The proposals not covered by the conditions under the
Automatic Route require the prior clearance of the
Reserve
Bank of India(RBI) for which a specific application along with the
documents prescribed therein is required to be made to the Overseas Investment
Division in the
Foreign
Exchange Department of the
Reserve
Bank of India. The application shall be made in:-
- Form
ODB if the investment is for acquiring shares of foreign company engaged
in the same core activity in exchange of American Depository Receipts
(ADRs)/ Global Depository Receipts (GDRs) issued to the latter or for
acquisition of shares of a company outside India, in lieu of fees due to
it for the professional services rendered to the foreign company.
- Form ODI in all the other cases.
Requests under the normal route are considered inter alia,
by taking into account the following factors:-
- Prima facie viability
of the JV/WOS outside India
- Financial position and business track
record of the Indian Party and the foreign entity
- Expertise and
experience of the Indian party in the same or related line of activity
of the JV/WOS outside India
- Contribution to external trade and other
benefits which will accrue to India through such investment
Now, the proprietary concerns in India are permitted to
invest outside India with prior approval of the Reserve
Bank of India, but only by way of acquisition of shares of a foreign
company in lieu of the fees for the professional services rendered to
the foreign company. It is subjected to the following conditions:-
- The value of shares accepted from each company outside India shall not exceed 50% of the fees receivable by the Indian party from that company,
and,
- The Indian party's shareholding in any one company outside India
shall not exceed 10% of the paid up capital of the company outside India.
The proprietary concerns can apply to the Reserve Bank in Form
ODB seeking general permission for 1 year to make such investments.
A Resident individual may apply to the Reserve
Bank of India (RBI) for permission to acquire shares in foreign entity
offered as consideration for professional services rendered to the foreign
entity. The Reserve Bank may grant permission subject to such terms and
conditions as are considered necessary:-
An Indian party which has made direct investment abroad
is under the following obligations:-
- Receive and submit to Reserve
Bank of India, the share certificates or any other document as an
evidence of investment in the foreign entity to the satisfaction of
the Reserve Bank within 6 months or such further period as RBI may permit
from:- (a) the date of effecting remittance; or (b) the date on which
the amount to be capitalised became due to the Indian party; or (c)
the date on which the amount due was allowed to be capitalised.
- Repatriate to India, all dues receivable from the foreign
entity, like dividend, royalty, technical fees, etc., within 60 days
of its falling due or such further period as the Reserve
Bank of India may permit; and,
- Submit with the Reserve
Bank of India an Annual Performance Report in Form
APR in respect of each JV/ WOS outside India set up or acquire by
the Indian party and other reports or documents as may be stipulated
by the Reserve Bank. This is to be done every year within 60 days from
the date of expiry of the statutory period as prescribed by the respective
laws of the host country for finalisation of the audited accounts of
the JV/WOS outside India or such further period as may be allowed by
the Reserve
Bank of India.
^ Top
