NDI Rules

54 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC.
3(ii)]
MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 17th October, 2019
S.O. 3732(E).—In exercise of the powers conferred by clauses (aa) and (ab) of sub-section (2) of section 46 of
the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of the Foreign Exchange Management
(Transfer of Issue of Security by a Person Resident outside India) Regulations, 2017 and the Foreign Exchange
Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2018, except as respects things
done or omitted to be done before such supersession, the Central Government hereby makes the following rules,
namely:-
CHAPTER I
PRELIMINARY
1. Short title and commencement :—(1) These rules may be called the Foreign Exchange Management (Non-debt
Instruments) Rules, 2019.
(2) Save as otherwise provided in these rules, they shall come into force from the date of their publication in the Official
Gazette.
2. Definitions: - In these rules, unless the context otherwise requires:-
(a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) “asset reconstruction company” means a company registered with the Reserve Bank under section 3 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(c) “authorised bank” shall have the meaning assigned to it in the Foreign Exchange Management (Deposit)
Regulations,2016;
(d) “authorised dealer” includes a person authorised under sub-section (1) of section 10 of the Act;
(e) ‘convertible note’ means an instrument issued by a startup company acknowledging receipt of money initially as debt,
repayable at the option of the holder, or which is convertible into such number of equity shares of that company, within a
period not exceeding five years from the date of issue of the convertible note, upon occurrence of specified events as per
other terms and conditions agreed and indicated in the instrument;
(f) “debt instruments” means all instruments other than non-debt instruments defined in clause (ai) of this rule;
(g) “depository receipt” means a foreign currency denominated instrument, whether listed on an international exchange
or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred
to that foreign depository and deposited with a domestic custodian and includes ‘global depository receipt’ as defined in
the Companies Act, 2013 (18 of 2013);
(h) “domestic custodian” means a custodian of securities registered with the Securities and Exchange Board of India in
accordance with the SEBI (Custodian of Securities) Regulations, 1996;
(i) “domestic depository” means a custodian of securities registered with the Securities and Exchange Board of India and
authorised by the issuing entity to issue Indian depository receipts;
(j) “ESOP” means ‘Employees’ stock option’ as defined under the Companies Act, 2013 and issued under the
regulations by the Securities and Exchange Board of India;
(k) “equity instruments” means equity shares, convertible debentures, preference shares and share warrants issued by an
Indian company;
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Explanation:-
(i) Equity shares issued in accordance with the provisions of the Companies Act, 2013 shall include equity shares that
have been partly paid. “Convertible debentures” means fully, compulsorily and mandatorily convertible debentures.
“Preference shares” means fully, compulsorily and mandatorily convertible preference shares. Share Warrants are those
issued by an Indian company in accordance with the regulations by the Securities and Exchange Board of India. Equity
instruments can contain an optionality clause subject to a minimum lock-in period of one year or as prescribed for the
specific sector, whichever is higher, but without any option or right to exit at an assured price.
(ii) Partly paid shares that have been issued to a person resident outside India shall be fully called-up within twelve
months of such issue or as may be specified by the Reserve Bank from time to time. Twenty- five per cent of the total
consideration amount (including share premium, if any) shall be received upfront.
(iii) In case of share warrants, at least twenty-five per cent of the consideration shall be received upfront and the balance
amount within eighteen months of the issuance of share warrants.
(l) “escrow account” means an escrow account maintained in accordance with the Foreign Exchange Management
(Deposit) Regulations, 2016;
(m) “FDI linked performance conditions” means the sector specific conditions specified in Schedule I of these rules for
companies receiving foreign investment;
(n) “FVCI” means a Foreign Venture Capital Investor incorporated and established outside India and registered with the
Securities and Exchange Board of India under the Securities and Exchange Board of India (Foreign Venture Capital
Investors) Regulations, 2000;
(o) “foreign central bank” means an institution or organisation or body corporate established in a country outside India
and entrusted with the responsibility of carrying out central bank functions under the law for the time being in force in
that country;
(p) “FCNR (B) account” means a Foreign Currency Non-Resident (Bank) account maintained in accordance with the
Foreign Exchange Management (Deposit) Regulations, 2016;
(q) “FCCB” or “Foreign Currency Convertible Bond” means a bond issued under the Issue of Foreign Currency
Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993;
(r) “FDI” or “Foreign Direct Investment” means investment through equity instruments by a person resident outside India
in an unlisted Indian company; or in ten per cent or more of the post issue paid-up equity capital on a fully diluted basis
of a listed Indian company;
Note:- In case an existing investment by a person resident outside India in equity instruments of a listed Indian company
falls to a level below ten percent, of the post issue paid-up equity capital on a fully diluted basis, the investment shall
continue to be treated as FDI;
Explanation: - Fully diluted basis means the total number of shares that would be outstanding if all possible sources of
conversion are exercised;
(s) “foreign investment” means any investment made by a person resident outside India on a repatriable basis in equity
instruments of an Indian company or to the capital of a LLP;
Explanation: - If a declaration is made by a person as per the provisions of the Companies Act, 2013 about a beneficial
interest being held by a person resident outside India, then even though the investment may be made by a resident Indian
citizen, the same shall be counted as foreign investment;
Note:- A person resident outside India may hold foreign investment either as FDI or as FPI in any particular Indian
company;
(t) “foreign portfolio investment” means any investment made by a person resident outside India through equity
instruments where such investment is less than ten percent of the post issue paid-up share capital on a fully diluted basis
56 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
of a listed Indian company or less than ten percent of the paid-up value of each series of equity instrument of a listed
Indian company;
(u) “FPI” or “Foreign Portfolio Investor” means a person registered in accordance with the provisions of the Securities
and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014;
(v) “government approval” means the approval from the erstwhile Secretariat for Industrial Assistance (SIA),
Department of Industrial Policy and Promotion, Government of India and/ or the erstwhile Foreign Investment Promotion
Board (FIPB) and/ or any of the ministry/ department of the Government of India, as the case may be;
(w) “group company” means two or more enterprises which, directly or indirectly, are in a position to (i) exercise
twenty-six per cent, or more of voting rights in other enterprise; or (ii) appoint more than fifty per cent of members of
Board of Directors in the other enterprise;
(x) “hybrid securities” means hybrid instruments such as optionally or partially convertible preference shares or
debentures and other such instruments as specified by the Central Government from time to time, which can be issued by
an Indian company or trust to a person resident outside India;
(y) “Indian company” means a company incorporated in India;
(z) “IDR” or “Indian Depository Receipts (IDRs)” means any instrument in the form of a depository receipt created by a
domestic depository in India and authorised by a company incorporated outside India making an issue of such depository
receipts;
(aa) “Indian entity” shall mean an Indian company or a LLP ;

(ab) “investing company” means an Indian company holding only investments in other Indian company/ies directly or
indirectly, other than for trading of such holdings or securities;
(ac) “investment” means to subscribe, acquire, hold or transfer any security or unit issued by a person resident in India;
Explanation:-
(i) Investment shall include to acquire, hold or transfer depository receipts issued outside India, the underlying of which
is a security issued by a person resident in India;
(ii) for the purpose of LLP, investment shall mean capital contribution or acquisition or transfer of profit shares;
(ad) “investment on repatriation basis” means an investment, sale or maturity proceeds of which are net of taxes, eligible
to be repatriated out of India, and the expression “investment on non-repatriation basis”, shall be construed accordingly;
(ae) “investment vehicle” means an entity registered and regulated under the regulations framed by the Securities and
Exchange Board of India or any other authority designated for that purpose and shall include, namely:- (i) Real Estate
Investment Trusts (REITs) governed by the Securities and Exchange Board of India (REITs) Regulations, 2014;(ii)
Infrastructure Investment Trusts (InvIts) governed by the Securities and Exchange Board of India (InvIts) Regulations,
2014 (iii) Alternative Investment Funds (AIFs) governed by the Securities and Exchange Board of India (AIFs)
Regulations, 2012 ;and (iv) mutual funds which invest more than fifty percent in equity governed by the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996;
(af) “LLP” means a limited liability partnership formed and registered under the Limited Liability Partnership Act, 2008
(6 of 2009);
(ag) “listed Indian company” means an Indian company which has any of its equity instruments or debt instruments
listed on a recognised stock exchange in India and the expression “unlisted Indian company” shall be construed
accordingly;
(ah) “manufacture”, with its grammatical variations, means a change in a non-living physical object or article or thing,:-
(i) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a
different name, character and use; or (ii) bringing into existence of a new and distinct object or article or thing with a
different chemical composition or integral structure;
(ai) “non-debt instruments” means the following instruments; namely :-
(i) all investments in equity instruments in incorporated entities: public, private, listed and unlisted;
(ii) capital participation in LLP;
(iii) all instruments of investment recognised in the FDI policy notified from time to time;
(iv) investment in units of Alternative Investment Funds (AIFs), Real Estate Investment Trust (REITs) and Infrastructure
Investment Trusts (InvIts);
(v) investment in units of mutual funds or Exchange-Traded Fund (ETFs) which invest more than fifty per cent in
equity;
(vi) junior-most layer (i.e. equity tranche) of securitisation structure;
(vii) acquisition, sale or dealing directly in immovable property;
(viii) contribution to trusts; and

(ix) depository receipts issued against equity instruments;
(aj) “NRI” or “Non-Resident Indian” means an individual resident outside India who is a citizen of India;
(ak) “OCI” or “Overseas Citizen of India” means an individual resident outside India who is registered as an Overseas
Citizen of India Cardholder under section 7A of the Citizenship Act, 1955 ( 57 of 1955);
(al) “resident Indian citizen” means an individual who is a person resident in India and is a citizen of India by virtue of
the Constitution of India or the Citizenship Act, 1955 ;
(am) “sectoral cap” means the maximum investment including both foreign investment on a repatriation basis by
persons resident outside India in equity and debt instruments of a company or the capital of a LLP, as the case may be,
and indirect foreign investment, unless provided otherwise. This shall be the composite limit for the Indian investee
entity.
Explanation:
(i) FCCBs and DRs having underlying of instruments being in the nature of debt shall not be included in the sectoral cap;
(ii) any equity holding by a person resident outside India resulting from conversion of any debt instrument under any
arrangement shall be reckoned under the sectoral cap;
(an) “startup company” means a private company incorporated under the Companies Act, 2013 and identified under
G.S.R. 180(E), dated the 17th February, 2016 issued by the Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry;
(ao) “sweat equity shares” means sweat equity shares defined under the Companies Act, 2013;
(ap) “transferable development rights (TDR)” shall have the meaning assigned to it in the regulations made under sub-
section (2) of section 6 of the Act;
(aq) “unit” means a beneficial interest of an investor in an investment vehicle;

