What are entry routes of Foreign Direct Investment in India under Foreign Direct Investment-Regulation and Policy ?

CS Executive · Economic, Business and Commercial Laws · PYQS · December 2023
What are entry routes of Foreign Direct Investment in India under Foreign Direct Investment-Regulation and Policy ?

Answer & Explanation:

Investments can be made by non-residents in the equity shares/fully, compulsorily and mandatorily convertible debentures/fully, compulsorily and mandatorily convertible preference shares of an Indian company, through the automatic Route or the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment. Under the Government Route, approval of the Government of India is required. Proposals for foreign investment under Government Route, are considered by respective Administrative Ministry/Department. Foreign Investment in sectors/activities under government approval route will be subject to Government approval where: An Indian company is being established with foreign investment and is not owned by a resident entity; or An Indian company is being established with foreign investment and is not controlled by a resident entity; or The control/ownership of an existing Indian company, currently owned or controlled by resident Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens, will be/is being transferred/passed on to a non-resident entity as a consequence of transfer of shares and/or fresh issue of shares to non-resident entities through amalgamation, merger/demerger, acquisition etc.; Investment by NRIs, a company, trust and partnership firm incorporated outside India and owned and controlled by non-resident Indians, under Schedule IV of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 on non-repatriation basis will be deemed to be domestic investment at par with the investment made by residents.

Topics: Foreign Exchange Management Act (FEMA)

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