The policy for regulating overseas investments by Indian entrepreneurs and all other related aspects like finance and insurance is governed by the circulars and guidelines issued by the Reserve Bank of India from time to time. Guidelines and circulars are defined as the documents notified by the Reserve Bank for the purpose of clarifying and interpreting the various provisions of a law or regulation. For example, Foreign Exchange Management Act (FEMA) is an umbrella Act regulating all foreign exchange transactions including investments abroad. It is under this Act that the Reserve Bank of India is authorised to issue various circulars, guidelines, rules and notifications, etc. for managing the various aspects of capital outflows. One of the most important guidelines relating to doing business abroad is the "Guidelines for Indian direct investment in Joint Ventures and Wholly Owned Subsidiaries abroad".

These circulars and guidelines are broadly aimed to ensure:-

• A transparent policy framework in order to enable Indian businessmen to plan their business and to be able to react to potential collaborators outside the country. Such transparency is also required to enable the financial institutions and banks to assess their support through professional judgement in the context of financial sector reforms.



• A formal recognition of the changing global reality which include:- close relationship between flow of investment and trade; success in the domestic economy as a precursor to success in the international arena; the importance of continuously updating the technology through cross investments; more dynamic relation between market seeking and resource seeking investments; tendency for skill and service intensity rather than material intensity in the international flows.



• Capturing of Indian realities which include:- strengthening globalisation of Indian economy by allowing the Indian entrepreneurship to go global; being a capital importing country, the need to avoid large capital outflows; visualising the global economic relationship well beyond physical exports and ensuring that Indian industry and business attain strategic positions in certain areas or regional blocs.

Some of the important circulars and guidelines of RBI are:-

• AP(DIR Series) Circular No.3 dated June 22, 2000



• AP(DIR Series) Circular No.13 dated September 14, 2000



• AP(DIR Series) Circular No.32 dated April 28, 2001



• AP(DIR Series) Circular No.16 dated December 15, 2001



• AP(DIR Series) Circular No.18 dated December 18, 2001



• AP(DIR Series) Circular No.23 dated February 19, 2002



• AP(DIR Series) Circular No.27 dated March 2, 2002



• AP(DIR Series) Circular No.43 dated April 30, 2002



• AP(DIR Series) Circular No.51 dated June 24, 2002



• AP(DIR Series) Circular No. 58 dated December 2, 2002



• AP(DIR Series) Circular No. 66 dated January 13,2003



• AP (DIR Series) circular No. 68 dated January 13,2003



• AP(DIR Series) Circular No. 83 dated March 1, 2003



• AP(DIR Series) Circular No. 96 dated April 28, 2003



• AP(DIR Series) Circular No. 97 dated April 29, 2003



• AP (DIR Series) circular No. 104 dated May 31, 2003



• AP (DIR Series) circular No. 107 dated June 19,2003



• A.P.(DIR Series) Circular No.97 dated June 21, 2004



• A.P. (DIR Series) Circular No. 30 dated April 05, 2006



• Circulars of RBI relating to ADRs/GDRs



• Circulars of RBI relating to ECBs



• Circulars of RBI relating to FCCBs



• Circulars of RBI relating to FEMA



• Guidelines for prepayment of Foreign Currency Convertible Bond (FCCB) Issues by Indian companies