(ar) “venture capital fund” means a fund established in the form of a trust, a company including a body corporate and
registered under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
(2) The words and expressions used but not defined in these rules shall have the same meanings respectively assigned to
them in the Act, rules and regulations.
CHAPTER II
GENERAL CONDITIONS APPLICABLE TO ALL INVESTORS

3. Restriction on investment in India by a person resident outside India.- Save as otherwise provided in the Act or
rules or regulations made thereunder, no person resident outside India shall make any investment in India :
Provided that an investment made in accordance with the Act or the rules or the regulations made thereunder and
held on the date of commencement of these rules shall be deemed to have been made under these rules and shall
accordingly be governed by these rules:
Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons and in
consultation with the Central Government, permit a person resident outside India to make any investment in India subject
to such conditions as may be considered necessary.
4. Restriction on receiving investment.- Save as otherwise provided in the Act or rules or regulations made thereunder,
an Indian entity or an investment vehicle, or a venture capital fund or a firm or an association of persons or a proprietary
concern shall not receive any investment in India from a person resident outside India or record such investment in its
books:
Provided that the Reserve Bank may, on an application made to it and for sufficient reasons and in consultation with
the Central Government, permit an Indian entity or an investment vehicle, or a venture capital fund or a firm or an
association of persons or a proprietary concern to receive any investment in India from a person resident outside India or
to record such investment subject to such conditions as may be considered necessary.
5. Permission for making investment by a person resident outside India.- Unless otherwise specified in these rules
or the Schedules, any investment made by a person resident outside India shall be subject to the entry routes, sectoral
caps or the investment limits, as the case may be, and the attendant conditionalities for such investment as laid down in
these rules.
CHAPTER III
INVESTMENT BY PERSON RESIDENT OUTSIDE INDIA
6. Investments by person resident outside India: - A person resident outside India may make investment as under:-
(a) may subscribe, purchase or sell equity instruments of an Indian company in the manner and subject to the terms and
conditions specified in Schedule I:
Provided that a person who is a citizen of Bangladesh or Pakistan or is an entity incorporated in Bangladesh or
Pakistan cannot purchase equity instruments without the prior government approval:
Provided further that a citizen of Pakistan or an entity incorporated in Pakistan cannot invest in defence, space,
atomic energy and sectors or activities prohibited for foreign investment even through the government route.
Note: Issue or transfer of “participating interest or right” in oil fields by Indian companies to a person resident outside
India would be treated as foreign investment and shall comply with the conditions laid down in Schedule I.
(b) A person resident outside India, other than a citizen of Bangladesh or Pakistan or an entity incorporated in
Bangladesh or Pakistan, may invest either by way of capital contribution or by way of acquisition or transfer of profit
shares of an LLP, in the manner and subject to the terms and conditions specified in Schedule VI.
(c) A person resident outside India, other than a citizen of Bangladesh or Pakistan or an entity incorporated in
Bangladesh or Pakistan, may invest in units of an investment vehicle, in the manner and subject to the terms and
conditions specified in Schedule VIII.
(d) A person resident outside India may invest in the depository receipts (DRs) issued by foreign depositories against
eligible securities in the manner and subject to the terms and conditions specified in Schedule IX.
7. Acquisition through rights issue or bonus issue.-A person resident outside India and having investment in an Indian
company may make investment in equity instruments (other than share warrants) issued by such company as a rights
issue or a bonus issue, provided that,-
(a) the offer made by the Indian company is in compliance with the provisions of the Companies Act, 2013;
(b) such issue shall not result in a breach of the sectoral cap applicable to the company;
(c) the share holding on the basis of which the rights issue or the bonus issue has been made must have been acquired and
held as per the provisions of these rules;
(d) in case of a listed Indian company, the rights issue to persons resident outside India shall be at a price determined by
the company;
(e) in case of an unlisted Indian company, the rights issue to persons resident outside India shall not be at a price less
than the price offered to persons resident in India;
(f) such investment made through rights issue or bonus issue shall be subject to the conditions as are applicable at the
time of such issue;
(g) the mode of payment and attendant conditions for such transactions shall be specified by the Reserve Bank.
(h). an individual who is a person resident outside India exercising a right which was issued when he or she was a person
resident in India shall hold the equity instruments (other than share warrants) so acquired on exercising the option on a
non-repatriation basis.
Explanation: The above conditions shall also be applicable in case a person resident outside India makes investment in
equity instruments (other than share warrants) issued by an Indian company as a rights issue that are renounced by the
person to whom it was offered.
8. Issue of Employees Stock Options and sweat equity shares to persons resident outside India.-An Indian company
may issue “employees’ stock option” and/ or “sweat equity shares” to its employees or directors or employees or
directors of its holding company or joint venture or wholly owned overseas subsidiary or subsidiaries who are resident
outside India:
Provided that. -
(a) the scheme has been drawn either in terms of regulations issued under the Securities and Exchange Board of India
Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014, as the case may be;
(b) the “employee’s stock option” or “sweat equity shares” so issued under the rules or regulations are in compliance
with the sectoral cap applicable to the said company;
(c) the issue of “employee’s stock option” or “sweat equity shares” in a company where investment by a person resident
outside India is under the approval route shall require prior government approval and issue of “employee’s stock option”
or “sweat equity shares” to a citizen of Bangladesh or Pakistan shall require prior government approval :
Provided further that an individual who is a person resident outside India exercising an option which was issued
when he or she was a person resident in India shall hold the shares so acquired on exercising the option on a non-
repatriation basis.
9. Transfer of equity instruments of an Indian company by or to a person resident outside India.- A person resident
outside India holding equity instruments of an Indian company or units in accordance with these rules or a person
resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any,
specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder :
(1) a person resident outside India, not being a non-resident Indian or an overseas citizen of India or an erstwhile
overseas corporate body may transfer by way of sale or gift the equity instruments of an Indian company or units held by
him to any person resident outside India;
Explanation: It shall also include transfer of equity instruments of an Indian company pursuant to liquidation, merger,
de-merger and amalgamation of entities or companies incorporated or registered outside India.
Provided that.-
(i) prior government approval shall be obtained for any transfer in case the company is engaged in a sector which
requires government approval;
(ii) where the equity instruments are held by the person resident outside India on a non-repatriable basis, the transfer by
way of sale where the transferee intends to hold the equity instruments on a repatriable basis, shall be in compliance with
and subject to the adherence to entry routes, sectoral caps or investment limits, as specified in these rules and attendant
conditionalities for such investment, pricing guidelines, documentation and reporting requirements for such transfers, as
may be specified by the Reserve Bank from time to time;
(2) A person resident outside India, holding equity instruments of an Indian company or units in accordance with these
rules may transfer the same to a person resident in India by way of sale or gift or may sell the same on a recognised stock
exchange in India in the manner specified by the Securities and Exchange Board of India :
Provided that. -
(i) the transfer by way of sale shall be in compliance with and subject to the adherence to pricing guidelines,
documentation and reporting requirements for such transfers as may be specified by the Reserve Bank in consultation
with the Central Government from time to time;
(ii) where the equity instruments are held by the person resident outside India on a non-repatriable basis, conditions at
item (i) of the proviso shall not apply.
(3) A person resident in India holding equity instruments of an Indian company or units, may transfer the same to a
person resident outside India by way of sale, subject to the adherence to entry routes, sectoral caps or investment limits,
pricing guidelines and other attendant conditions as applicable for investment by a person resident outside India and
documentation and reporting requirements for such transfers as may be specified by the Reserve Bank in consultation
with the Central Government from time to time;
(4) A person resident in India holding equity instruments or units of an Indian company on a non- repatriation basis may
transfer the same to a person resident outside India by way of gift with the prior approval of the Reserve Bank, in the
manner prescribed, and subject to the following conditions, namely:-
(i) the donee is eligible to hold such a security under the Schedules of these Rules;
(ii) the gift does not exceed five percent of the paid up capital of the Indian company or each series of debentures or each
mutual fund scheme;
Explanation: The five percent of the paid up capital of the Indian company or each series of debentures or each mutual
fund scheme will be on cumulative basis by a single person to another single person.
(iii) the applicable sectoral cap in the Indian company is not breached;
(iv) the donor and the donee shall be “relatives” within the meaning in clause (77) of section 2 of the Companies Act,
2013;
(v) the value of security to be transferred by the donor together with any security transferred to any person residing
outside India as gift during the financial year does not exceed the rupee equivalent of fifty-thousand US Dollars;
(vi) such other conditions as considered necessary in public interest by the Central Government.
(5) A person resident outside India holding equity instruments of an Indian company containing an optionality clause in
accordance with these rules and exercising the option or right, may exit without any assured return, subject to the pricing
guidelines prescribed in these rules and a minimum lock-in period of one year or minimum lock-in period as prescribed
in these rules, whichever is higher.
(6) In case of transfer of equity instruments between a person resident in India and a person resident outside India, an
amount not exceeding twenty five percent of the total consideration,-
(i) may be paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the
transfer agreement; or
(ii) may be settled through an escrow arrangement between the buyer and the seller for a period not exceeding eighteen
months from the date of the transfer agreement; or
(iii) may be indemnified by the seller for a period not exceeding eighteen months from the date of the payment of the full
consideration, if the total consideration has been paid by the buyer to the seller :
Provided that the total consideration finally paid for the shares shall be compliant with the applicable pricing
guidelines.
(7) In case of transfer of equity instruments between a person resident in India and a person resident outside India, a
person resident outside India may open an escrow account in accordance with the Foreign Exchange Management
(Deposit) Regulations, 2016 and such escrow account may be funded by way of inward remittance through banking
channels and/ or by way of guarantee issued by an authorised dealer bank, subject to the terms and conditions as
specified in the Foreign Exchange Management (Guarantees) Regulations, 2000.
(8) The transfer of equity instruments of an Indian company or units of an investment vehicle by way of pledge is
subject to the following terms and conditions, namely :-
(i) any person being a promoter of a company registered in India (borrowing company), which has raised external
commercial borrowing in compliance with the Foreign Exchange Management (Borrowing and Lending in Foreign
Exchange) Regulations, 2000 may pledge the shares of the borrowing company or that of its associate resident companies
for the purpose of securing the external commercial borrowing raised by the borrowing company subject to the following
further conditions, namely :-
(A) the period of such pledge shall be co-terminus with the maturity of the underlying external commercial borrowing;
(B) in case of invocation of pledge, transfer shall be made in accordance with these rules and directions issued by the
Reserve Bank;
(C) the statutory auditor has certified that the borrowing company shall utilise or has utilised the proceeds of the external
commercial borrowing for the permitted end-use only;
(D) no person shall pledge any such share unless a no-objection has been obtained from an authorised dealer bank that
the above conditions have been complied with;
(ii) any person resident outside India holding equity instruments in an Indian company or units of an investment vehicle
may pledge the equity instruments or units, as the case may be,-
(A) in favour of a bank in India to secure the credit facilities being extended to such Indian company for bona fide
purposes,
(B) in favour of an overseas bank to secure the credit facilities being extended to such person or a person resident
outside India who is the promoter of such Indian company or the overseas group company of such Indian company,
(C) in favour of a non-banking financial company registered with the Reserve Bank to secure the credit facilities being
extended to such Indian company for bona fide purposes,
(D) subject to the authorised dealer bank satisfying itself of the compliance of the conditions stipulated by the Reserve
Bank in this regard;
(iii) in case of invocation of pledge, transfer of equity instruments of an Indian company or units shall be in accordance
with entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions at the time of
creation of pledge.
CHAPTER IV
INVESTMENT BY FOREIGN PORTFOLIO INVESTOR (FPI)

