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Eligible Entities

Indian companies or body corporate under the act of parliament

Partnership firm registered under the Indian Partnership Act, 1932 Resident individual

Upto 75,000 USD in upto upto 100% 100% of of Net Net worth worth permitted capital or current account transaction

The above ceiling will include: Contribution to the capital of overseas Joint Ventures/ Wholly Owned Subsidiaries Loan granted to Joint Ventures/ Wholly Owned subsidiaries 100% guarantee issued to or on behalf of Joint Venture/ Wholly Owned Subsidiaries

NOTE: 1. Overseas Direct Investment is not allowed in Real Estate or Banking Sector. 2. The ceiling of 100% of Net worth is not applicable if investment is made out of EEFC A/c of the Indian Party or out of funds raised through ADRs/GDRs.

Procedure for Investment


Automatic Route Approval Route

Indian Company,

Individual, Proprietorship firms, Unregistered Exporter Partnership Firms, Newly Registered Partnership Firms

Registered Partnership Firm (Existing)

Filing of form ODI to RBI through AD Category-I

RBI approval required

Filing of form ODI to RBI through AD Category -I

RBI considers the following for approval

Viability of the project at the first instance

Contribution to external trade or other benefit which will accrue to India through this investment

Expertise or experience of the internal party in the same as related activity

Financial position and track record of the firm/ company

Online generation of Unique Identification Number (UIN) Reserve Bank will allot a unique identification number for each JV/WOS outside India and the Indian party shall quote such number in all its communications and reports to the Reserve Bank and the authorized dealer. Online application has to be made by AD ( https://secweb.rbi.org.in) however, the Indian Party has to submit hardcopy to AD of ODI Form. Only one branch of an AD Category I bank can be designated by the Indian Party and all its transactions related to investment shoud be routed through this Designated AD branch. Obligations of Indian Party (1) An Indian party which has made direct investment abroad is under obligation to (a) receive share certificate or any other document as an evidence of investment, (b) repatriate to India the dues receivable from foreign entity, and (c) submit the documents / Annual Performance Report to the Reserve Bank, in accordance with the provisions specified in Regulation 15 of the Notification. The share certificate or any other document as evidence of investment has to be submitted to and retained by the designated AD Category - I bank, who is required to monitor the receipt of such documents and satisfy themselves about the bonafides of the documents. A certificate to this effect should be submitted by the designated AD category I bank to the Reserve Bank along with the APR (Part III of Form ODI). (2) Reporting requirements including submission of Annual Performance Report are also applicable for investors in unincorporated entities in the oil sector. (3) Where the law of the host country does not mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the unaudited annual accounts of the JV / WOS provided: a. The Statutory Auditors of the Indian party certify that The un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS and b. That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party.

Annual Compliances

Filing of Form APR in Form ODI Part III

on or before 30th June every year

[A.P.(DIR Series) Circular No.96] based on the latest audited annual accounts of JV/WOS.[ A.P. (DIR Series) Circular No.29] Law of the Host country does NOT mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the un-audited annual accounts of the JV / WOS provided:

The Statutory Auditors of the Indian party certifies The un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS

That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party.

An Indian party can open, hold and maintain Foreign Currency Account (FCA) abroad for the purpose of overseas direct investments as per A.P.(DIR Series) Circular No.101 provided:

Host country Regulations stipulate that the investments into the country is required to be routed through a designated account.

FCA shall be opened, held and maintained as per the regulation of the host country.

The remittances sent to the FCA by the Indian party should be utilized only for making overseas direct investment into the JV / WOS abroad.

Any amount received in the account by way of dividend and / or other entitlements from the subsidiary shall be repatriated to India within 30 days from the date of credit.

The Indian party should submit the details of debits and credits in the FCA on yearly basis to the designated AD bank with a certificate from the Statutory Auditors of the Indian party certifying that the FCA was maintained as per the host country laws and the extant FEMA regulations / provisions as applicable.

The FCA so opened shall be closed immediately or within 30 days from the date of disinvestment from JV / WOS or cessation thereof.

BIBLIOGRAPHY
1. 2. 3. 4. 5. 6. 7. 8. 9. Notification No.FEMA 120/RB-2004 dated July 7,2004. A.P. (DIR Series) Circular No. 96 dt. March 28,2012. A.P.(DIR Series) Circular No.101 dt. April 02, 2012. A.P.(DIR Series) Circular No.29 dt. September 12,2012. Master Circular No. 11/2013-14 dt. July 01,2013. A. P. (DIR Series) Circular No.23 dt. August 14,2013. A. P. (DIR Series) Circular No.24 dt. August 14, 2013. http://www.rbi.org.in/commonman/English/scripts/FAQs.aspx?Id=18 http://www.ppshahandassociates.com/index.php?option=com_content&view=article&id=169&Ite mid=108&limitstart=1 10. 'Joint Venture' shall mean a foreign concern formed, registered or incorporated in accordance with the laws and regulations of the host country in which the Indian party makes a direct investment, whether such investment amounts to a majority or minority shareholding Source http://www.rbi.org.in/scripts/ECMUserView.aspx?Id=41

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