Summary on Foreign Direct Investment Government of India with the objective of attracting and promoting foreign direct investment

has put in place transparent, predictable and comprehensive policy framework on Foreign Direct Investment. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry makes policy pronouncements on FDI through Press Notes/ Press Releases. The same are notified by Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000. In case of any conflict, the relevant FEMA Notification will prevail. The present consolidation is effective from April 5, 2013 and subsumes and supersedes all Press Notes/Press Releases/clarifications/circulars issued by DIPP. The policy defines various terms General conditions on FDI Entities which can make FDI - Subject to the FDI Policy following entities appearing below can make FDI in Indian Company: 1. Non-resident entity can invest in India, except in those sectors/ activities which are prohibited. A citizen of Bangladesh or an entity incorporated in Bangladesh can invest only with Government approval. A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under Government approval route, in sectors/activities other than defence, space and atomic energy and sectors/ activities prohibited for foreign investment. NRIs resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan are permitted to invest in the capital of Indian companies on repatriation basis when the amount of consideration for such investment is paid only by way of inward remittance in free foreign exchange through normal banking channels. OCBs (OCBs derecognized as class of investors in India with effect from September 16, 2003) which are incorporated outside India and not under the adverse notice of RBI can make fresh investment as incorporated nonresident entities with the prior approval from Government of India if the investment is through Government route; and with the prior approval of RBI if the investment is through Automatic route. 2. Foreign Institutional Investors (FIIs) - An FII may invest in the capital of an Indian Company under the Portfolio Investment Scheme individual holding of an FII is limited to 10% of the capital of the company and the aggregate holding for FII investment is limited to 24% of the capital of the company. The said limits may be increased upto the sectoral cap by passing resolution by Board of Directors and special resolution in General Meeting and with prior approval of RBI. Indian company has to report shares issued to FIIs for which payment has been received directly into companys account in FC-GPR and custodian bank

has to submit daily statement in respect of all transactions in floppy/soft copy prescribed by RBI 3. FII and NRIs registered with SEBI can invest / trade through registered broker in capital of Indian Companies on recognized stock exchanges 4. Foreign Venture Capital Investors (FVCI): FVCI registered with SEBI are allowed to: a. contribute 100% of the capital under Automatic approval route. b. set up domestic asset management company subject to the extant FEMA regulations and extant FDI policy including sectoral caps, etc. c. invest in a domestic venture capital fund registered under the SEBI as nonresident entities, in other companies, subject to FDI Policy and FEMA regulations. d. invest in the eligible securities (equity, equity linked instruments, debt, debt instruments, debentures of an IVCU or VCF, units of schemes / funds set up by a VCF) by way of private arrangement / purchase from a third party also, subject to FEMA regulations, as amended from time to time, as well as the terms and conditions stipulated therein. e. invest in securities on a recognized stock exchange subject to the provisions of the SEBI (FVCI) Regulations, 2000, as amended from time to time, as well as the terms and conditions stipulated therein. Qualified Foreign Investors (QFls) investment in equity shares: QFIs are permitted to: a. invest through SEBI registered Depository Participants (DPs) only in equity shares of listed Indian companies through recognized brokers on recognized stock exchanges in India as well as in equity shares of Indian companies which are offered to public in India in terms of the relevant and applicable SEBI guidelines/regulations b. acquire equity shares by way of right shares, bonus shares or equity shares on account of stock split / consolidation or equity shares on account of amalgamation, demerger or such corporate actions within the prescribed investment limits and sell the equity shares so acquired subject to relevant SEBI guidelines. Limits prescribed for Individual investment is 5% of the paid up capital of the Indian Company and aggregate investment is upto 10% of the paid up capital of any Indian Company. Dividend payments on equity shares held by QFls can either be directly