10. Investment by FPI - A FPI may make investments as under:-
(1) A FPI may purchase or sell equity instruments of an Indian company which is listed or to be listed on a recognised
stock exchange in India, and/or may purchase or sell securities other than equity instruments, in the manner and subject
to the terms and conditions specified in Schedule II.
Note - A FPI may trade or invest in all exchange traded derivative contracts approved by Securities and Exchange Board
of India from time to time subject to the limits specified by the Securities and Exchange Board of India and the
conditions prescribed in Schedule II.
(2) A FPI may purchase, hold, or sell Indian Depository Receipts (IDRs) of companies resident outside India and issued
in the Indian capital market, in the manner and subject to the terms and conditions as prescribed in Schedule X.
11. Transfer of equity instruments of an Indian company by FPI - A FPI holding equity instruments of an Indian
company or units in accordance with these rules, may transfer such equity instruments or units so held by him in
compliance with the conditions, if any, prescribed in the respective Schedules of these rules and subject to the terms and
conditions prescribed hereunder and as specified by the Securities and Exchange Board of India;
(1) A FPI may transfer by way of sale or gift the equity instruments of an Indian company or units held by him to any
person resident outside India;
Explanation: For the purposes of this rule transfer shall also include transfer of equity instruments of an Indian company
pursuant to liquidation, merger, de-merger and amalgamation of entities or companies incorporated or registered outside
India.
Provided that.-
(i) prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which
requires the Government approval.
(ii) where the acquisition of equity instruments by FPI made under Schedule II of these rules has resulted in a breach of
the applicable aggregate FPI limits or sectoral limits, the provisions of sub-paragraph a (iii) of paragraph (1) of Schedule
II shall apply.
CHAPTER V
INVESTMENT BY NON-RESIDENT INDIAN OR AN OVERSEAS CITIZEN OF INDIA
12. Investment by NRI or OCI - A NRI or an OCI may make investments as under:-
(1) A NRI or an OCI may, on repatriation basis, purchase or sell equity instruments of a listed Indian company and other
securities in the manner and subject to the terms and conditions prescribed in Schedule III.
(2) A NRI or an OCI may, on non-repatriation basis, purchase or sell equity instruments of an Indian company or other
securities or contribute to the capital of a LLP or a firm or proprietary concern, in the manner and subject to the terms
and conditions specified in Schedule IV.
Note: A NRI or an OCI may trade or invest in all exchange traded derivative contracts approved by the Securities and
Exchange Board of India from time to time subject to the limits specified by Securities and Exchange Board of India and
conditions prescribed in Schedule III.
(3) A NRI or an OCI may purchase, hold, or sell Indian Depository Receipts (IDRs) of companies resident outside India
and issued in the Indian capital market, in the manner and subject to the terms and conditions specified in Schedule X.
13. Transfer of equity instruments by NRI or OCI - A NRI or an OCI holding equity instruments of an Indian
company or units in accordance with these rules may transfer such equity instruments or units so held by him in
compliance with the conditions, if any, prescribed in the Schedules of these rules and subject to the terms and conditions
prescribed hereunder :
(1) A NRI or an OCI holding equity instruments of an Indian company or units on repatriation basis may transfer the
same by way of sale or gift to any person resident outside India :
Provided that,-
(i) prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which
requires Government approval;
(ii) where the acquisition of equity instruments by an NRI or an OCI under the provisions of Schedule III of these rules
has resulted in a breach of the applicable aggregate NRI or OCI limit or sectoral limits, the NRI or the OCI shall sell such
equity instruments to a person resident in India eligible to hold such instruments within the time stipulated by the
Reserve Bank of India in consultation with the Central Government and the breach of the said aggregate or sectoral limit
on account of such acquisition for the period between the acquisition and sale, provided the sale is within the prescribed
time, shall not be reckoned as a contravention under these rules.
(2) A NRI or an OCI or an eligible investor under Schedule IV of these rules, holding equity instruments of an Indian
company or units on a non-repatriation basis, may transfer the same to a person resident outside India by way of sale,
subject to the adherence to entry routes, sectoral caps or investment limits, pricing guidelines and other attendant
conditions as applicable for investment by a person resident outside India and documentation and reporting requirements
for such transfers as may be specified by the Reserve Bank in consultation with the Central Government from time to
time;
Provided that the entry routes, sectoral caps or investment limits, pricing guidelines and other attendant
conditions shall not apply in case the transfer is to an NRI or an OCI or an eligible investor under Schedule IV of these
rules acquiring such investment.
(3) A NRI or an OCI or an eligible investor under Schedule IV of these rules holding equity instruments or units of an
Indian company on a non-repatriation basis may transfer the same to a person resident outside India by way of gift with
the prior approval of the Reserve Bank of India, in the manner prescribed, and subject to the following conditions,
namely :-
(i) the donee is eligible to hold such a security under relevant Schedules of these rules;
(ii) the gift does not exceed five percent of the paid up capital of the Indian company or each mutual fund scheme;
Explanation: The five percent shall be on cumulative basis by a single person to another single person.
(iii) the applicable sectoral cap in the Indian company is not breached;
(iv) the donor and the donee shall be “relatives” within the meaning in clause (77) of section 2 of the Companies Act,
2013;
(v) the value of security to be transferred by the donor together with any security transferred to any person residing
outside India as gift during the financial year does not exceed the rupee equivalent of USD 50000;
(vi) such other conditions as may be considered necessary in public interest by the Central Government.
(4) A NRI or an OCI or an eligible investor specified under Schedule IV of these rules holding equity instruments of an
Indian company or units on a non-repatriation basis, may transfer the same by way of gift to an NRI or an OCI or an
eligible investor under Schedule IV of these rules who shall hold it on a non-repatriable basis.
(5) An erstwhile OCB may transfer equity instruments subject to the directions issued by the Reserve Bank of India from
time to time in this regard.
Explanation: “Overseas Corporate Body (OCB)” means an entity de-recognised through Foreign Exchange Management
[Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)] Regulations, 2003.
CHAPTER VI
INVESTMENT BY OTHER NON-RESIDENT INVESTORS
14. Investment in securities by other non-resident investors - The other non-resident investors may make investments
in securities in the manner and subject to the terms and conditions specified in Schedule V.
15. Transfer of securities by other non-resident investors :- The other non-resident investors, holding securities in
accordance with these rules, may transfer the securities subject to such terms and conditions prescribed in Schedule V
and as specified by the Securities and Exchange Board of India and the Reserve Bank.
CHAPTER VII
INVESTMENT BY FOREIGN VENTURE CAPITAL INVESTOR
16. Investment by FVCI - A Foreign Venture Capital Investor (FVCI) may make investments in the manner and subject
to the terms and conditions specified in Schedule VII.
17. Transfer of equity instruments of an Indian company by or to a FVCI - A FVCI holding equity instruments of an
Indian company or units in accordance with these rules or a person resident in India, may transfer such equity
instruments or units so held by him in compliance with the conditions, if any, prescribed in Schedule VII of these rules
and as specified by the Securities and Exchange Board of India and the Reserve Bank.
CHAPTER VIII
GENERAL PROVISIONS
18. Issue of Convertible Notes by an Indian startup company .-(1) A person resident outside India (other than an
individual who is citizen of Pakistan or Bangladesh or an entity which is registered or incorporated in Pakistan or
Bangladesh), may purchase convertible notes issued by an Indian startup company for an amount of twenty five lakh
rupees or more in a single tranche.
(2) A startup company, engaged in a sector where investment by a person resident outside India requires Government
approval, may issue convertible notes to a person resident outside India only with such approval. Further, issue of equity
shares against such convertible notes shall be in compliance with the entry route, sectoral caps, pricing guidelines and
other attendant conditions for foreign investment.
(3) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
(4) A NRI or an OCI may acquire convertible notes on non-repatriation basis in accordance with Schedule IV of these
rules.
(5) A person resident outside India may acquire or transfer by way of sale, convertible notes, from or to, a person resident
in or outside India, provided the transfer takes place in accordance with the entry routes and pricing guidelines as
prescribed for capital instruments.
19. Merger or demerger or amalgamation of Indian companies.- (1) Where a scheme of merger or amalgamation of
two or more Indian companies or a reconstruction by way of demerger or otherwise of an Indian company, has been
approved by the National Company Law Tribunal (NCLT) or competent authority, the transferee company or the new
company, as the case may be, may issue equity instruments to the existing holders of the transferor company resident
outside India, subject to the following conditions, namely:-
(a) the transfer or issue is in compliance with the entry routes, sectoral caps or investment limits, as the case may be,
and the attendant conditionalities of investment by a person resident outside India :
Provided that where the percentage is likely to breach the sectoral caps or the attendant conditionalities, the
transferor company or the transferee or new company may obtain necessary approval from the Central Government.
(b) the transferor company or the transferee company or the new company shall not engage in any sector prohibited for
investment by a person resident outside India.
(2) where a scheme of merger or amalgamation of two or more Indian companies or a reconstruction by way of demerger
or otherwise of an Indian company where any of the companies involved is listed on a recognised stock exchange in
India, then the scheme of arrangement shall be in compliance with the SEBI (Listing Obligation and Disclosure
Requirement) Regulations, 2015.
20. Reporting requirements - The reporting requirements for any investment in India by a person resident in India shall
be as specified by the Reserve Bank.
21. Pricing guidelines - (1) The pricing guidelines specified in these rules shall not be applicable for any transfer by
way of sale done in accordance with Securities and Exchange Board of India regulations where the pricing is specified by
Securities and Exchange Board of India.
(2) Unless otherwise prescribed in these rules, the price of equity instruments of an Indian company, -
(a) issued by such company to a person resident outside India shall not be less than :
(i) the price worked out in accordance with the Securities and Exchange Board of India guidelines in case of a listed
Indian company or in case of a company going through a delisting process as per the Securities and Exchange Board of
India (Delisting of Equity Shares) Regulations, 2009;
(ii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an
arm’s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and
Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian Company.
(b) transferred from a person resident in India to a person resident outside India shall not be less than,-
(i) the price worked out in accordance with the Securities and Exchange Board of India guidelines in case of a listed
Indian company;
(ii) the price at which a preferential allotment of shares can be made under the Securities and Exchange Board of India
Guidelines, as applicable, in case of a listed Indian company or in case of a company going through a delisting process as
per the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;
(iii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an
Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian company.
(c) transferred by a person resident outside India to a person resident in India shall not exceed :
(i) the price worked out in accordance with the relevant Securities and Exchange Board of India guidelines in case of a
listed Indian company;
(ii) the price at which a preferential allotment of shares can be made under the Securities and Exchange Board of India
Guidelines, as applicable, in case of a listed Indian company or in case of a company going through a delisting process as
per the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 :
Provided that the price is determined for such duration as specified in the Securities and Exchange Board of India
Guidelines, preceding the relevant date, which shall be the date of purchase or sale of shares;
(iii) the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an
Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian company.
Explanation: The guiding principle shall be that the person resident outside India is not guaranteed any assured exit price
at the time of making such investment or agreement and shall exit at the price prevailing at the time of exit.
(iv) in case of swap of equity instruments, subject to the condition that irrespective of the amount, valuation involved in
the swap arrangement shall have to be made by a Merchant Banker registered with the Securities and Exchange Board of
India or an investment banker outside India registered with the appropriate regulatory authority in the host country.
(v) where shares in an Indian company are issued to a person resident outside India in compliance with the provisions of
the Companies Act, 2013, by way of subscription to Memorandum of Association, such investments shall be made at
face value subject to entry route and sectoral caps.
(vi) in case of share warrants, their pricing and the price or conversion formula shall be determined upfront:
Provided that these pricing guidelines shall not be applicable for investment in equity instruments by a person
resident outside India on a non-repatriation basis.
22. Taxes and remittances of sale proceeds - (1) Taxes - All transaction under these rules shall be undertaken through
banking channels in India and subject to the payment of applicable taxes and other duties or levies in India.
(2) Remittance of sale proceeds : (a) No remittance of sale proceeds of an Indian security held by a person resident
outside India shall be made otherwise than in accordance with these rules , the conditions prescribed in the relevant
Schedule and as specified by the Reserve Bank.
(b) An authorised dealer may allow the remittance of sale proceeds of a security (net of applicable taxes) to the seller of
shares resident outside India :
Provided that -
(i) the security was held by the seller on repatriation basis; and
(ii) either the security has been sold in compliance with the pricing guidelines or the Reserve Bank’s approval has been
obtained in other cases for sale of the security and remittance of the sale proceeds thereof.
23. Downstream investment - (1) Indian entity which has received indirect foreign investment shall comply with the
entry route, sectoral caps, pricing guidelines and other attendant conditions as applicable for foreign investment.
Explanation: Downstream investment by an LLP not owned and not controlled by resident Indian citizens or owned or
controlled by persons resident outside India is allowed in an Indian company operating in sectors where foreign
investment up to one hundred percent is permitted under automatic route and there are no FDI linked performance
conditions.
(2) With effect from the 31st day of July, 2012, downstream investment(s) made under Corporate Debt Restructuring
(CDR), or other loan restructuring mechanism, or in trading book, or for acquisition of shares due to defaults in loans, by
a banking company, as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 ( 10 of 1949) incorporated
in India, which is not owned and not controlled by resident Indian citizens or owned or controlled by persons resident
outside India, shall not count towards indirect foreign investment, however, their strategic downstream investment shall
be counted towards indirect foreign investment for the company in which such investment is being made.
(3) Guidelines for calculating total foreign investment in Indian companies are as follows ,-
(a) any equity holding by a person resident outside India resulting from conversion of any debt instrument under any
arrangement shall be reckoned for total foreign investment;
(b) FCCBs and DRs having underlying of instruments in the nature of debt shall not be reckoned for total foreign
investment;
(c) the methodology for calculating total foreign investment shall apply at every stage of investment in Indian companies
and thus in each and every Indian company;
(d) for the purpose of downstream investment, the portfolio investment held as on 31st March of the previous financial
year in the Indian company making the downstream investment shall be considered for computing its total foreign
investment;
(e) indirect foreign investment received by a wholly owned subsidiary of an Indian company shall be limited to the total
foreign investment received by the company making the downstream investment.
(4) Downstream investment that is treated as indirect foreign investment for the investee entity shall be subject to the
following conditions, namely :-
(a) downstream investment shall have the approval of the Board of Directors as also a shareholders’ Agreement, if any;
(b) for the purpose of downstream investment, the Indian entity making the downstream investment shall bring in
requisite funds from abroad and not use funds borrowed in the domestic markets and the downstream investments may be
made through internal accruals and for this purpose, internal accruals shall mean profits transferred to reserve account
after payment of taxes. Further raising of debt and its utilisation shall be in compliance with the Act, rules or regulations
made thereunder.
(5) Equity instrument of an Indian company held by another Indian company which has received foreign investment and
is not owned and not controlled by resident Indian citizens or is owned or controlled by persons resident outside India
may be transferred to-
(a) a person resident outside India, subject to the reporting requirements as specified by the Reserve Bank.
(b) a person resident in India subject to adherence to pricing guidelines;

