject to the provisions of the FDI policy, foreign investment in manufacturing sector is under automatic route. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce, without Government approval. 4. Substituted vide Press Note No. 4 (2019 Series) dated 18-09-2019 before it was read as Sector/Activity % of Equity/ FDI Cap Entry Route Single Brand product retail trading 100% Automatic up to 49% Government route beyond 49% (1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions mentioned in this Para, a single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce. (3) Application seeking permission of the Government for FDI exceeding 49% in a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy Promotion. The applications would specifically indicate the product/product categories which are proposed to be sold under a Single Brand . Any addition to the product/product categories to be sold under Single Brand would require a fresh approval of the Government. In case of FDI up to 49%, the list of products/product categories proposed to be sold except food products would be provided to the RBI. Note: (i) Conditions mentioned at Para 5.2.15.3 (2) (b) 5.2.15.3 (2) (d) will not be applicable for undertaking SBRT of Indian brands. (ii) Indian brands should be owned and controlled by resident Indian citizens and/or companies which are owned and controlled by resident Indian citizens. (iii) Sourcing norms will not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition that Companies receiving FDI shall obtain necessary license /approval from the Insurance Regulatory Development Authority of India for undertaking insurance and related activities. (d) An Indian Insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities as determined by Department of Financial Services/ Insurance Regulatory and Development Authority of India as per the rules/regulation issued by them from time to time. (e) Foreign portfolio investment in an Indian Insurance company shall be governed by the provisions contained in sub-regulations (2), (2A), (3) and (8) of Regulation 5 of FEMA Regulations, 2000 and provisions of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014. (f) Any increase in foreign investment in an Indian Insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank of India under the FEMA Regulations. (g) The foreign equity investment cap of 49 percent shall apply on the same terms as above to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and Other 48 Insurance Interm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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