remitted to the designated overseas bank accounts of the QFIs or credited to the single non-interest bearing Rupee account. Entities into which FDI can be made: FDI can be made in a. Indian Company: Indian Company will issue share capital b. Partnership Firm/ Proprietary Concern: Investment is allowed in Partnership Firm or Proprietary Concern on repatriation basis when amount is invested by inward remittance or out of NRE/FCNR (B)/NRO account maintained with Authorized Dealers / Authorized Banks and Firm or proprietary concern is not engaged in agriculture/ plantation or real estate business or print media sector. Prior approval of RBI is to be taken for investment with repatriation option. c. Venture Capital Fund (VCF) : FDI is allowed in any Indian Venture Capital Undertakings (IVCUs) /Venture Capital Funds (VCFs) /other companies. Setting up domestic VCF as a trust is allowed with Government approval and setting up domestic VCF as incorporated company is allowed under Automatic approval route subject to the pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms etc. d. Trust: FDI in Trusts other than VCF is not permitted e. Limited Liability Partnership (LLP): LLP with the Government approval are allowed in sectors where 100% FDI is allowed through automatic route and there are no FDI linked performance conditions. LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business. LLP with FDI are not allowed make downstream investment. Investment in LLPs by Foreign Institutional Investors (FIls) and Foreign Venture Capital Investors (FVCIs) will not be permitted. LLPs will also not be permitted to avail External Commercial Borrowings (ECBs). f. other entities: FDI in resident entities other than those mentioned above is not permitted Types of Instruments issued: Indian companies can issue equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares subject to pricing guidelines/valuation norms prescribed under FEMA Regulations. Price/ conversion formula of convertible capital instrument shall be determined upfront at the time of issue of capital instrument which in any case should not be lower than fair value worked out at the time of issue of capital instrument issued. Other types of Preference shares/Debentures i.e. non-convertible, optionally convertible or partially convertible for issue of which funds have been received on or after May 1, 2007 are considered as debt. The inward remittance received by the Indian company vide issuance of DRs and FCCBs are treated as and counted towards FDI.

Issue of shares under FCCB/ADR/GDR: (i) Indian companies can also issue FCCB/DR(ADRs / GDRs) in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism)Scheme, 1993 and guidelines issued by Government of India from time to time. (ii) ADRs/GDRs are issued by Company which is eligible to issue shares to person resident outside India under the FDI policy. (iii)Indian listed Company which is not eligible to raise fund from the Indian Capital Market including the company restrained from accessing securities market by SEBI are not eligible to issue ADRs/GDRs. (iv) Unlisted company require prior or simultaneous listing in the domestic market to issue ADRs / GDRs. If ADRs/GDRs are already issued by such companies then such companies have to list in domestic market on making profit or within three years of such issue of ADRs/GDRs whichever is earlier. (v)The ADR / GDR proceeds can be utilized for first stage acquisition of shares in the disinvestment process of Public Sector Undertakings / Enterprises and also in the mandatory second stage offer to the public in view of their strategic importance. (vi) ADRs / GDRs will be issued at the price as determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time. Two way fungibility scheme: In this scheme, initiated by Government of India, a registered stock broker in India can purchase shares of an Indian company from market for conversion into ADRs/GDRs based on the instruction received from overseas investors. Sponsored ADR/GDR issue: An Indian Company can also sponsor ADR/GDR. A company can offer its resident shareholders a choice to submit their shares back to the company so that on the basis of such shares, ADRs / GDRs can be issued abroad. The proceeds of the ADR / GDR issue are remitted back to India and distributed among the resident investors who had offered their Rupee denominated shares for conversion. Issue/ transfer of shares: the capital instrument will be issued within 180 days from the date of receipt of the inward remittance received through normal banking channels including escrow account opened and maintained for the purpose or by debit to the NRE/FCNR (B) account of the non-resident investor failing which amount of consideration so received shall be refunded immediately to the non resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B) account, as the case may be. Failure to issue shares within 180 days

