1
INDEX
PART –
Foreign Investments in India – Schematic RepresentationSection
I: Foreign Direct Investment
1. Foreign Direct Investment in India
2. Entry routes for investments in India
3. Eligibility for investment in India
4. Type of instruments
5. Pricing guidelines
6. Mode of payment
7. Foreign investment limits, prohibited sectors and investment n MSEs
8. Modes of investment under Foreign Direct Investment Scheme 8.A Issuance of fresh shares by the company 8.B Acquisition by way of transfer of existing shares by person resident outside India 8.C Issue of Rights /Bonus shares 8.D Issue of shares under Employees Stock Option Scheme (ESOPs) 8.E Conversion of ECB / Lumpsum Fee / Royalty / Import of capital goods by SEZs in to Equity / Import payables / Pre incorporation expenses 8.F Issue of eligible securities by Indian Companies under Depository Receipts Scheme, 2014 (DR Scheme 2014).
8.G FDI through issue / transfer of 'participating interest / right' in oil fields to a NR
9. Foreign currency account and escrow account 27
10. Acquisition of shares under scheme of merger / amalgamation
11. Remittance of sale proceeds 28
12. Remittance on winding up/liquidation of companies
13. Pledge
14. Guidelines for the calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies
15. Issue of Non convertible/ redeemable bonus preference shares or debentures
16. Foreign Direct Investment in Limited Liability Partnership (LLP) 41 Section – II: Foreign investments under Portfolio Investment Scheme (PIS) 1. Entities 42 2. Investment in listed Indian companies 43 3. Accounts with AD Category – I banks 45 4. Exchange Traded Derivative Contracts 46 5. Collateral for FIIs 46 6. Short Selling of FIIs 47 7. Private placement with FIIs 48 8. Transfer of shares acquired under PIS 48 9. Monitoring of Investment position by RBI and AD banks 48 10. Prior intimation to Reserve Bank of India 49 11. Caution List 49 12. Ban List 49 13. Issue of irrevocable payment commitment (IPCs) to stock exchanges on behalf of FIIs 50 14. Investments by Qualified Foreign investors (QFIs) in listed equity shares 50 15. Foreign Portfolio Investment Scheme 53 2 Section – III: Foreign Venture Capital Investments 1. Investments by Foreign Venture Capital Investor 56 Section – IV : Other Foreign Investments 1. Purchase of other securities by NRIS 58 2. Indian Depository Receipts (IDRs) 59 3. Purchase of other securities by RFPIs/FIIs , QFIs and long term investors 60 4. Investment by Multilateral Development Banks (MDBs) 62 5. Foreign investment in Tier I and Tier II instruments issued by banks in India 62 6. Qualified foreign investors (QFIs) investment in the units of domestic mutual funds 63 7. Infrastructure Debt Fund. 64 8. Purchase of other securities by QFIs 65 Section – V: Reporting guidelines for Foreign Investments in India as per Section I and II 1. Reporting of FDI for fresh issuance of shares 67 2. Reporting of FDI for transfer of shares 69 3. Reporting of conversion of ECB into equity 71 4. Reporting of ESOPs for allotment of equity shares 71 5. Reporting of DR issues 72 6. Reporting of FII investments under PIS 72 7. Reporting of NRI investments under PIS 72 8. Reporting of foreign investment by way of issue / transfer of 'participating interest/right' in oil fields 73 3 PART II Investment in Partnership Firm / Proprietary Concern 1. Investment in partnership firm / proprietary concern 74 2. Investments with repatriation benefits 74 3. Investment by non-residents other than NRIs/PIO 74 4. Restrictions 75 Annexures Page No. Annex A – Salient features of Portfolio Investment Scheme (PIS) for investments by a Non Resident Indian (NRI) 76 Annex B n- Scheme for Acquisition/ Transfer by a person resident outside India of capital contribution or profit share of Limited Liability Partnerships (LLPs) 80 Annex – 1 Sector-Specific Policy For Foreign Investment 84 Annex – 2 Sectors prohibited for FDI 118 Annex – 3 Terms And Conditions for Transfer Of Shares / Convertible Debentures, By Way Of Sale 119 Annex – 4 Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift 123 Annex – 5 Definition Of "Relative" As Given in Section 6 Of Companies Act, 2013 124 Annex – 6 report by the Indian company receiving amount of consideration for issue of shares / convertible debentures under the FDI scheme – advance remittance form 125 Annex – 7 – Know Your Customer (KYC) Form in Respect Of The Non-Resident Investor 127 Annex – 8 – FC- GPR 128 Annex – 9-I – FC-TRS 137 Annex – 9-II Know Your Customer (KYC) Form in respect of the non-resident investor 143 Annex – 10 Return to be filed by an Indian Company who has arranged issue of GDR/ADR 145 Annex-11 Form FOREIGN DIRECT INVESTMENT LLP(I) 148 Annex-12 Form FOREIGN DIRECT INVESTMENT LLP(II) 154 Annex-13 Form ESOP 159 Annex-14 Appendix of A.P. DIR and Notifications 164 4 Part – I Foreign Investments in India—Schematic Representation: Foreign Investments Foreign Direct Investments Foreign Portfolio Investments Investments on non-repatriable basis Other investments (G-Sec, NCDs, etc) Foreign Venture Capital Investments Automatic Route Govt. Route SEBI regd. FVCIs NRIs/ PIO VCF, IVCUs FIIs/ RFPIs, NRIs, PIO,QFIs Long term Investors NRIs, PIO Persons Resident outside India FIIs/ QFIs /RFPIs Company LLP 5 Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India Foreign Direct Investment (FDI) in India is : - undertaken in accordance with the FDI Policy which is formulated and announced by the Government of India. