Divyesh Digital Networks LLP wants to expand its business through investment in an overseas Joint Ventures (JV) or/and Wholly Owned Subsidiaries (WOS). The partners of the firm seek your advice about the various sources/

An Indian Party has been permitted to make investment/undertake financial commitment in overseas JV/WOS as per the ceiling prescribed by Reserve Bank of India from time to time. This is contained in Notification No. FEMA 120/RB-2004 dated July 7, 2004. Divyesh Digital Networks, LLP can invest in an overseas JV/WOS out of one or more of the following sources: Drawal of foreign exchange from an AD Bank in India; capitalization of exports Swap of Shares Proceeds of External Commercial Borrowings (ECBs)/ Foreign Currency Convertible Bonds (FCCBs) Balances held in EEFC account of the India Party In exchange of ADRs/GDRs issued in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993, and the guidelines issued there under from time to time by the Government of India. Proceeds of foreign currency funds raised through ADR/GDR issues. In respect of (v) and (vi) above, the limit of financial commitment vis-à-vis the net worth will not apply. However, all investments (or financial commitment) made in the financial sector will be subject to compliance with Regulation 7 of the Notification ibid, irrespective of the method of funding. Further, General permission has been granted to persons resident in India for purchase/acquisition of securities in the following manner: Out of funds held in RFC Account; As bonus shares on existing holding of foreign currency shares.