or refund the amount as per above provision would be considered as contravention under FEMA and will attract penalty. Issue price of shares: Price of shares issued to persons resident outside India shall not be less than a. the price worked out in accordance with the SEBI guidelines where the shares of the company is listed on any recognised stock exchange in India; b. the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India ; and c. the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment. Investment may be made by non resident (including NRI) at face value subject to their eligibility to invest under FDI scheme where investment in Indian Company is made in compliance with companies Act 1956 by subscribing to Memorandum of Association. Foreign Currency Account: Indian companies which are eligible to issue shares to person resident outside India under the FDI Policy may be allowed to retain the share subscription amount in a Foreign Currency Account, with the prior approval of RBI. Transfer of shares and convertible debentures : 1. Non resident investors can invest in Indian Companies by purchasing / acquiring existing shares from Indian shareholders or from other non resident shareholders subject to FDI sectoral policy (relating to sectoral caps and entry routes), applicable laws and other conditionalities including security conditions and subject to following : a. A person resident outside India (other than NRI and erstwhile OCB) may transfer by way of sale or gift, the shares or convertible debentures to any person resident outside India (including NRIs). b. NRIs may transfer by way of sale or gift the shares or convertible debentures held by them to another NRI. c. A person resident outside India can transfer any security to a person resident in India by way of gift.

d. A person resident outside India can sell the shares and convertible debentures of an Indian company on a recognized Stock Exchange in India

through a stock broker registered with stock exchange or a merchant banker registered with SEBI e. A person resident in India can transfer by way of sale, shares/convertible debentures (including transfer of subscribers shares), of an Indian company under private arrangement to a person resident outside India, subject to the guidelines. f. General permission is also available for transfer of shares/convertible debentures, by way of sale under private arrangement by a person resident outside India to a person resident in India, subject to the guidelines. g. The above General Permission also covers transfer by a resident to a nonresident of shares/convertible debentures of an Indian company, engaged in an activity earlier covered under the Government Route but now falling under Automatic Route, as well as transfer of shares by a non-resident to an Indian company under buyback and/or capital reduction scheme of the company. h. Transferor / Transferee who is resident in India should submit Form FC- TRS to AD Category 1 Bank within 60 days from the date of receipt of amount of consideration. 2. The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels shall be subjected to a Know Your Customer (KYC) check by the remittance receiving AD Category-I bank at the time of receipt of funds. 3. Escrow: General permission is given to AD Category 1 Banks to open Escrow Account and Special account of non resident corporate for open/exit offers and delisting of shares. With the prior approval of RBI, AD Category 1 banks can open and maintain non-interest bearing Escrow accounts in Indian Rupees in India on behalf of residents and/or non-residents, towards payment of share purchase consideration and/or provide Escrow facilities for keeping securities to facilitate FDI transactions subject to the terms and conditions specified by RBI. SEBI authorised Depository Participants are also permitted to open and maintain, without prior approval of RBI, Escrow accounts for securities subject to the terms and conditions as specified by RBI. Prior permission of RBI in certain cases for transfer of capital instruments 1. Prior permission of RBI is required where transfer of capital instruments by resident to non resident (i)is at the price which falls outside the guidelines prescribed by RBI and such transaction does not fall under the exception prescribed. (ii) for transfer of capital instruments by the non-resident acquirer involving deferment of payment of the amount of consideration. Form FC TRS should be submitted within 60 days from the date of receipt of full and