(c) an Indian company which has received foreign investment and is not owned and not controlled by resident Indian
citizens or owned or controlled by persons resident outside India.
(6) The first level Indian company making downstream investment shall be responsible for ensuring compliance with the
provisions of these rules for the downstream investment made by it at second level and so on and so forth and such first
level company shall obtain a certificate to this effect from its statutory auditor on an annual basis and such compliance of
these rules shall be mentioned in the Director’s report in the Annual Report of the Indian company. In case statutory
auditor has given a qualified report, the same shall be immediately brought to the notice of the regional office of the
Reserve Bank in whose jurisdiction the Registered Office of the company is located and shall also obtain
acknowledgement from the Registered Office.
(7) The provisions (5) and (6) of rule 23 shall apply mutatis mutandis to a LLP.
Note: Downstream investment that is treated as indirect foreign investment for the investee entity made in accordance
with the guidelines in existence prior to the 13th February, 2009 shall not require any modification to conform to these
rules and all such investments, after the said date, shall come under the ambit of these rules. Downstream investment that
is treated as indirect foreign investment for the investee entity made between the 13th February,2009 and 21st June 2013
which is not in conformity with these rules shall have to be intimated to the Reserve Bank by 3rd October,2013 for
treating such cases as compliant with these Rules.
Explanation.- For the purposes of this rule,-
(a) “ownership of an Indian company” shall mean beneficial holding of more than fifty percent of the equity instruments
of such company and “ownership of an LLP” shall mean contribution of more than fifty percent in its capital and having
majority profit share;
(b) “company owned by resident Indian citizens” shall mean an Indian company where ownership is vested in resident
Indian citizens and/ or Indian companies, which are ultimately owned and controlled by resident Indian citizens and
“LLP owned by resident Indian citizens” shall mean an LLP where ownership is vested in resident Indian citizens and/ or
Indian entities, which are ultimately owned and controlled by resident Indian citizens;
(c) “company owned by persons resident outside India” shall mean an Indian company that is owned by persons resident
outside India and “LLP owned by persons resident outside India” shall mean an LLP that is owned by persons resident
outside India;
(d) “control” shall mean the right to appoint majority of the directors or to control the management or policy decisions
including by virtue of their shareholding or management rights or shareholders agreement or voting agreement and for
the purpose of LLP, “control” shall mean the right to appoint majority of the designated partners, where such designated
partners, with specific exclusion to others, have control over all the policies of an LLP;
(e) “company controlled by resident Indian citizens” means an Indian company, the control of which is vested in resident
Indian citizens and/ or Indian companies which are ultimately owned and controlled by resident Indian citizens and “LLP
controlled by resident Indian citizens” shall mean an LLP, the control of which is vested in resident Indian citizens and/
or Indian entities, which are ultimately owned and controlled by resident Indian citizens;
(f) “company controlled by persons resident outside India” shall mean an Indian company that is controlled by persons
resident outside India and “LLP controlled by persons resident outside India” shall mean an LLP that is controlled by
persons resident outside India;
(g) “downstream investment” shall mean investment made by an Indian entity which has total foreign investment in it, or
an Investment Vehicle in the capital instruments or the capital, as the case may be, of another Indian entity;
(h) “holding company” shall have the same meaning as assigned to it under Companies Act, 2013;
(i) “indirect foreign investment” means downstream investment received by an Indian entity from,-
(A) another Indian entity (IE) which has received foreign investment and (i) the IE is not owned and not controlled by
resident Indian citizens or (ii) is owned or controlled by persons resident outside India; or
(B) an investment vehicle whose sponsor or manager or investment manager (i) is not owned and not controlled by
resident Indian citizens or (ii) is owned or controlled by persons resident outside India :
Provided that no person resident in India other than an Indian entity can receive Indirect Foreign Investment;
(j) “total foreign investment” means the total of foreign investment and indirect foreign investment and the same will be
reckoned on a fully diluted basis;
(k) “strategic downstream investment” means investment by banking companies incorporated in India in their
subsidiaries, joint ventures and associates.
CHAPTER IX
ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA

24. Acquisition and transfer of property in India by a NRI or an OCI - A NRI or an OCI may -
(a) acquire immovable property in India other than an agricultural land or farm house or plantation property:
Provided that the consideration, if any, for transfer, shall be made out of :
(i) funds received in India through banking channels by way of inward remittance from any place outside India ; or
(ii) funds held in any non-resident account maintained in accordance with the provisions of the Act, rules or regulations
framed thereunder:
Provided further that no payment for any transfer of immovable property shall be made either by traveller’s cheque
or by foreign currency notes or by any other mode other than those specifically permitted under this clause;
(b) acquire any immovable property in India other than agricultural land or farm house or plantation property by way of
gift from a person resident in India or from an NRI or from an OCI, who in any case is a relative as defined in clause (77)
of section 2 of the Companies Act, 2013;
(c) acquire any immovable property in India by way of inheritance from a person resident outside India who had
acquired such property:-
(i) in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the
provisions of these rules ;or
(ii) from a person resident in India;
(d) transfer any immovable property in India to a person resident in India;
(e) transfer any immovable property other than agricultural land or farm house or plantation property to an NRI or an
OCI.
25. Joint acquisition by the spouse of a NRI or an OCI : A person resident outside India, not being an NRI or an OCI,
who is a spouse of an NRI or an OCI may acquire one immovable property (other than agricultural land or farm house or
plantation property), jointly with his or her NRI or OCI spouse :
Provided that -
(a) consideration for transfer, shall be made out of -

(i) funds received in India through banking channels by way of inward remittance from any place outside India; or
(ii) funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations
made by the Reserve Bank;
(b) no payment for any transfer of immovable property shall be made either by traveller’s cheque or by foreign currency
notes or by any other mode other than those specifically permitted under this clause :
Provided that the marriage has been registered and subsisted for a continuous period of not less than two years
immediately preceding the acquisition of such property :
Provided further that the non-resident spouse is not otherwise prohibited from such acquisition.
26. Acquisition of immovable property for carrying on a permitted activity - A person resident outside India who
has established in India in accordance with the Foreign Exchange Management (Establishment in India of a Branch
office or a liaison office or a project office or any other place of business) Regulations, 2016, as amended from time to
time, a branch, office or other place of business for carrying on in India any activity, excluding a liaison office, may -
(a) acquire any immovable property in India, which is necessary for or incidental to carrying on such activity:
Provided that,-
(i) all applicable laws, rules, regulations, for the time being in force are duly complied with; and
(ii) the person files with the Reserve Bank a declaration in the Form IPI as specified by the Reserve Bank from time to
time, not later than ninety days from the date of such acquisition;
(b) transfer by way of mortgage to an authorised dealer as a security for any borrowing, the immovable property
acquired in pursuance of clause (a) of rule 26:
Provided that no person of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Hong Kong or
Macau or Nepal or Bhutan or Democratic People’s Republic of Korea (DPRK) shall acquire immovable property, other
than on lease not exceeding five years, without prior approval of the Reserve Bank.
27. Purchase or sale of immovable property by Foreign Embassies or Diplomats or Consulate Generals - A Foreign
Embassy or Diplomat or Consulate General may purchase or sell immovable property in India other than agricultural
land or plantation property or farm house provided :
(i) clearance from Government of India, Ministry of External Affairs is obtained for such purchase or sale; and
(ii) the consideration for acquisition of immovable property in India is paid out of funds remitted from abroad through
banking channels.
28. Acquisition by a long-term visa holder - A person being a citizen of Afghanistan, Bangladesh or Pakistan
belonging to minority communities in those countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians
who is residing in India and has been granted a Long Term Visa (LTV) by the Central Government may purchase only
one residential immovable property in India as dwelling unit for self-occupation and only one immovable property for
carrying out self-employment subject to the following conditions, namely :-
(a) the property shall not be located in and around restricted or protected areas so notified by the Central Government
and cantonment areas;
(b) the person submits a declaration to the Revenue Authority of the district where the property is located, specifying the
source of funds and that he or she is residing in India on LTV;
(c) the registration documents of the property shall mention the nationality and the fact that such person is on LTV;
(d) the property of such person may be attached or confiscated in the event of his or her indulgence in anti-India
activities;
(e) a copy of the documents of the purchased property shall be submitted to the Deputy Commissioner of Police (DCP)
or Foreigners Registration Office (FRO) or Foreigners Regional Registration Office (FRRO) concerned and to the
Ministry of Home Affairs (Foreigners Division);
(f) such person shall be eligible to sell the property only after acquiring Indian citizenship, however, transfer of the
property before acquiring Indian citizenship shall require prior approval of DCP or FRO or FRRO concerned.
29. Repatriation of sale proceeds - (1) A person referred to in sub-section (5) of section 6 of the Act, or his successor
shall not, except with the general or specific permission of the Reserve Bank, repatriate outside India the sale proceeds of
any immovable property referred to in that sub- section.
(2) In the event of sale of immovable property other than agricultural land or farm house or plantation property in India
by an NRI or an OCI, the authorised dealer may allow repatriation of the sale proceeds outside India, provided the
following conditions are satisfied, namely:-
(a) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in
force at the time of acquisition or the provisions of these rules;
(b) the amount for acquisition of the immovable property was paid in foreign exchange received through banking
channels or out of funds held in Foreign Currency Non-Resident Account or out of funds held in Non-Resident External
Account;
(c) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
(3) In the event of failure in repayment of external commercial borrowing availed by a person resident in India under the
provisions of the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, as
amended from time to time, a bank which is an authorised dealer may permit the overseas lender or the security trustee
(in whose favour the charge on immovable property has been created to secure the ECB) to sell the immovable property
on which the said loan has been secured only to a (by the) person resident in India and to repatriate the sale proceeds
towards outstanding dues in respect of the said loan and not any other loan.
30. Prohibition on transfer of immovable property in India - (1) Save as otherwise provided in the Act or rules, no
person resident outside India shall transfer any immovable property in India:
Provided that:-
(a) the Reserve Bank may, for sufficient reasons, permit the transfer subject to such conditions as may be considered
necessary;
(b) a bank which is an authorised dealer may, subject to the directions issued by the Reserve Bank in this behalf, permit a
person resident in India or on behalf of such person to create charge on his immovable property in India in favour of an
overseas lender or security trustee, to secure an external commercial borrowing availed under the provisions of the
Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000;
(c) an authorised dealer in India being the Indian correspondent of an overseas lender may, subject to the directions
issued by the Reserve Bank in this regard, create a mortgage on an immovable property in India owned by an NRI or an
OCI, being a director of a company outside India, for a loan to be availed by the company from the said overseas lender :
Provided further that :-

(i) the funds shall be used by the borrowing company only for its core business purposes overseas;
(ii) in case of invocation of charge, the Indian bank shall sell the immovable property to an eligible acquirer and remit the
sale proceeds to the overseas lender.
(2) A person resident outside India who has acquired any immovable property in India in accordance with foreign
exchange laws in force at the time of such acquisition or with the general or specific permission of the Reserve Bank may
transfer such property to a person resident in India provided the transaction takes place through banking channels in India
and provided further that the resident is not otherwise prohibited from such acquisition.
31. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries - No
person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or
Macau or Democratic People’s Republic of Korea (DPRK) without prior permission of the Reserve Bank shall acquire or
transfer immovable property in India, other than lease not exceeding five years :
Provided that this prohibition shall not apply to an OCI.
Explanation: For the purpose of this rule, the term “citizen” shall include natural persons and legal entities.
32. Miscellaneous - Any transaction involving acquisition or transfer of immovable property under these rules shall be
undertaken:-
(a) through banking channels in India;

(b) subject to payment of applicable taxes and other duties or levies in India.
33. Savings - Any existing holding of immovable property in India by a person resident outside India made in
accordance with the policy in existence at the time of such acquisition would not require any modifications to conform to
these rules.
SCHEDULE I
(See rule 6(a))

Purchase or sale of equity instruments of an Indian company by a person resident outside India
(1) Purchase or sale of equity instruments of an Indian company by a person resident outside India
(a) An Indian company may issue equity instruments to a person resident outside India subject to entry routes, sectoral
caps and attendant conditionalities prescribed in this Schedule.
(b) A person resident outside India may purchase equity instruments of a listed Indian company on a stock exchange in
India:
Provided that -
(i) the person resident outside India making the investment has already acquired control of such company in accordance
with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 and continues to hold such control;
(ii) the amount of consideration may be paid as per the mode of payment specified by the Reserve Bank or out of the
dividend payable by Indian investee company in which the person resident outside India has acquired and continues to
hold the control in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 provided
the right to receive dividend is established and the dividend amount has been credited to a specially designated non-
interest bearing rupee account for acquisition of shares on the recognised stock exchange.
(c) A wholly owned subsidiary set up in India by a non-resident entity, operating in a sector where 100 percent foreign
investment is allowed in the automatic route and there are no FDI linked performance conditions, may issue equity
instruments to the said non-resident entity against pre- incorporation or pre-operative expenses incurred by the said non-
resident entity up to a limit of five percent of its authorised capital or USD 500,000 whichever is less, subject to the
condition that within thirty days from the date of issue of equity instruments but not later than one year from the date of
incorporation or such time as the Reserve Bank permits, the Indian company shall report the transaction to the Reserve
Bank as per the reporting requirements as specified by the Reserve Bank.
(d). An Indian company may issue, subject to compliance with the conditions prescribed by the Central Government
and/or the Reserve Bank from time to time, equity instruments to a person resident outside India, if the Indian investee
company is engaged in an automatic route sector, against,-
(i) swap of equity instruments; or
(ii) import of capital goods or machinery or equipment (excluding second-hand machinery); or
(iii) pre-operative or pre-incorporation expenses (including payments of rent etc.) :

