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Attention of the Authorised Dealer Category – I (AD Category – I) banks is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.
India today said it would next month initiate discussion on liberalising Foreign Direct Investment in sectors ranging from defence to agriculture and even retail — a source of political woes for the government in the past. The Department of Industrial Policy and Promotion (DIPP), the nodal agency for framing FDI policies, will come out with six discussion papers in mid-May on overseas investment norms.
The government plans to plug loopholes in investment of foreign equity from a single source into one company through multiple routes. Currently, different agencies monitor the foreign investment flow, leading to policy overlaps and violations.
The government plans to tighten investment norms for non-resident Indians (NRI) in companies to ensure that they do not violate foreign direct investment (FDI) sectoral caps or enter areas where such investment is banned. The Reserve Bank of India (RBI) has also mooted a proposal to withdraw the special status given to NRIs for investing in sectors such as aviation, housing and real estate.
Under the current regulations, an application from a foreign entity to establish BO / LO in India is considered on the basis of the following Basic criteria: If principal business of the foreign entity falls under sectors where 100 percent foreign direct investment (FDI) is permissible under the automatic route.
The Committee of Secretaries (CoS) set up to formulate changes in the foreign direct investment (FDI) policy in sensitive sectors that are now under the automatic approval route has added a rider subjecting them to post-investment surveillance.
The government is planning to tighten norms governing FDI through partly-paid shares, convertible warrants and units issued by venture capital funds (VCFs), as it looks to prevent misuse of these popular instruments. The finance ministry and the department of industrial policy & promotion (DIPP) have decided that the conditions such as sectoral ceilings, minimum-capitalisation and lock-in period governing foreign investment through equity should be applicable to these instruments. The two sides held consultations following an increase in the quantum of FDI flowing through these windows.
With a view to rationalising the present arrangements relating to foreign portfolio investments by Foreign Institutional Investors (FIIs)/ Non Resident Indians (NRIs) and other foreign investments like Foreign Venture Capital Investor (FVCI) and Private Equity entities etc., the Government has decided to set up a working group to look at various types of foreign flows, which are taking advantage of arbitrage across the respective stand-alone regulations and generate recommendations to Government.
Shri Anand Sharma, Union Minister of Commerce and Industry, has released the first draft consolidation of all the aspects of FDI Policy and FDI Framework, here today, and also launched the same in the Department of Industrial Policy & Promotion’s website (http://dipp./nic.in). Briefing the media on the occasion, Shri Sharma said that such consolidation would ensure the availability of all information on FDI policy at one place, and is expected to lead to: simplification of the policy; greater clarity of understanding of foreign investment rules among foreign investors and sectoral regulators, as also predictability of policy and added that having a single policy platform would also ease the regulatory burden for Government.
Payment of salary outside India to employees of a foreign company who are on secondment to an office, branch, subsidiary or joint venture in India (Indian entity) of the foreign company. The remittance of salary received by foreign nationals whilst resident in India who are employees of Indian companies.