final amount of consideration to AD Category 1 bank in case approval is granted by RBI 2. Transfer of any capital instrument, by way of gift by a person resident in India to a person resident outside India. Necessary documents along with the applications are to be submitted to RBI for approval. 3. Transfer of shares by Non resident to non resident RBI approval not required : A. The transfer of shares by NRI to resident if pricing guidelines under FEMA, 1999 are not met but original and resultant investment are in accordance with FDI policy and FEMA regulation and pricing on the transaction is compliant with SEBI regulations and guidelines and FORM FC - TRS along with certificate from CA certifying compliance with SEBI regulations is filed with AD banks, are approved under automatic route and do not require RBI approval B. Transfer of share from Resident to Non Resident (i) Requisite approval of FBIP has been obtained as required for the transfer of shares and transfer is in accordance with the pricing guidelines and documentation specified by RBI from time to time. (ii) transfer if attracts SEBI (SAST Regulation) is in accordance with the pricing guidelines and documentation specified by RBI from time to time (iii)Where transfer is not in accordance with pricing guidelines under FEMA 1999 then the resultant FDI should in compliance with extant FDI policy and FEMA regulations, pricing of transaction is complaint with SEBI regulations and guidelines and Certificate of Chartered Accountant certifying compliance with relevant SEBI regulations / guidelines are attached with Form FC - TRS filed with AD bank (iv) the investee company is in financial sector and NOC obtained from respective financial sector regulators of investee as well as investor company are filed with FC TRS with AD bank and FDI policy and FEMA regulations in terms of sectoral caps, conditionalities (such as minimum capitalization, pricing etc ) are complied with. Conversion of ECB / Lumpsum Fee/ Royalty etc into Equity (i) External Commercial Borrowings (ECB) (excluding those deemed as ECB) in convertible foreign currency can be converted by Indian Company into equity shares/fully compulsorily and mandatorily convertible preference shares with the general permission when the activity of the is company is covered under Automatic route for FDI or company has obtained Government approval for foreign equity in the company, foreign equity after conversion of ECB is within

sectoral cap and where pricing of share is as per the prescribed provisions and requirements prescribed under the other statutes and regulation are complied with and The conversion facility is available for ECBs availed under the Automatic or Government Route and is applicable to ECBs, due for payment or not, as well as secured/unsecured loans availed from non-resident collaborators. (ii) General permission is also available for issue of shares/preference shares against lump sum technical know-how fee, royalty, subject to entry route, sectoral cap and pricing guidelines (iii)Government approval is to be obtained for issue of equity shares under FDI policy for import of capital goods/ machinery/ equipment (excluding secondhand machinery)subject to compliance of conditions prescribed, preoperative/ pre-incorporation expenses (including payments of rent etc.), subject to compliance of the conditions prescribed, Specific Conditions in Certain cases: Issue of Right / Bonus shares : Indian companies, under FEMA provisions, are free to issue Rights/Bonus shares to existing non-resident shareholders if such right / bonus shares are in issued in accordance with Companies Act 1956, SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 (in case of listed companies). The offer on right basis to a person resident outside India shall be at a price as determined by the company incase shares of company listed on a recognized stock exchange in India or at a price which is not less than the price at which offer on right basis is made to resident shareholders incase shares of company not listed on a recognized stock exchange Prior permission of RBI is required incase companies desire to issue rights shares to erstwhile OCBs since they have been derecognized as class of investors.RBI approval is not required in issuing bonus shares. Additional allocation of rights share by residents to non-residents: Investee company can issue additional shares/ fully, compulsorily and mandatorily convertible debentures/ fully, compulsorily and mandatorily convertible preference shares out of unsubscribed portion subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap. Acquisition of shares under Scheme of Merger/Demerger/Amalgamation: Once the scheme of merger or demerger or amalgamation of two or more Indian companies has been approved by a Court in India, the transferee company or new company is allowed to issue shares to the shareholders of the transferor company resident outside India, provided (i) the percentage of shareholding of persons resident outside India in the transferee or new company does not exceed the

