July 2008
A.P. (DIR Series) Circular No. 48, dated 3-6-2008 — Overseas Investments — Liberalisation/Rationalisation.
By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Chartered Accountants
Reading Time 2 mins
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Part C : RBI/FEMA
Given below are the highlights of certain RBI Circulars.
53 A.P. (DIR Series) Circular No. 48, dated
3-6-2008 — Overseas Investments — Liberalisation/Rationalisation.
This Circular has further liberalised the provisions of
Notification No. FEMA 120/RB-2004, dated July 7, 2004 in the following cases :
1. Overseas Investment in Energy and Natural Resources
Sectors — Indian companies can invest in excess of 400 % of their net worth as
on the date of the last audited balance sheet, after obtaining prior approval
of RBI, in the energy and natural resources sectors such as oil, gas, coal and
mineral oil.
2. Investment in Overseas Unincorporated Entities in Oil
Sector :
(a) ONGC Videsh Limited and Oil India Limited are
permitted to invest in overseas unincorporated entities in oil sector (for
exploration and drilling for oil and natural gas, etc.) without any limits.
(b) Subject to certain conditions, Indian companies can
invest up to 400% of their net worth as on the date of the last audited
balance sheet in overseas unincorporated entities in the oil sector.
Investments in excess of 400% of their net worth require prior approval of
RBI.
In case of capitalisation of exports — the time limit for
obtaining prior approval of RBI has been aligned with the time limit provided
for in the Foreign Trade Policy. Thus, prior approval of RBI for capitalisation
of export proceeds will be required only where the exports remain outstanding
beyond the period of realisation prescribed by the Foreign Trade Policy.
