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March 2015

A. P. (DIR Series) Circular No. 59 dated January 22, 2015

By Gaurang Gandhi Chartered Accountant
Reading Time 2 mins
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Notification No. FEMA.325/RB-2014 dated November 12, 2014 Overseas Direct Investments by proprietorship concern / unregistered partnership firm in India – Review

This circular provides that RBI while granting permission under the Approval Route to proprietorship concern/ unregistered partnership firm in India for investing outside India will take into account/consider the following: –

1. The proprietorship concern/unregistered partnership firm in India is classified as ‘Status Holder’ as per the Foreign Trade Policy issued by the Ministry of Commerce and Industry, Govt. of India from time to time.

2. The proprietorship concern/unregistered partnership firm in India has a proven track record, i.e. the export outstanding does not exceed 10% of the average export realisation of the preceding three years and it has a consistently high export performance.

3. The Bank with whom the proprietorship concern / unregistered partnership firm in India deals with is satisified that it is KYC (Know Your Customer) compliant, engaged in the proposed business and has turnover as indicated;

4. The proprietorship concern/unregistered partnership firm in India has not come under the adverse notice of any Government agency like the Directorate of Enforcement, Central Bureau of Investigation, Income Tax Department, etc. and does not appear in the exporters’ caution list of the Reserve Bank or in the list of defaulters to the banking system in India.

5. The proposed investment outside India does not exceed 10% of the average of last three years’ export realisation or 200% of the net owned funds of the proprietorship concern/unregistered partnership firm in India, whichever is lower.

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