sectoral cap, and (ii) the transferor company or the transferee or the new company is not engaged in activities which are prohibited under the FDI policy . Issue of shares under Employees Stock Option Scheme (ESOPs) : Listed Indian companies are allowed to issue shares under the Employees Stock Option Scheme (ESOPs), to its employees or employees of its joint venture or wholly owned subsidiary abroad, who are resident outside India, other than to the citizens of Pakistan. Shares under ESOPs can be issued directly or through a Trust when the scheme is drawn in accordance with relevant SEBI regulations and the face value of the shares to be allotted under the scheme to the non-resident employees does not exceed 5 per cent of the paid-up capital of the issuing company. Unlisted companies have to follow the provisions of the Companies Act, 1956. The details of granting of stock options under the scheme to non residents is to be reported to Regional Office concerned of RBI and subsequently issue of shares such stock options is to be reported within 30 days from the date of issue of shares in Form FCGPR . Share Swap: Investment by swap of shares requires valuation of share to be done by Category 1 Merchant Banker registered with SEBI or Investment Banker outside India registered with appropriate authority in the host country and FIPB approval. 3. 5. 7 Pledge of share: A promoter of Indian Company which has raised ECB may pledge the shares of the borrowing company or that of its associate resident companies for the purpose of securing the ECB raised by the borrowing company provided that a no objection for the same is obtained from a bank which is an authorised dealer. Non-resident holding shares of an Indian company, can pledge these shares in favour of the AD bank in India to secure credit facilities being extended to the resident investee company for bonafide business purpose, subject to the fulfillment of conditions prescribed. Non-resident holding shares of an Indian company, can pledge these shares in favour of an overseas bank to secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company, subject to fulfillment of prescribed conditions ENTRY ROUTES FOR INVESTMENT: Non-residents can invset in the equity shares/fully, compulsorily and mandatorily convertible debentures/ fully, compulsorily and mandatorily convertible preference shares of an Indian company, under (i) Automatic Route: the non-resident investor or the Indian company does not require any approval from Government of India for the investment. (ii) Government Route: prior approval of the Government of India is required. Proposals for foreign investment under Government route, are considered by FIPB.

Guidelines for establishment of Indian companies/ transfer of ownership or control of Indian companies, from resident Indian citizens to non-resident entities, in sectors with caps

CAPS ON INVESTMENTS ENTRY CONDITIONS ON INVESTMENT the investment/investors are required to comply with all relevant sectoral laws, regulations, rules, security conditions, and state/ local laws/ regulations FOREIGN INVESTMENT COMPANIES INTO/ DOWNSTREAM INVESTMENT BY INDIAN

Foreign investment into an Indian company, engaged only in the activity of investing in the capital of other Indian company/ies, will require prior Government/FIPB approval. Core Investment companies will be required obtain prior Government / FIPB approval and will have to additionally follow RBI Regulatory Framework for CICs. Indian companies which does not have any operations and downstream investment will be required to obtain Government / FIPB approval and when such companies commences business or makes downstream investment they will have to comply with the relevant sectoral conditions on entry route, conditionalities and cap Direct foreign investment means investment by non resident in an Indian company Indirect foreign investment means Indian investing company having foreign investment Indirect Foreign Investment includes all types of foreign investment like FDI, investment by FIIs; NRIs, ADRs, GDRs, Foreign currency convertible bonds (FCCB), fully, compulsorily and mandatory convertible preference shares and fully, compulsorily and mandatorily convertible debentures Guidelines for calculation of total foreign investment in an Indian company The total foreign investment is sum total of Direct Foreign Investment of: (i) Direct Foreign Investment which means all investment directly by a non resident entity into the Indian Company is counted towards direct investment (ii) Indirect Foreign Investment which means the entire investment by the investing company which is owned and controlled by non resident entities into the subject Indian company is considered as Indirect Foreign Investment

Note: Foreign investment through the Indian company is not considered as Indirect foreign investment The above calculation apply at every stage of investment into Indian companies and to each and every Indian Company Additionally companies need to fulfill conditions like furnishing full details of the foreign investment including ownership details, information control about the company, informing about the agreement which have effect on the appointment of the board of Directors or on the exercise of voting rights or creating voting rights disproportionate to shareholding or incidental matters thereto for seeking Government approval. In all sectors attracting sectoral caps, the balance equity i.e. beyond the sectoral foreign investment cap, would specifically be beneficially owned by/held with/in the hands of resident Indian citizens and Indian companies, owned and controlled by resident Indian citizens. In the I& B and Defence sectors where the sectoral cap is less than 49%, the company would need to be owned and controlled by resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens. The policy and methodology does not apply to Insurance Sector and to the foreign investment already made in accordance with the guidelines in existence prior to February 13, 2009 will not require any modifications to confirm to these guidelines FDI is prohibited in: (a) Lottery Business including Government /private lottery, online lotteries, etc. (b) Gambling and Betting including casinos etc. (c) Chit funds (d) Nidhi company (e) Trading in Transferable Development Rights (TDRs) (f) Real Estate Business or Construction of Farm Houses (g) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (h) Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems). Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities Permitted Sectors:

