SPOTLIGHT ON OUTWARD FOREIGN INVESTMENT l 99
BOX 3.4 Timeline of India’s Gradual Path to Liberalization of OFDI Year
Action
1992
Automatic route introduced
Amount
Limit for automatic approval (of which, limit for cash remittances)
US$2 million (US$0.5 million)
Companies can raise capital in overseas markets via global depository receipts, American depositary receipts, or foreign currency convertible bonds
n.a.
Fast Track Route introduced
n.a.
Process for approvals moved to Reserve Bank of India from Commerce Ministry to get single window clearance mechanism
US$4 million
Could not be invested in the stock market and not for real estate investments
n.a.
1997
Non-exporter exchange earners brought under fasttrack route
n.a.
1999
End of OFDI neutrality condition (that is, repatriating remittances in five years as dividends)
n.a.
Permitted value of OFDI under the automatic route was raised
Rs 1,200 million: Nepal and Bhutan
1995
US$30 million: other SAARC and Myanmar US$15 million: other countries 2000
Foreign Exchange Management Act
n.a.
Automatic route limit raised to
US$50 million
2002
Automatic route limit raised to
US$100 million
2003
Automatic route limit raised to
100% of net worth
Limit raised for SAARC and Myanmar (except Pakistan)
US$150 million
2004
Rs 7,000 million: Nepal and Bhutan
Consolidate role of RBI Introduced the LRS with automatic route limit
US$25,000
2005
Automatic route limit raised to
200% of net worth
2006
Under automatic route, allowed to disinvest without prior approval of RBI
n.a.
2006
Proprietary and partnership firms with export track record allowed to invest on approval
n.a.
2007
June: Automatic route limit raised to
300% of net worth
September: Automatic route limit raised to
400% of net worth (Box continues next page)
