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.”
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