FDI are permitted in the sectors as appearing below subject to applicable laws / regulations, security and conditionalities. FDI is permitted upto 100% under Automatic approval route in sectors/activities not listed below, subject to applicable laws/ regulations; security and other conditionalities. 1. 100% under Automatic route in Agriculture sector like Floriculture, Horiculture, Agriculture and Cultivation of Vegetables & Mushrooms under controlled conditions, Development and Production of seeds and planting materials, Animal Husbandry, Pisculture, Aquaculture and services related to agro and allied sectors under controlled conditions. 2. 100% with Government approval in Tea sector including tea plantations 3. 100% under Automatic route in Mining and Exploration of metal and non metal ores including diamond, gold, silver and precious ores 4. 100 % under Automatic route for Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units, Setting up coal processing plants like washeries and other eligible activities permitted under and subject to provision of Coal Mines (Nationalization)Act 1973. 5. 100% with Government approval for Mining and mineral separation of titanium bearing minerals & ores, its value addition and integrated activities subject to sectoral regulations and Minerals (Development and Regulation Act1957) 6. 100% under Automatic approval route for Exploration activities of oil and natural gas fields, infrastructure, marketing of natural gas and petroleum products, petroleum product pipelines, natural gas/pipelines, LNG Regasification infrastructure, market study and formulation and Petroleum refining in the private sector, subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government 7. 49% with Government approval in Petroleum refining by the Public Sector Undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs 8. Government approval is required for investing more than 24% capital Any industrial undertaking which is not a Micro or Small Scale Enterprise, but manufactures items reserved for the MSE sector subject to general and specific conditions specified in Industrial (Development and Regulation) Act 1951 9. 26 % with Government approval in Defence Industry subject to Industrial license under Industries (development & Regulation) Act 1951

10.49% under Automatic approval route and beyond 49% but upto 74% with Government approval in Teleports (setting up of uplinking HUBs/ Teleports); Direct to Home(DTH); Cable networks (Multi system operators (MSOs) operating at National / State/ District level and undertaking upgradation of networks towards digitalization and addressability); Mobile TV; Headend in the Sky Broadcasting Service (HTS) 11.49% under Automatic approval route in Cable network (other MSOs not undertaking and upgradation of networks towards digitalization and addressability and Local Cable operators) 12.26% with Government approval in Terrestrial Broadcasting FM (FM radio) subject to such terms and conditions, as specified by Ministry of Information & Broadcasting from time to time,for grant of permission for setting up of FM Radio stations 13.26 % with Government approval in Uplinking of News & current Affairs TV channels and 100 % with Government approval in Uplinking of non news & current affairs TV channels / Downlinking of TV channels subject to compliance with the relevant Up-linking/Down-linking Policy notified by the Ministry of Information & Broadcasting from time to time 14.Publication : subject to compliance with the legal framework as applicable and guidelines issued by Ministry of Information & Broadcasting from time to time a. 26% (FDI & investment by NRIs/ PIOs/ FII) with Government approval Publishing of Newspaper & periodicals dealing with news and current affairs b. 26% (FDI & investment by NRIs/ PIOs/ FII) with Government approval in Publications of Indian editions of foreign magazines dealing with news and current affairs c. 100% with Government approval in Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals d. 100% with Government approval in Publication of facsimile edition of foreign newspapers subject to the 15. Airport : subject to compliance with relevant SEBI regulations as well as other applicable rules and regulations

a. 100% under Automatic approval route in Greenfield projects in relation to Airports and 74% under Automatic approval route and beyond 74% with Government approval in Existing projects in relation to Airports