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India issues a “Consolidated FDI Policy Circular ” on an yearly basis on March 31 of each year (since 2010) elaborating the policy and the process in respect of FDI in India. The latest “Consolidated FDI Policy Circular” dated April 17, 2014 is available in the public domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of Industrial Policy and Promotion – http://dipp.nic.in/English/Policies/FDI_Circular_2014.pdf governed by the provisions of the Foreign Exchange Management Act (FEMA), 1999. FEMA Regulations which prescribe amongst other things the mode of investments i.e. issue or acquisition of shares / convertible debentures and preference shares, manner of receipt of funds, pricing guidelines and reporting of the investments to the Reserve Bank. The Reserve Bank has issued Notification No. FEMA 20/2000- RB dated May 3, 2000 which contains the Regulations in this regard. This Notification has been amended from time to time. 2. Entry routes for investments in India Under the Foreign Direct Investments (FDI) Scheme, investments can be made in shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares1 of an Indian company by non-residents through two routes: o Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. o Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India(Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), 1 "Shares" mentioned in this Master Circular means equity shares, "preference shares" means fully and mandatorily convertible preference shares and "convertible debentures" means fully and mandatorily convertible debentures [cf. A. P. (DIR Series) Circular Nos. 73 & 74 dated June 8, 2007]
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Foreign Investments in India – Schematic RepresentationSection
I: Foreign Direct Investment
1. Foreign Direct Investment in India
2. Entry routes for investments in India
3. Eligibility for investment in India
4. Type of instruments
5. Pricing guidelines
6. Mode of payment
7. Foreign investment limits, prohibited sectors and investment n MSEs
8. Modes of investment under Foreign Direct Investment Scheme 8.A Issuance of fresh shares by the company 8.B Acquisition by way of transfer of existing shares by person resident outside India 8.C Issue of Rights /Bonus shares 8.D Issue of shares under Employees Stock Option Scheme (ESOPs) 8.E Conversion of ECB / Lumpsum Fee / Royalty / Import of capital goods by SEZs in to Equity / Import payables / Pre incorporation expenses 8.F Issue of eligible securities by Indian Companies under Depository Receipts Scheme, 2014 (DR Scheme 2014).
8.G FDI through issue / transfer of 'participating interest / right' in oil fields to a NR
9. Foreign currency account and escrow account 27
10. Acquisition of shares under scheme of merger / amalgamation
11. Remittance of sale proceeds 28
12. Remittance on winding up/liquidation of companies
13. Pledge
14. Guidelines for the calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies
15. Issue of Non convertible/ redeemable bonus preference shares or debentures
16. Foreign Direct Investment in Limited Liability Partnership (LLP) 41 Section – II: Foreign investments under Portfolio Investment Scheme (PIS) 1. Entities 42 2. Investment in listed Indian companies 43 3. Accounts with AD Category – I banks 45 4. Exchange Traded Derivative Contracts 46 5. Collateral for FIIs 46 6. Short Selling of FIIs 47 7. Private placement with FIIs 48 8. Transfer of shares acquired under PIS 48 9. Monitoring of Investment position by RBI and AD banks 48 10. Prior intimation to Reserve Bank of India 49 11. Caution List 49 12. Ban List 49 13. Issue of irrevocable payment commitment (IPCs) to stock exchanges on behalf of FIIs 50 14. Investments by Qualified Foreign investors (QFIs) in listed equity shares 50 15. Foreign Portfolio Investment Scheme 53 2 Section – III: Foreign Venture Capital Investments 1. Investments by Foreign Venture Capital Investor 56 Section – IV : Other Foreign Investments 1. Purchase of other securities by NRIS 58 2. Indian Depository Receipts (IDRs) 59 3. Purchase of other securities by RFPIs/FIIs , QFIs and long term investors 60 4. Investment by Multilateral Development Banks (MDBs) 62 5. Foreign investment in