RBI/2013-14/251
A. P. (DIR Series) Circular No.42
September 12, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign Investment in India – Guidelines for calculation of total foreign
investment in Indian companies, transfer of ownership and control of Indian
companies and downstream investment by Indian companies
Attention of Authorised Dealers Category – I (AD Category - I) banks is
invited to Para 6 (ii) of Annex to
A.P. (DIR Series) Circular No. 1 dated July
04, 2013 as regards downstream investments by an Indian company which is not
owned and/or controlled by resident entity/ties.
- On review of the policy, it has now been decided to amend condition at (d) in
the aforesaid para. The amended condition is given in the Annex.
- All the other conditions contained in the
A.P. (DIR Series) Circular No.1
dated July 04, 2013, shall remain unchanged.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank has since amended the Regulations and notified vide
Notification No. FEMA. 284/2013-RB dated August 27, 2013 and notified vide G.S.R.596 (E) dated
September 06, 2013.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(C.D. Srinivasan)
Chief General Manager
[Annex to A.P.(DIR Series)
Circular No.42 dated 12.09.2013]
| c.f. Annex to A.P.(DIR Series) Circular No. 1 dated June 04, 2013
|
Earlier Condition |
Revised condition |
| Para E 6 (ii) (d) |
For the purpose of downstream investment, the Indian companies making the
downstream investments would have to bring in requisite funds from abroad and
not use funds borrowed in the domestic market. This would, however, not preclude
downstream operating companies, from raising debt in the domestic market.
Downstream investments through internal accruals are permissible by an Indian
company engaged only in activity of investing in the capital of another Indian
company/ies, subject to the provisions above and as also elaborated below:
|
For the purpose of downstream investment, the Indian companies making the
downstream investments would have to bring in requisite funds from abroad and
not use funds borrowed in the domestic market. This would, however, not preclude
downstream operating companies, from raising debt in the domestic market.
Downstream investments through internal accruals are permissible by an Indian
company engaged only in activity of investing in the capital of another Indian
company/ies, subject to the provisions of clause 6(i) and as also elaborated
below: |