Important Amendments in Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2018

Important Amendments in Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2018

The following are some of the important amendments made by RBI recently.

1.Prior Approval is needed for FDIs in investing companies investing in NBFCs not registered with the Reserve Bank and in core investment companies 

 Foreign Investment in investing companies not registered as Non-Banking Financial Companies with the Reserve Bank and in core investment companies (CICs), both engaged in the activity of investing in the capital of other Indian entities, will require prior Government approval.

2.100% Automatic Route for FDIs in NBFCs registered with RBI

Foreign investment in investing companies registered as Non-Banking Financial Companies (NBFCs) with the Reserve Bank, will be under 100% automatic route.

3.Joint Audit in case Foreign Investor Prefers

Wherever the person resident outside India who has made foreign investment specifies a particular auditor/ audit firm having international network for the audit of the Indian investee company, then audit of such investee company shall be carried out as joint audit wherein one of the auditors is not part of the same network.”

OFFERING FOLLOWING SERVICES AS PRACTICING COMPANY SECRETARY

For details , Please click the following link:

https://rvseckarcompanylaw.blogspot.com/2018/04/corporate-compliance-services-r-v.html

4.FDIs in Airlines is now Restricted to 49% (other than NRIs) under Automatic route

(a) (i) Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (ii) Regional Air Transport Service

100%

Automatic up to 49% Government route beyond 49% (Automatic up to 100% for NRIs and OCIs)

5.Foreign investment in M/s Air India Limited shall be subject to the following conditions:

    i.        Foreign investment in M/s Air India Ltd., including that of foreign airline(s), shall not exceed 49% either directly or indirectly.

  ii.        Substantial ownership and effective control of M/s Air India Ltd. shall continue to be vested in Indian Nationals.”

6.100% FDIs are Allowed in Real Estate Broking Business

Real estate broking services shall be excluded from the definition of “real estate business” and 100% foreign investment is allowed in real estate broking services under automatic route.”

_{7.FDI in Single Brand Retailing}

“(i) Single brand retail trading entity shall be permitted to set off its incremental sourcing of goods from India for global operations during initial 5 years, beginning 1st April of the year of the opening of first store, against the mandatory sourcing requirement of 30% of purchases from India. For this purpose, incremental sourcing shall mean the increase in terms of value of such global sourcing from India for that single brand (in INR terms) in a particular financial year from India over the preceding financial year, by the non-resident entities undertaking single brand retail trading, either directly or through their group companies. After completion of this 5 years period, the SBRT entity shall be required to meet the 30% sourcing norms directly towards its India’s operation, on an annual basis.”

_{8.Definition of Sourcing Norms}

“Sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having 'state-of-art' and 'cutting-edge' technology and where local sourcing is not possible. Thereafter, condition mentioned at 15.3.1(e) above will be applicable. A Committee under the Chairmanship of Secretary, DIPP, with representatives from NITI Aayog, concerned Administrative Ministry and independent technical expert(s) on the subject will examine the claim of applicants on the issue of the products being in the nature of ‘state-of-art’ and ‘cutting-edge’ technology where local sourcing is not possible and give recommendations for such relaxation.”

9.Definition of Medical Devises under Pharmaceuticals

“in-vitro diagnostic device which is a reagent, reagent product, calibrator, control material, kit, instrument, apparatus, equipment or system, whether used alone or in combination thereof intended to be used for examination and providing information for medical or diagnostic purposes by means of examination of specimens derived from the human bodies or animals.”

10.Issue of Shares for the materials imported or pre-operative expenses incurred is under Automatic Route

(4) An Indian company may issue, subject to compliance with the conditions prescribed by the Central Government and/or the Reserve Bank from time to time, capital instruments to a person resident outside India, if the Indian investee company is engaged in an automatic route sector, against:

a.  Swap of capital instruments; or

b.  Import of capital goods/ machinery/ equipment (excluding second-hand machinery); or

c.  Pre-operative/ pre-incorporation expenses (including payments of rent etc.).

Provided Government approval shall be obtained if the Indian investee company is engaged in a sector under Government route. The applications for approval shall be made in the manner prescribed by the Central Government from time to time.

For full details , Please click the following link:

https://rbi.org.in/scripts/BS_FemaNotifications.aspx?Id=11240