Foreign Exchange Management Transfer or Issue of Security by a Person Resident Outside India Regulations 2017-RBI Notification

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017

RBI has notified the said Regulations which seek to regulate investment in India by a Person Resident Outside India. The Regulations supersedes of Notification No. FEMA 20/2000-RB and Notification No. FEMA 24/2000-RB both dated May 3, 2000.

As per the Regulations, except with the permission of RBI or as provided, an Indian entity or an investment vehicle, or a venture capital fund or a Firm or an Association of Persons or a proprietary concern shall not receive any investment in India from a person resident outside India or record such investment in its books.

As per the Regulations, any investment made by a person resident outside India shall be subject to the entry routes, sectoral caps or the investment limits, as the case may be, and the attendant conditions for such investment as prescribed.

Restrictions have been put on citizen of Bangladesh or Pakistan or an entity incorporated in Bangladesh or Pakistan for making investment in India.

Further, it has been provided that all transaction under these regulations shall be undertaken through banking channels in India and subject to payment of applicable taxes and other duties/ levies in India.

Reporting requirements have also been prescribed for any Investment in India by a person resident outside India. The format, periodicity and manner of submission of such reporting shall be as prescribed by Reserve Bank in this regard.

investment by a person resident outside India is prohibited in lottery business, gambling and betting , Chit funds, Nidhi company, Trading in Transferable Development Rights (TDRs), Real Estate Business or Construction of Farm Houses, manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes,  activities/ sectors not open to private sector investment e.g. atomic energy and railway operations, foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract.