This Press Note has made the following amendments
to the Consolidated FDI Policy issued on May 12, 2015, with immediate
effect: –
2. Para 3.6.2 (vi) of the Consolidated FDI Policy Circular of 2015, is amended to read as under:
3.6.2
(vi) It is also clarified that Foreign investment shall include all
types of foreign investments, direct and indirect, regardless of whether
the said investments have been made under Schedule 1 (FDI), 2 (FII), 2A
(FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and 10 (DRs) of FEMA
(Transfer or Issue of Security by Persons Resident Outside India)
Regulations. FCCBs and DRs having underlying of instruments which can be
issued under Schedule 5, being in the nature of debt, shall not be
treated as foreign investment. However, any equity holding by a person
resident outside India resulting from conversion of any debt instrument
under any arrangement shall be reckoned as foreign investment.
3. Para 4.1.2 of the Consolidated FDI Policy Circular of 2015, is amended to read as under:
4.1.2
For the purpose of computation of indirect foreign investment, foreign
investment in an Indian company shall include all types of foreign
investments regardless of whether the said investments have been made
under Schedule 1 (FDI), 2 (FII holding as on March 31), 2A (FPI holding
as on March 31), 3 (NRI), 6 (FVCI), 8 (QFI holding as on March 31), 9
(LLPs) and 10 (DRs) of FEMA (Transfer or Issue of Security by Persons
Resident Outside India) Regulations. FCCBs and DRs having underlying of
instruments which can be issued under Schedule 5, being in the nature of
debt, shall not be treated as foreign investment. However, any equity
holding by a person resident outside India resulting from conversion of
any debt instrument under any arrangement shall be reckoned as foreign
investment.
4. Para 3.1.4 (i) of the Consolidated FDI Policy Circular of 2015, is amended to read as under:
3.1.4
(i) An FII/FPI/QFI (Schedule 2, 2A and 8 of FEMA (Transfer or Issue of
Security by Persons Resident Outside India) Regulations, as the case may
be) may invest in the capital of an Indian company under the Portfolio
Investment Scheme which limits the individual holding of an FII/FPI/QFI
below 10% of the capital of the company and the aggregate limit for
HI/FPI/OR investment to 24% of the capital of the company. This
aggregate limit of 24% can be increased to the sectoral cap/statutory
ceiling, as applicable, by the Indian company concerned through a
resolution by its Board of Directors followed by a special resolution to
that effect by its General Body and subject to prior intimation to RBI.
The aggregate FII/FPI/ QFI investment, individually or in conjunction
with other kinds of foreign investment, will not exceed
sectoral/statutory cap.
5. Para 6.2 of the Consolidated FDI Policy Circular of 2015 is amended to read as under:
a)
In the sectors/activities as per Annexure, foreign investment up to the
limit indicated against each sector/activity is allowed, subject to the
conditions of the extant policy on specified sectors and applicable
laws/regulations; security and other conditionalities. In
sectors/activities not listed therein, foreign investment is permitted
up to 100% on the automatic route, subject to applicable
laws/regulations; security and other conditionalities. Wherever there is
a requirement of minimum capitalization, it shall include share premium
received along with the face value of the share, only when it is
received by the company upon issue of the shares to the non-resident
investor. Amount paid by the transferee during post-issue transfer of
shares beyond the issue price of the share, cannot be taken into account
while calculating minimum capitalization requirement.
b)
Sectoral cap i.e. the maximum amount which can be invested by foreign
investors in an entity, unless provided otherwise, is composite and
includes all types of foreign investments, direct and indirect,
regardless of whether the said investments have been made under Schedule
1 (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8 (QFI), 9 (LLPs) and 10
(DRs) of FEMA (Transfer or Issue of Security by Persons Resident
Outside India) Regulations. FCCBs and DRs having underlying of
instruments which can be issued under Schedule 5, being in the nature of
debt, shall not be treated as foreign investment. However, any equity
holding by a person resident outside India resulting from conversion of
any debt instrument under any arrangement shall be reckoned as foreign
investment under the composite cap. Sectoral cap is as per Annexure
referred above.
c) Foreign investment in sectors under
Government approval route resulting in transfer of ownership and/or
control of Indian entities from resident Indian citizens to non-resident
entities will be subject to Government approval. Foreign investment in
sectors under automatic route but with conditionalities, resulting in
transfer of ownership and/or control of Indian entities from resident
Indian citizens to non-resident entities, will be subject to compliance
of such conditionalities.
d) The sectors which are already under 100% automatic route and are without conditionalities would not be affected.
e)
Notwithstanding anything contained in paragraphs a) and c) above,
portfolio investment, upto aggregate foreign investment level of 49% or
sectoral/statutory cap, whichever is lower, will not be subject to
either Government approval or compliance of sectoral conditions, as the
case may be, if such investment does not result in transfer of ownership
and/or control of Indian entities from resident Indian citizens to
nonresident entities. Other foreign investments will be subject to
conditions of Government approval and compliance of sectoral conditions
as laid down in the FDI policy.
f) Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/statutory cap.
g)
Any existing foreign investment already made in accordance with the
policy in existence would not require any modification to conform to
these amendments.
h) The onus of compliance of above provisions will be on the investee company.
6.
It is clarified that there are no sub-limits of portfolio investment
and other kinds of foreign investments in commodity exchanges, credit
information companies, infrastructure companies in the securities market
and power exchanges.
7 In Defence sector, portfolio investment
by FPIs/FIls/ NRIs/QFIs and investments by FVCIs together will not
exceed 24% of the total equity of the investee/joint venture company.
Portfolio investments will be under automatic route. 8. In Banking-
Private sector, where sectoral cap is 74%, FII/ FPI/ QFI investment
limits will continue to be within 49% of the total paid up capital of
the company.
9. There is no change in the entry route i.e.
Government approval requirement to bring foreign investment in a
particular sector/activity. Further, subject to the amendments mentioned
in this Press Note, there is no change in other conditions mentioned in
the Consolidated FDI Policy Circular of 2015 and subsequent Press
Notes.
10. Relevant provisions of the FDI policy and subsequent
Press Notes will be read in harmony with the above amendments in
Consolidated FDI Policy Circular of 2015.
