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October 2013

A. P. (DIR Series) Circular No. 30 dated 4th September, 2013

By Gaurang Gandhi, Chartered Accountant
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Overseas Direct Investments–Rationalisation/ Clarifications

This circular clarifies that:

(a) All the financial commitments made on or before 14th August, 2013, in compliance with the earlier limit of 400% of the net worth of the Indian Party under the automatic route will continue to be allowed. As a result, such investments will not be subject to any unwinding or approval from the RBI.

(b) Limit of financial commitments for an Indian Party (presently 100% of its net worth) will not apply to the financial commitments funded out of EEFC account of the Indian Party or out of funds raised by way of ADR/GDR by the Indian Party, as hitherto.

(c) Limit of 400% of the net worth of the Indian Party will apply in case the financial commitments are funded by way of eligible ECB raised by the Indian Party as per the extant ECB guidelines.

Certain additional/consequential clarifications are also annexed to this circular.

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