b. 49% (100% for NRI) under Automatic approval route for Scheduled Air Transport Services / Domestic Scheduled Passenger Airlines c. 49% (100% for NRI) under Automatic approval route and beyond 49 % but upto 74% with Government approval for Non Scheduled Air Transport Service d. 100% under Automatic approval route for Helicopter services / seaplane services requiring DGCA approval e. 49% (100% for NRIs) under Automatic approval route and beyond 49% but upto 74% with Government approval for Ground Handling Services subject to sectoral regulations and security clearance f. 100% under Automatic approval route for Maintenance and Repair organizations flying training institutes; and technical training institutions g. 100% with Government approval for Courier services for carrying packages, parcels and other items which do not come within the ambit of the Indian Post Office Act, 1898 and excluding the activity relating to the distribution of letter 16.Construction Development of Township, Housing, Builtup infrastructure a. 100% under Automatic route Construction Development of Townships, housing, builtup infrastructure and construction development projects (including but not restricted to housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) b. 100% under Automatic route for new and existing Industrial parks c. 74% under Government route for establishment and operation of Satellites subject to Sectoral guidelines of Dept. of Space / ISRO d. 49% under Government route for Private Security Agencies 17. Telecommunications :

a. 49% under Automatic route and beyond 49 % upto 74% under Government route for Telecom Services subject compliance of licensing and security requirement notified by Dept. of Telecommunications b. 49% under Automatic approval for ISP with gateways

c. 49% under Automatic approval and upto 74% with Government approval for ISPs not providing gateways (both for satellite& marine cables), Radio paging and end to end bandwith d. 100% where 49% under Automatic approval and with Government approval beyond 49 % for infrastructure provider providing dark fibre, right of way, duct space, tower (IP category I), electronic mail and voice mail. However if companies are listed in other parts of the world then such companies should divest 26% of their equity in favour of Indian public in 5 years 18. Cash Trading: 100% under Automatic approval for Cash and carry Wholesale Trading / Wholesale trading (including sourcing from MSE) 19. E commerce activities a. 100% under Automatic approval for Ecommerce activities b. 100% with Government approval for Test marketing items approved for manufacture. However such test marketing facility should be for period of 2 years and setting up of manufacturing facility should commence simultaneously with the test marketing c. 100% with Government approval for Single Brand product retail trading d. 51% with Government approval for Multi Brand Retail trading 20.74% of the paid up Reconstruction Company capital with Government approval for Asset

21.49%under Automatic approval and beyond 49%upto 74 % with Government approval including investment by FIIs for Bank in Private Sector 22.Upto 20% (including portfolio investment )with Government approval for banking in private sector 23.49% with Government approval for commodity exchange as per FDI policy. However investment by Registered FII under Portfolio Investment Scheme will be limited to 23% and Investment under FDI scheme will be limited to 26% 24.49% (both FDI & FII ) with Government approval for Credit Information companies 25.49% with Government approval in Infrastructure companies in Securities Markets namely stock exchanges, depositories and clearing corporations subject to compliance of SEBI regulations 26.26% under Automatic route in Insurance Sector

27.100% under Automatic route for NBFC engaged in activities of Merchant Banking, Under Writing, Portfolio Management Services, Investment Advisory Services, Financial Consultancy, Stock Broking, Asset Management, Venture Capital, Custodian Services, Factoring, Credit Rating Agencies, Leasing and Finance, Forex Broking, Credit Card Business, Money Changing Business, Micro Credit and Rural Credit. Investment is subject to minimum captialisation norms as specified in the policy 28.100% under Automatic route in Greenfield and 100 % with Government approval in Brownfield in Pharmaceutical industry 29.49% (both FDI& FII)with Government approval (only for FDI)in Power Exchanges registered under Central Electricity Regulatory commission (Power Market) Regulation 2010

