Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, issued Press Note No. 2 (2025 Series) on April 7, 2025, providing clarity regarding the issuance of bonus shares by Indian companies operating in sectors where Foreign Direct Investment (FDI) is prohibited. According to the clarification, such companies may issue bonus shares to their existing non-resident shareholders, provided the shareholding structure of these shareholders remains unchanged after the issuance. This aligns with the existing provision in the Consolidated FDI Policy Circular of 2020, which permits issuance of bonus shares to non-resident shareholders within applicable sectoral caps.
The issuance of bonus shares must continue to comply with all relevant laws, regulations, and guidelines. The clarification will come into effect following the issuance of corresponding notifications under the Foreign Exchange Management Act (FEMA). The note has been forwarded to key authorities, including the Press Information Bureau, Department of Economic Affairs, and the Reserve Bank of India, for updating relevant rules and ensuring wider dissemination. The policy update aims to facilitate consistency and legal clarity for Indian companies with non-resident investors in restricted sectors.
Government of India
Ministry of Commerce and Industry
Department for Promotion of Industry and Internal Trade
FDI (Policy, Facilitation & Data) Section
FDI Policy Cell
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Press Note No. 2 (2025 Series)
Subject: Clarifications on the permissibility of issuance of bonus shares to existing non-resident shareholder(s) by Indian companies engaged in sectors prohibited for FDI.
As per the Consolidated FDI Policy Circular of 2020 dated 15.10.2020. as amended from time to time (FDI Policy), Indian companies are permitted to issue bonus shares to existing non-resident shareholders. subject to adherence to sectoral cap. if any. Accordingly, the following clarification is inserted under Para 1 Annexure 3 of the FDI Policy:
“An Indian Company engaged in a sector/activity prohibited for FDI. is permitted to issue bonus shares to its pre-existing non-resident shareholder(s) provided that the shareholding pattern of the pre-existing non-resident shareholder(s) does not change pursuant to the issuance of bonus shares”
2. Issuance of bonus shares must comply with the applicable rules/laws/regulations/guidelines.
3. The above clarification will be effective from the date of issue of the applicable FEMA notifications.
(Sandhya Bhullar)
Joint Secretary to the Government of India
DPIIT File No.: P-15022/1/2025-FDI Policy dated 07.04.2025
Copy forwarded to:
1. Press Information Officer, Press Information Bureau – for giving wide publicity to the above Press Note.
2. Joint Secretary, Department of Economic Affairs, North Block, New Delhi – For suitably incorporating the policy changes in Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and the relevant schedules thereof.
3. Reserve Bank of India, Foreign Exchange Department, Mumbai – For suitably incorporating the policy changes in Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and the relevant schedules thereof.
4. NIC Section in the Department for Promotion of Industry and Internal Trade- for uploading the Press Note on DPIIT’s website
5. Hindi Section, DPIIT- for providing the Hindi version.