Provided that the Government approval shall be obtained if the Indian investee company is engaged in a sector
under Government route and the applications for approval shall be made in the manner prescribed by the Central
Government from time to time.
(e) An Indian company may issue equity shares against any funds payable by it to a person resident outside India, the
remittance of which is permitted under the Act or the rules and regulations framed or directions issued thereunder or does
not require prior permission of the Central Government or the Reserve Bank under the Act or the rules and regulations
framed or directions issued thereunder or has been permitted by the Reserve Bank under the Act or the rules and
regulations framed or directions issued thereunder:
Provided that in case where permission has been granted by the Reserve Bank for making remittance, the Indian
company may issue equity shares against such remittance provided all regulatory actions with respect to the delay or
contravention under the Act or the rules or the regulations framed thereunder have been completed.
(f) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank.
(2) Sectors prohibited for FDI.-
(a) Lottery business including Government or private lottery, online lotteries, etc.
(b) Gambling and betting including casinos, etc.
(c) Chit funds
(d) Nidhi company

(e) Trading in Transferable Development Rights
(f) Real estate business or construction of farm houses
Explanation: For the purpose of this rule, ‘real estate business shall not include development of townships, construction
of residential or commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and
regulated under the SEBI (REITs) Regulations, 2014.
(g) Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
(h) Activities or sectors not open to private sector investment e.g. (I) Atomic energy and (II) Railway operations (other
than permitted activities mentioned in paragraph (3) of Schedule I)
(i) Foreign technology collaborations in any form including licensing for franchise, trademark, brand name, management
contract is also prohibited for lottery business and gambling and betting activities.
(3) Permitted sectors, entry routes and sectoral caps for total foreign investment
Unless otherwise specified in these Rules or the Schedules, the entry routes and sectoral caps for the total foreign
investment in an Indian entity shall be as follows, namely :-
(a) Entry routes.-
(i) “automatic route” means the entry route through which investment by a person resident outside India does not require
the prior approval of the Reserve Bank or the Central Government;
(ii) “government route” means the entry route through which investment by a person resident outside India requires prior
Government approval and foreign investment received under this route shall be in accordance with the conditions
stipulated by the Government in its approval.
(iii) Aggregate foreign portfolio investment up to forty-nine percent of the paid-up capital on a fully diluted basis or the
sectoral or statutory cap, whichever is lower, shall not require Government approval or compliance of sectoral conditions
as the case may be, if such investment does not result in transfer of ownership and control of the resident Indian company
from resident Indian citizens or transfer of ownership or control to persons resident outside India and other investments
by a person resident outside India shall be subject to the conditions of Government approval and compliance of sectoral
conditions as laid down in these rules.
(b) Sectoral caps.—
(i) Sectoral cap for the sectors or activities specified in the table is the limit indicated against each sector. The total
foreign investment shall not exceed the sectoral or statutory cap.
(ii) Foreign investment in the following sectors or activities is subject to applicable laws or regulations, security and
other conditionalities.
(iii) In sectors or activities not listed below or not prohibited under paragraph (2) of Schedule I of these rules, foreign
investment is permitted up to one hundred percent on the automatic route, subject to applicable laws or regulations,
security and other conditionalities :
Provided that foreign investment in financial services other than those indicated under serial number “F” below
would require prior approval of the Government .
(iv) Wherever there is a requirement of minimum capitalisation, it shall include premium received along with the face
value of the equity instrument, only when it is received by the company upon issue of such instruments to the person
resident outside India and the amount paid by the transferee during post-issue transfer beyond the issue price of the
capital instrument, shall not be taken into account while calculating minimum capitalization requirement.
(v) (A) Foreign Investment in investing companies not registered as Non-Banking Financial Companies with the Reserve
Bank and in core investment companies (CICs), both engaged in the activity of investing in the capital of other Indian
entities, shall require prior approval of the Government .
Note: Compliance to these rules by the core investment companies is in addition to the compliance of the regulatory
framework prescribed to such companies as NBFCs under the Reserve Bank of India Act, 1934 and regulations framed
thereunder.
(v) (B) Foreign investment in investing companies registered as Non-Banking Financial Companies (NBFCs) with the
Reserve Bank, shall be under 100% automatic route.
(vi) For undertaking activities which are under automatic route and without FDI linked performance conditions, an
Indian company which does not have any operations and also has not made any downstream investment that is treated as
indirect foreign investment for the investee entity, may receive investment in its equity instruments from persons resident
outside India under automatic route, however, approval of the Government shall be required for such companies for
undertaking activities which are under Government route and as and when such a company commences business or
makes downstream investment that is treated as indirect foreign investment for the investee entity, it shall have to comply
with the relevant sectoral conditions on entry route, conditionalities and caps.
(vii) The onus of compliance with the sectoral or statutory caps on such foreign investment and attendant conditions, if
any, shall be on the company receiving foreign investment.
(viii) Wherever the person resident outside India who has made foreign investment specifies a particular auditor or audit
firm having international network for the audit of the Indian investee company, then audit of such investee company shall
be carried out as joint audit wherein one of the auditors is not part of the same network.
Table
Sl. Sector/ Activity Sectoral Entry Route

No(1) Cap(3)
(2) (4)
1. Agriculture and Animal Husbandry
1.1 (a) Floriculture, Horticulture and Cultivation of vegetables and 100% Automatic
mushrooms under controlled conditions;
(b) Development and production of seeds and planting material;
(c) Animal Husbandry (including breeding of dogs), Pisciculture,


No(1) Cap(3)
(2) (4)
Aquaculture and Apiculture; and
(d) Services related to agro and allied sectors.

Note: Other than the above, foreign investment is not allowed in
any other agricultural sector or activity.
1.2 Other Conditions
The term ‘under controlled conditions’ covers the following:

‘Cultivation under controlled conditions’ for the categories of Floriculture, Horticulture, Cultivation of
vegetables and mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air
humidity and culture medium are controlled artificially. Control in these parameters may be effected through
protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities
where micro-climatic conditions are regulated anthropogenically.
2. Plantation
2.1 (a) Tea sector including tea plantations 100% Automatic

(b) Coffee plantations
(c) Rubber plantations
(d) Cardamom plantations

(e) Palm oil tree plantations
(f) Olive oil tree plantation
Note: Foreign investment is not allowed in any plantation sector/

activity other than those listed above.
Prior approval of the State Government concerned is required in case of any future land use change.
3. Mining
3.1 Mining and Exploration of metal and non-metal ores including 100% Automatic
diamond, gold, silver and precious ores but excluding titanium
bearing minerals and its ores; subject to the Mines and Minerals
(Development and Regulation) Act, 1957.
3.2 Coal and Lignite
(a) Coal and Lignite mining for captive consumption by power 100% Automatic
projects, iron and steel and cement units and other eligible activities
permitted under and subject to the provisions of Coal Mines
(Nationalization) Act, 1973.
(b) Setting up coal processing plants like washeries, subject to the

condition that the company shall not do coal mining and shall not sell
washed coal or sized coal from its coal processing plants in the open
market and shall supply the washed or sized coal to those parties who
are supplying raw coal to coal processing plants for washing or sizing.
3.3 Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated

No(1) Cap(3)
(2) (4)
activities
(a) Mining and mineral separation of titanium bearing minerals and 100% Government
ores, its value addition and integrated activities subject to sectoral
regulations and the Mines and Minerals (Development and
Regulation) Act, 1957.
(a) Foreign investment for separation of titanium bearing minerals and ores shall be subject to the following
conditions:
(i) Value addition facilities are set up within India along with transfer of technology;
(ii) Disposal of tailings during the mineral separation shall be carried out in accordance with regulations
framed by the Atomic Energy Regulatory Board such as Atomic Energy (Radiation Protection) Rules, 2004 and
the Atomic Energy (Safe Disposal of Radioactive Wastes) Rules, 1987.
(b) Foreign investment will not be allowed in mining of "prescribed substances" listed in the Notification No.
S.O. 61(E), dated 18.1.2006, issued by the Department of Atomic Energy.
Clarification:
(i) For titanium bearing ores such as Ilmenite, Leucoxene and Rutile, manufacture of titanium dioxide pigment
and titanium sponge constitutes value addition. Ilmenite can be processed to produce Synthetic Rutile or
Titanium Slag as an intermediate value added product.
(ii) The objective is to ensure that the raw material available in the country is utilized for setting up
downstream industries and the technology available internationally is also made available for setting up such
industries within the country. Thus, if with the technology transfer, the objective of this Rules can be achieved,
the conditions prescribed at (a)(i) above shall be deemed to be fulfilled.
4. Petroleum and Natural Gas
4.1 Exploration activities of oil and natural gas fields, infrastructure 100% Automatic
related to marketing of petroleum products and natural gas, marketing
of natural gas and petroleum products, petroleum product pipelines,
natural gas/ pipelines, LNG Regasification infrastructure, market
study and formulation and Petroleum refining in the private sector,
subject to the existing sectoral policy and regulatory framework in the
oil marketing sector and the policy of the Government on private
participation in exploration of oil and the discovered fields of national
oil companies.
4.2 Petroleum refining by the Public Sector Undertakings (PSUs), without 49% Automatic
any disinvestment or dilution of domestic equity in the existing PSUs.
5. Manufacturing 100% Automatic
5.1 A manufacturer is permitted to sell its products manufactured in India through wholesale and/ or retail, including
through e-commerce without Government approval.
Notwithstanding the provisions of these Rules on trading sector, 100 percent foreign investment under the
government approval route is allowed for trading, including through e-commerce, in respect of food products
manufactured and/ or produced in India. Applications for foreign investment in food products retail trading shall
be processed in the Department of Industrial Policy and Promotion before being considered by the Government