REMITTANCE AND REPATRIATION 1. Sale proceeds of a security will be remitted to the seller of the shares by AD category I banker when such security is held on repatriation basis. Dividends (after deducting TDS & DDT) and are freely repatriable without any restrictions. Interest on fully, mandatorily and compulsory convertible debentures is freely repatriable without any restriction REPORTING of FDI 1. Reporting of Inflow: Indian company receiving foreign investment has to report to RBI within 30 days from the date of receipt the details of amount of consideration through AD Category I bank with copies of FIRC(evidencing payment of remittances) and KYC report on non resident investor from the overseas bank remitting the amount. The report will be acknowledged by Regional office concerned allotting unique Identification Number (UIN) for amount the reported 2. Reporting of issue of shares: Indian company has to submit FC-GPR duly signed by Managing Director / Director / Secretary of the Company within 30 days from the date of issue of shares (including bonus and shares issued on rights basis and shares issued under ESOP)or fully, mandatorily and compulsorily convertible debentures or fully, mandatorily and compulsorily convertible preference shares . Indian company has to submit FC-GPR to Authorised Dealer of the Company to be forwarded to RBI along with certificate from: Company Secretary certifying that all requirements of Companies Act 1956 and terms and conditions of the Governments approval are complied,

company is eligible to issue shares under these Regulations and company has all original certificates evidencing receipt of amount of consideration issued by authorized dealer in India Certificate from Statutory Auditor or Chartered Accountant indicating the manner of arriving at the price of shares issued, Annual Return on Foreign Liabilities and Assets should be filed on an annual basis with RBI. Reporting of transfer of shares: Transferor or Transferee resident in India has to submit Form FC TRS to AD Category I bank within 60 days from the date of receipt of amount of consideration. Reporting of Non cash: Company shall report the conversion in Form FC GPR to Regional office concerned of RBI and ECB 2 to Department of Statistics and Information Management, RBI within 7 days clearly indicating the words ECB wholly converted to equity at the top of the Form ECB 2. In case of partial conversion company shall report conversion in Form FC GPR and ECB 2 clearly indicating the words ECB partially converted to equity indicated at the top of the ECB -2. Reporting of FCCB/ADR/ GDR issues: The Indian company issuing ADRs / GDRs has to furnish to the Reserve Bank full details of such issue within 30 days from the date of closing of issue and furnish quarterly return within 15 days from the close of calendar quarter till the entire amount raised through ADR / GDR mechanism is either repatriated to India or utilized abroad as per the extant Reserve Bank guidelines Violations and Penalties : any violation of FDI regulations are covered by the penal provisions of the FEMA. 1. Person violating or contravening any FDI Regulations, by way of breach/nonadherence/non-compliance/contravention of any rule, regulation, notification, press note, press release, circular, direction or order issued in exercise of the powers under FEMA or contravenes any conditions shall be liable to a penalty upto thrice the sum involved in such contravention in case the amount is quantifiable or upto two lakh rupees where such is not quantifiable. and where such contraventions is a continuing one, further penalty which may extend to five thousand Rupees for every day after the first day during which the contraventions continues. 2. If the contravention of any provisions of this Act or of any rule, direction or order is by Company then every person who at the time of contravention was committed, was in charge of, and was responsible to the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly

3. Additional penalty may be imposed by Adjudicating Authority, if thought fit, for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government Adjudication and Appeals: Officers of the Central Government are appointed as Adjudicating Authority by Finance Ministry under FEMA rules 2000 for holding an enquiry in the prescribed manner. A person alleged to have committed contraventions against whom the complaint has been made has to be given a reasonable opportunity of being heard before imposing a penalty Compounding Proceedings: Compounding Authority appointed by Central Government are authorized to compound the amount involved in the contravention to the Act made by the person. No contravention shall be compounded unless the amount involved in such contravention is quantifiable. The Compounding Authority shall pass an order of compounding after affording an opportunity of being heard to all the concerns as expeditiously and not later than 180 days from the date of application made to the Compounding Authority. The Compounding Authority may call for any information, record or any other documents relevant to the compounding proceedings.