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Foreign Investment Approval Every FIFP approval aspirant company must be well-versed with the regulations of the Foreign Exchange Debt Management rules of 2019.
TABLE OF CONTENT
Eligible Investor For Foreign Direct Investments FIFP APPROVAL FOR INVESTOR'S ELIGIBILITY Transfer of FDI's FIFP Approval for Investment on Repatriation Basis Derecognition of the OCB's FOLLOW US ON CONTACT US
Eligible Investor For Foreign Direct Investments A Foreign Investment Facilitation Portal is set up to cater to the investment demands of an Indian company from the Foreign establishment. The FIFP is a regulating authority that regulates the incoming foreign funds into Indian enterprises. Every company must get the FIFP approval from the respective portal to get foreign funds. It is a Foreign Investment Approval gaining, which allows you to legally receive funds from a verified foreign sources. This article details some of the ifs and buts of receiving Foreign Direct Investments from abroad after gaining FIFP approval.
FIFP APPROVAL FOR INVESTOR'S ELIGIBILITY
Any Non-Resident entity can invest in India. But such investments are subject to the FDI Policy. The exception lies in those sectors or activities the RBI prohibits. However, any entity in a country can invest only under the Government route. But such entities must share a land border with India or where the beneficial owner of the foreign investment into India situates in or is a citizen of that country. Furthermore, a Pakistani citizen or an entity incorporated in Pakistan can also invest under the Government route. But such investment must not cater to the sectors or activities from defence, space, atomic energy or any such sectors or activities prohibited for Foreign Direct Investments (FDIs).
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Transfer of FDI's If the foreign establishment wants to transfer the ownership of an existing or future FDI for a business entity in India, either directly or indirectly, then the beneficial ownership will fall within the purview of the FIFP Approval Act. Any such change in beneficial ownership will also require prior Government approval.
FIFP Approval for Investment on Repatriation Basis
Any Non-Resident Indian in Nepal and Bhutan or a citizen of Nepal and Bhutan can invest in Indian businesses' capital on a repatriation basis. But such investments are subject to the condition for the amount of consideration for such investment. The amount can be paid only through inward remittance. Also, the company must transfer such remittances in a free foreign exchange through normal banking channels.
Derecognition of the OCB's
The RBI has derecognized the OCBs as a class of investors in India from September 16 of 2003. Any OCB incorporated outside India that is not under the RBI's notice can make fresh investments. Such OCBs can make investments as incorporated Non-Resident Entities. Also, these investments must be according to the FDI Policy as well as the Foreign Exchange Management Non-Debt Instrument Rules of 2019.
Special Provisions for the NRIs A registered Company, Trust and Partnership incorporated outside India and owned by NRIs can also invest in the country. But such investments must be with a special dispensation. Such dispensations are available to NRIs under the FDI Policy.
FIFP Approval for Investments by the FPIs & FVCI An FPI, i.e., a Foreign Portfolio Investor, can also invest in an Indian Company. But such investments must be in a manner and subject to the terms and conditions of the Foreign Exchange Management Non-Debt Instruments Rules of 2019. An FVCI or a Foreign Venture Capital Investor can also make investments, subject to the terms of the Foreign Exchange Management Non-Debt Instruments Rules of 2019.
Investment through a Broker A registered FPI, as well as an NRI, can invest or trade through a registered broker in the capital of Indian Companies. But the company must make such investments in recognized Indian Stock Exchanges. This amendment is per the Foreign Exchange Management Non-Debt Instruments Rules of 2019 Foreign Venture Capital Investor
FIFP Approval: NPS Enrollment of the NRIs & OCIs Any NRI or OCI can subscribe to National Pension System (NPS). This NPS is governed and administered by Pension Fund Regulatory and Development Authority (PFRDA). Therefore, such subscriptions are made through normal banking channels. Also, the person is eligible to invest as per the PFRDA Act's provisions. The RBI allows the annuity or accumulated saving to be repatriable.
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