No(1) Cap(3)
(2) (4)
for approval.
6. Defence
6.1 Defence Industry subject to Industrial license under the Industries 100% Automatic route up to 49%
(Development & Regulation) Act, 1951; and
Government route beyond
Manufacturing of small arms and ammunition under the Arms Act, 49% wherever it is likely to
1959 result in access to modern
technology or for other
reasons to be recorded.
(a) Fresh foreign investment within the permitted automatic route, in a company not seeking industrial license,
resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, shall
require Government approval.
(b) Licence applications will be considered and licences shall be given by the Department of Industrial Policy
and Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence and Ministry of
External Affairs.
(c) Foreign investment in this sector is subject to security clearance and guidelines of the Ministry of Defence.
(d) Investee company should be structured to be self-sufficient in areas of product design and development. The
investee/ joint venture company along with manufacturing facility, should also have maintenance and life cycle
support facility of the product being manufactured in India.
7. Broadcasting
7.1 Broadcasting Carriage Services
7.1.1 (a) Teleports (setting up of up-linking HUBs/ Teleports); 100% Automatic
(b) Direct to Home (DTH);

(c) Cable Networks (Multi System Operators (MSOs) operating at
National or State or District level and undertaking up-gradation of
networks towards digitalization and addressability);
(d) Mobile TV;
(e) Head-end-in-the Sky Broadcasting Service (HITS)
7.1.2 Cable Networks (Other MSOs not undertaking up-gradation of 100% Automatic
networks towards digitalization and addressability and Local Cable
Operators (LCOs)).
7.1.3 Note: Infusion of fresh foreign investment for sectors specified in 7.1.1 and 7.1.2 above, beyond 49 percent in a
company not seeking license/ permission from sectoral Ministry, resulting in change in the ownership pattern or
transfer of stake by existing investor to new foreign investor, will require Government approval
7.2 Broadcasting Content Services
7.2.1 Terrestrial Broadcasting FM (FM Radio), subject to such terms and 49% Government
conditions, as specified from time to time, by Ministry of Information
and Broadcasting, for grant of permission for setting up of FM Radio
stations.

No(1) Cap(3)
(2) (4)
7.2.2 Up-Linking of ‘News & Current Affairs’ TV Channels 49% Government
7.2.3 Up-linking of Non-'News & Current Affairs' TV Channels/ Down- 100% Automatic
linking of TV Channels
(a) Foreign investment in companies engaged in all the afore-stated services shall be subject to relevant
regulations and such terms and conditions, as may be specified from time to time, by the Ministry of Information
and Broadcasting.
(b) Foreign investment in the afore-stated broadcasting carriage services shall be subject to the terms and
conditions as may be specified by the Ministry of Information and Broadcasting, from time to time, in this
regard.
(c) Licensee shall ensure that broadcasting service installation carried out by it shall not become a safety hazard
and is not in contravention of any statute, rule or regulations and public policy.
(d) In the l and B sector where the sectoral cap is up to 49 percent, the company should be owned and controlled
by resident Indian citizens or Indian companies which are owned and controlled by resident Indian citizens.
(i) For this purpose, the equity held by the largest Indian shareholder shall be at least 51 percent of the total
equity, excluding the equity held by Public Sector Banks and Public Financial Institutions, as defined in section
4A of the Companies Act, 1956 or Section 2 (72) of the Companies Act, 2013, as the case may be and the term
`largest Indian shareholder' used in this clause, shall include any or a combination of the following, namely :—
(1) In the case of an individual shareholder,
(aa) The individual shareholder,

(bb) A relative of the shareholder within the meaning of Section 2 (77) of Companies Act, 2013.
(cc) A company or group of companies in which the individual shareholder or Hindu Undivided Family
to which he belongs has management and controlling interest.
(2) In the case of an Indian company,
(aa) The Indian company
(bb) A group of Indian companies under the same management and ownership control.
(3) For this purpose, "Indian company" shall be a company which must have a resident Indian or a relative as
defined under section 2 (77) of Companies Act, 2013/ HUF, either singly or in combination holding at least
51percent of the shares.
(4) Provided that, in case of a combination of all or any of the entities mentioned in sub-clauses (d)(i) above,
each of the parties shall have entered into a legally binding agreement to act as a single unit in managing the
matters of the applicant company.
8. Print Media
8.1 Publishing of newspaper and periodicals dealing with news and 26% Government
current affairs
8.2 Publication of Indian editions of foreign magazines dealing with news 26% Government
and current affairs
8.2.1 Other conditions


No(1) Cap(3)
(2) (4)
(a) 'Magazine', for the purpose of these guidelines, shall be defined as a periodical publication, brought out on
non-daily basis, containing public news or comments on public news.
(b) Foreign investment shall also be subject to the Guidelines for Publication of Indian editions of foreign
magazines dealing with news and current affairs issued by the Ministry of Information and Broadcasting on
4-12-2008.
8.3 Publishing or printing of Scientific and Technical Magazine or 100% Government

specialty journals or periodicals, subject to compliance with the legal
framework as applicable and guidelines issued in this regard from
time to time by Ministry of Information and Broadcasting.
8.4 Publication of facsimile edition of foreign newspapers 100% Government
8.4.1 Other conditions:
(a) Foreign investment shall be made by the owner of the original foreign newspapers whose facsimile edition is
proposed to be brought out in India.
(b) Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or
registered in India under the provisions of the Companies Act, 2013.
(c) Publication of facsimile edition of foreign newspaper shall also be subject to the Guidelines for publication of
newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign
newspapers issued by Ministry of Information and Broadcasting on 31-3-2006.
9. Civil Aviation
9.1 The Civil Aviation sector includes Airports, Scheduled and Non-Scheduled domestic passenger airlines,
Helicopter services or Seaplane services, Ground Handling Services, Maintenance and Repair organizations,
Flying training institutes, and Technical training institutions.
For the purposes of the Civil Aviation sector:

(a) "Airport" means a landing and taking off area for aircrafts, usually with runways and aircraft maintenance and
passenger facilities and includes aerodrome as defined in clause (2) of section 2 of the Aircraft Act, 1934;
(b) "Aerodrome" means any definite or limited ground or water area intended to be used, either wholly or in part,
for the landing or departure of aircraft, and includes all buildings, sheds, vessels, piers and other structures
thereon or pertaining thereto;
(c) "Air transport service" means a service for the transport by air of persons, mails or any other thing, animate or
inanimate, for any kind of remuneration whatsoever, whether such service consists of a single flight or series of
flights;
(d) "Air Transport Undertaking" means an undertaking whose business includes the carriage by air of passengers
or cargo for hire or reward;
(e) "Aircraft component" means any part, the soundness and correct functioning of which, when fitted to an
aircraft, is essential to the continued airworthiness or safety of the aircraft and includes any item of equipment;
(f) "Helicopter" means a heavier than air aircraft supported in flight by the reactions of the air on one or more
power driven rotors on substantially vertical axis;
(g) "Scheduled air transport service" means an air transport service undertaken between the same two or more
places and operated according to a published time table or with flights so regular or frequent that they constitute
a recognizably systematic series, each flight being open to use by members of the public;

No(1) Cap(3)
(2) (4)
(h) "Non-Scheduled air transport service" means any service which is not a scheduled air transport service and
will include Cargo airlines;
(i) "Cargo airlines" would mean such airlines which meet the conditions as given in the Civil Aviation
Requirements issued by the Ministry of Civil Aviation;
(j) "Seaplane" means an aeroplane capable normally of taking off from and alighting solely on water;
(k) "Ground Handling" means (i) ramp handling, (ii) traffic handling both of which shall include the activities as
specified by the Ministry of Civil Aviation through the Aeronautical Information Circulars from time to time,
and (iii) any other activity specified by the Central Government to be a part of either ramp handling or traffic
handling.
9.2 Airports
(a) Greenfield projects 100% Automatic
(b) Existing projects 100% Automatic
9.3 Air Transport Services
(a) (i) Scheduled Air Transport Service/ Domestic Scheduled 100% Automatic up to 49%
Passenger Airline Government route beyond
49%(Automatic up to
(ii) Regional Air Transport Service
100% for NRI’s and
OCI’s)
(b) Non-Scheduled Air Transport Service 100% Automatic
(c) Helicopter service or seaplane services requiring Directorate 100% Automatic

General of Civil Aviation approval
9.4 Other Services under Civil Aviation sector
(a) Ground Handling Services subject to sectoral regulations and 100% Automatic
security clearance
(b) Maintenance and Repair organizations; flying training institutes 100% Automatic
and technical training institutions
(a) Air Transport Services shall include Domestic Scheduled Passenger Airlines, Non-Scheduled Air Transport
Services, helicopter and seaplane services.
(b) Foreign airlines are allowed to make foreign investment in Cargo airlines, helicopter and seaplane services, as
per the limits and entry routes mentioned above.
(c) Foreign airlines are allowed to invest in the capital of Indian companies, operating scheduled and non-
scheduled air transport, services up to the limit 49 percent of the paid up capital of the Indian investee company.
Such foreign investment would be subject to the following conditions, namely,:—
(i) It shall be under the Government approval route.
(ii) The foreign investment shall comply with the relevant regulations of Securities and Exchange Board of
India as well as other applicable rules and regulations.
(iii) A Scheduled Operator's Permit may be granted only to a company:

No(1) Cap(3)
(2) (4)
(1) that is registered and has its principal place of business within India;
(2) the Chairman and at least two-thirds of the Directors of which are citizens of India; and
(3) the substantial ownership and effective control of which is vested in Indian citizens.
(iv) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport
services, as a result of such foreign investment shall be cleared from security view point before deployment; and
(v) All technical equipment that might be imported into India as a result of such foreign investment shall
require clearance from the relevant authority in the Ministry of Civil Aviation.
(d) In addition to the above conditions, foreign investment in M/s Air India Limited shall be subject to the
following conditions:
(i) Foreign investment in M/s Air India Ltd., including that of foreign airline(s), shall not exceed 49% either
directly or indirectly.
(ii) Substantial ownership and effective control of M/s Air India Ltd. shall continue to be vested in Indian
Nationals.”
Note:
(4) The sectoral caps or entry routes, mentioned at paragraph 9.3(a) and 9.3(b) above, are applicable in the
situation where there is no investment by foreign airlines.
(5) The dispensation for NRIs and OCIs regarding foreign investment up to 100% shall also be applicable in
respect of the investment regime specified at 9.5(c) above.
(6) The investee company additionally shall have to follow guidelines issued by the concerned ministry of the
Central Government.
10 Construction Development: Townships, Housing, Built-up

infrastructure
10.1 Construction-development projects (which shall include development 100% Automatic

of townships, construction of residential/ commercial premises, roads
or bridges, hotels, resorts, hospitals, educational institutions,
recreational facilities, city and regional level infrastructure,
townships)
10.2 (a) Each phase of the construction development project shall be considered as a separate project.
(b) The investor shall be permitted to exit on completion of the project or after development of trunk
infrastructure i.e. roads, water supply, street lighting, drainage and sewerage.
(c) Notwithstanding anything contained at (b) above, a person resident outside India shall be permitted to exit
and repatriate foreign investment before the completion of project under automatic route, provided that a lock-in-
period of three years, calculated with reference to each tranche of foreign investment has been completed.
Further, transfer of stake from a person resident outside India to another person resident outside India, without
repatriation of foreign investment will neither be subject to any lock-in period nor to any government approval.
(d) The project shall conform to the norms and standards, including land use requirements and provision of
community amenities and common facilities, as laid down in the applicable building control regulations, bye-
laws, rules, and other regulations of the State Government or Municipal or Local Body concerned.