Tier I and Tier II instruments issued by banks in India 62 6. Qualified foreign investors (QFIs) investment in the units of domestic mutual funds 63 7. Infrastructure Debt Fund. 64 8. Purchase of other securities by QFIs 65 Section – V: Reporting guidelines for Foreign Investments in India as per Section I and II 1. Reporting of FDI for fresh issuance of shares 67 2. Reporting of FDI for transfer of shares 69 3. Reporting of conversion of ECB into equity 71 4. Reporting of ESOPs for allotment of equity shares 71 5. Reporting of DR issues 72 6. Reporting of FII investments under PIS 72 7. Reporting of NRI investments under PIS 72 8. Reporting of foreign investment by way of issue / transfer of 'participating interest/right' in oil fields 73 3 PART II Investment in Partnership Firm / Proprietary Concern 1. Investment in partnership firm / proprietary concern 74 2. Investments with repatriation benefits 74 3. Investment by non-residents other than NRIs/PIO 74 4. Restrictions 75 Annexures Page No. Annex A – Salient features of Portfolio Investment Scheme (PIS) for investments by a Non Resident Indian (NRI) 76 Annex B n- Scheme for Acquisition/ Transfer by a person resident outside India of capital contribution or profit share of Limited Liability Partnerships (LLPs) 80 Annex – 1 Sector-Specific Policy For Foreign Investment 84 Annex – 2 Sectors prohibited for FDI 118 Annex – 3 Terms And Conditions for Transfer Of Shares / Convertible Debentures, By Way Of Sale 119 Annex – 4 Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift 123 Annex – 5 Definition Of "Relative" As Given in Section 6 Of Companies Act, 2013 124 Annex – 6 report by the Indian company receiving amount of consideration for issue of shares / convertible debentures under the FDI scheme – advance remittance form 125 Annex – 7 – Know Your Customer (KYC) Form in Respect Of The Non-Resident Investor 127 Annex – 8 – FC- GPR 128 Annex – 9-I – FC-TRS 137 Annex – 9-II Know Your Customer (KYC) Form in respect of the non-resident investor 143 Annex – 10 Return to be filed by an Indian Company who has arranged issue of GDR/ADR 145 Annex-11 Form FOREIGN DIRECT INVESTMENT LLP(I) 148 Annex-12 Form FOREIGN DIRECT INVESTMENT LLP(II) 154 Annex-13 Form ESOP 159 Annex-14 Appendix of A.P. DIR and Notifications 164 4 Part – I Foreign Investments in India—Schematic Representation: Foreign Investments Foreign Direct Investments Foreign Portfolio Investments Investments on non-repatriable basis Other investments (G-Sec, NCDs, etc) Foreign Venture Capital Investments Automatic Route Govt. Route SEBI regd. FVCIs NRIs/ PIO VCF, IVCUs FIIs/ RFPIs, NRIs, PIO,QFIs Long term Investors NRIs, PIO Persons Resident outside India FIIs/ QFIs /RFPIs Company LLP 5 Section - I: Foreign Direct Investment 1. Foreign Direct Investment in India Foreign Direct Investment (FDI) in India is : - undertaken in accordance with the FDI Policy which is formulated and announced by the Government of India. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India issues a “Consolidated FDI Policy Circular ” on an yearly basis on March 31 of each year (since 2010) elaborating the policy and the process in respect of FDI in India. The latest “Consolidated FDI Policy Circular” dated April 17, 2014 is available in the public domain and can be downloaded from the website of Ministry of Commerce and Industry, Department of Industrial Policy and Promotion – http://dipp.nic.in/English/Policies/FDI_Circular_2014.pdf governed by the provisions of the Foreign Exchange Management Act (FEMA), 1999. FEMA Regulations which prescribe amongst other things the mode of investments i.e. issue or acquisition of shares / convertible debentures and preference shares, manner of receipt of funds, pricing guidelines and reporting of the investments to the Reserve Bank. The Reserve Bank has issued Notification No. FEMA 20/2000- RB dated May 3, 2000 which contains the Regulations in this regard. This Notification has been amended from time to time. 2. Entry routes for investments in India Under the Foreign Direct Investments (FDI) Scheme, investments can be made in shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares1 of an Indian company by non-residents through two routes: o Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. o Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India(Foreign Investment Promotion Board (FIPB), Department of Economic Affairs (DEA), 1 "Shares" mentioned in this Master Circular means equity shares, "preference shares" means fully and mandatorily convertible preference shares and "convertible debentures" means fully and mandatorily convertible debentures [cf. A. P. (DIR Series) Circular Nos. 73 & 74 dated June 8, 2007]
To invest in India how ? contact us
CSGAURAV +919990694230
[email protected] https://www.facebook.com/gauravdelhiravpage
Subscribe to CS GAURAV SHARMA by Email
