Technical Query from Abhay- Procudure to obtain permission of FIPB

Please Refer Query From Abhay on

PROCEDURES

PROCEDURE UNDER AUTOMATIC ROUTE

FDI in sector/ activities to the extent permitted under automatic route does not require any prior approval either by Government of India or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

PROCEDURE UNDER GOVERNMENT APPROVAL

FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals of composite proposals involving foreign investment / foreign technical collaboration are also granted on the recommendations of the FIPB.

Applications for all FDI cases, except Non-Resident Indian (NRI) investments and 100% Export Oriented Units (EOUs), should be submitted to the FIPB Unit, Department of Economic Affairs (DEA), Ministry of Finance.

Applications for NRI and 100% EOU cases should be presented to SIA in Department of Industrial Policy and Promotion.

Applications can also be submitted with Indian Missions abroad who forward them to the Department of Economic Affairs for further processing.

Applications can be made in Form FC-IL which can be downloaded from http://www.dipp.gov.in. Plain paper applications carrying all relevant details are also accepted. No fee is payable.

Additional Information

GENERAL PERMISSION OF RBI UNDER FEMA

Indian companies having foreign investment approval through FIPB route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors. The companies are required to notify the concerned regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or NRIs.

GENERAL PERMISSION TO NRIs/PIOs

Reserve Bank has granted general permission to NRIs/PIOs for undertaking direct investment in Indian companies under the Automatic Route, purchase of shares under Portfolio Investment Schemes, investment in companies and proprietorship/ partnership concerns on non-repatriation basis and for remittances of current income. NRIs/PIOs do not have to seek specific permission for approved activities under these schemes.

The Reserve Bank of India has now further simplified financial transactions by NRIs/PIOs by granting general permissions to:

1. Resident individuals, partnership/proprietorship concerns to avail of interest bearing rupee loans from NRIs/PIOs out of funds remitted by them from abroad or out of funds held in their bank accounts in India, on non – repatriation basis, subject to certain conditions; one of them being that the rate of interest on such loans should not exceed Bank Rate plus two percentage points.

2. NRIs/PIOs to transfer by way of gift shares held by them in Indian companies and to transfer by way of gift immovable property held by them in India subject to compliance with other applicable rules/regulations including the provisions of Foreign Contribution Regulations Act, 1976 by the charitable trust/organisation concerned.

3. All domestic public/private sector mutual funds for issue of units to NRIs/PIOs on both repatriation and non repatriation basis.

4. NRIs/PIOs to place deposits with Indian firms, on non-repatriation basis and with Indian companies on non-repatriation basis out of domestic sources.

5. NRIs/PIOs for sale of shares acquired under direct investment Schemes on stock exchanges in India.

6. NRIs/PIOs for transfer of shares, by way of sale under private arrangement to another NRI or to a resident.

NRIs/PIOs have been granted General Permission to invest in Government Securities and Treasury Bills.