No(1) Cap(3)
(2) (4)
(e) The Indian investee company shall be permitted to sell only developed plots. For the purposes of this policy
"developed plots" shall mean plots where trunk infrastructure i.e. roads, water supply, street lighting, drainage
and sewerage, have been made available.
(f) The Indian investee company shall be responsible for obtaining all necessary approvals, including those of the
building or layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of
development, external development and other charges and complying with all other requirements as prescribed
under applicable rules/ bye-Laws/ regulations of the State Government or Municipal or Local Body concerned.
(g) The State Government or Municipal or Local Body concerned, which approves the building or development
plans, shall monitor compliance of the above conditions by the developer.
Note:
(1) Foreign investment is not permitted in an entity which is engaged or proposes to engage in real estate
business, construction of farm houses and trading in transferable development rights (TDRs).
(2) Condition of lock-in period shall not apply to Hotels and Tourist Resorts, Hospitals, Special Economic Zones
(SEZs), Educational Institutions, Old Age Homes and investment by NRIs or OCIs.
(3) Completion of the project shall be determined as per the local bye-laws/ rules and other regulations of State
Governments.
(4) Foreign investment up to 100 percent under automatic route is permitted in completed projects for operating
and managing townships, malls/ shopping complexes and business centres. Consequent to such foreign
investment, transfer of ownership and/ or control of the investee company from persons resident in India to
persons resident outside India is also permitted, however, there shall be a lock-in-period of three years, calculated
with reference to each tranche of foreign investment and transfer of immovable property or part thereof is not
permitted during this period.
(5) "Transfer", in relation to this sector, includes,—
( a.) the sale, exchange or relinquishment of the asset; or
(b.) the extinguishment of any rights therein; or

(c.) the compulsory acquisition thereof under any law; or
(d.) any transaction involving the allowing of the possession of any immovable property to be taken or
retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act,
1882 (4 of 1882) ; or
(e.) any transaction, by acquiring capital instruments in a company or by way of any agreement or any
arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment
of, any immovable property.
(6) Real estate business’ means dealing in land and immovable property with a view to earning profit therefrom
and does not include development of townships, construction of residential/ commercial premises, roads or
bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships;
Explanation: —
(a) Investment in units of Real Estate Investment Trusts (REITs) registered and regulated under the Securities
and Exchange Board of India (REITs) regulations 2014 shall also be excluded from the definition of “real estate
business”.
(b) Earning of rent income on lease of the property, not amounting to transfer, shall not amount to real estate

No(1) Cap(3)
(2) (4)
business.
(c) Transfer in relation to real estate includes,

(i) the sale, exchange or relinquishment of the asset; or
(ii) the extinguishment of any rights therein; or
(iii) the compulsory acquisition thereof under any law; or

(iv) any transaction involving the allowing of the possession of any immovable property to be taken or
retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act,
1882 (4 of 1882); or
(v) any transaction, by acquiring capital instruments in a company or by way of any agreement or any
arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment
of, any immovable property.
“(7) Real estate broking services shall be excluded from the definition of “real estate business” and 100% foreign
investment is allowed in real estate broking services under automatic route.
11. Industrial Parks 100% Automatic
11.1 For the purpose of this sector:

(a) "Industrial Park" is a project in which quality infrastructure in the form of plots of developed land or built up
space or a combination with common facilities, is developed and made available to all the allottee units for the
purposes of industrial activity.
(b) “Infrastructure” refers to facilities required for functioning of units located in the Industrial Park and includes
roads (including approach roads), railway line/ sidings including electrified railway lines and connectivity to the
main railway line, water supply and sewerage, common effluent treatment facility, telecom network, generation
and distribution of power, air conditioning.
(c) “Common Facilities” refer to the facilities available for all the units located in the industrial park, and include
facilities of power, roads (including approach roads), railway line/ sidings including electrified railway lines and
connectivity to the main railway line, water supply and sewerage, common effluent treatment, common testing,
telecom services, air conditioning, common facility buildings, industrial canteens, convention/ conference halls,
parking, travel desks, security service, first aid centre, ambulance and other safety services, training facilities and
such other facilities meant for common use of the units located in the Industrial Park.
(d) "Allocable area" in the Industrial Park means—
(i) in the case of plots of developed land - the net site area available for allocation to the units, excluding the
area for common facilities.
(ii) in the case of built up space - the floor area and built-up space utilized for providing common facilities.
(iii) in the case of a combination of developed land and built-up space - the net site and floor area available for
allocation to the units excluding the site area and built-up space utilized for providing common facilities.
(e) "Industrial Activity" means manufacturing; electricity; gas and water supply; post and telecommunications;
software publishing, consultancy and supply; data processing, database activities and distribution of electronic
content; other computer related activities; basic and applied research and development on bio-technology,
pharmaceutical sciences or life sciences, natural sciences and engineering; business and management consultancy
activities; and architectural, engineering and other technical activities.

No(1) Cap(3)
(2) (4)
11.2 Foreign investment in Industrial Parks shall not be subject to the conditionalities applicable for construction
development projects etc. spelt out in para 10 above, provided the Industrial Parks meet with the under-
mentioned conditions:
(a) it shall comprise of a minimum of 10 units and no single unit shall occupy more than 50 percent of the
allocable area;
(b) the minimum percentage of the area to be allocated for industrial activity shall not be less than 66 percent of
the total allocable area.
12. Satellites - Establishment and operation
Satellites Establishment and operation, subject to the sectoral 100% Government

guidelines of Department of Space/ ISRO
13. Private Security Agencies 49% Government
14. Telecom services

(including Telecom Infrastructure Providers Category-l)
14.1 All telecom services including Telecom Infrastructure Providers 100% Automatic up to 49%;
Category-I, viz. Basic, Cellular, United Access Services, Unified
license (Access services), Unified License, National/ International
49%
Long Distance, Commercial V-Sat, Public Mobile Radio Trunked
Services (PMRTS), Global Mobile Personal Communications
Services (GMPCS), all types of ISP licenses, Voice Mail/ Audiotex/
UMS, Resale of IPLC, Mobile Number Portability services,
Infrastructure Provider Category-I (providing dark fibre, right of way,
duct space, tower) except Other Service Providers.
The licensing and security conditions as notified by the Department of Telecommunications (DoT) from time to
time, shall be observed by licensee as well as investors except for foreign investment in “Other Service
Providers”, which is allowed up to 100 percent under the automatic route.
15. Trading
15.1 Cash and Carry Wholesale Trading/ Wholesale Trading 100% Automatic
(including sourcing from MSEs)
15.1.1 Definition:
(a) Cash and Carry Wholesale trading (WT)/ Wholesale trading, shall mean sale of goods or merchandise to
retailers, industrial, commercial, institutional or other professional business users or to other wholesalers and
related subordinated service providers.
(b) Wholesale trading shall, accordingly, imply sales for the purpose of trade, business and profession, as
opposed to sales for the purpose of personal consumption. The yardstick to determine whether the sale is
wholesale or not shall be the type of customers to whom the sale is made and not the size and volume of sales.
Wholesale trading shall include resale, processing and thereafter sale, bulk imports with export/ ex-bonded
warehouse business sales and B2B e-Commerce.
15.1.2 Other Conditions


No(1) Cap(3)
(2) (4)
(a) For undertaking ‘WT', requisite licenses/ registration/ permits, as specified under the relevant Acts or
Regulations or Rules or Orders of the State Government or Government Body or Government Authority or
Local Self-Government Body under that State Government shall be obtained.
(b) Except in cases of sales to Government, sales made by the wholesaler shall be considered as 'cash and carry
wholesale trading/ wholesale trading' with valid business customers, only when WT is made to the following
entities:
(i) Entities holding sales tax or VAT registration or service tax or excise duty or Goods and Services Tax
(GST) registration; or
(ii) Entities holding trade licenses i.e. a license or registration certificate or membership certificate or
registration under Shops and Establishment Act, issued by a Government Authority or Government Body/ Local
Self-Government Authority, reflecting that the entity or person holding the license or registration certificate or
membership certificate, as the case may be, is itself or himself or herself engaged in a business involving
commercial activity; or
(iii) Entities holding permits or license etc. for undertaking retail trade (like tehbazari and similar license for
hawkers) from Government Authorities or Local Self Government Bodies; or
(iv) Institutions having certificate of incorporation or registration as a society or registration as public trust for
their self-consumption.
Note: An Entity, to whom WT is made, may fulfil any one of the 4 conditions at (b)(i) to (iv) above.
(c) Full records indicating all the details of such sales like name of entity, kind of entity, registration/ license/
permit etc. number, amount of sale etc. shall be maintained on a day to day basis.
(d) WT of goods shall be permitted among companies of the same group. However, such WT to group companies
taken together shall not exceed 25 percent of the total turnover of the wholesale venture.
(e) WT can be undertaken as per normal business practice, including extending credit facilities subject to
applicable regulations.
(f) A wholesale or cash and carry trader can undertake single brand retail trading, subject to the conditions
mentioned in para 15.3. An entity undertaking wholesale/ cash and carry as well as retail business shall be
mandated to maintain separate books of accounts for these two arms of the business and duly audited by the
statutory auditors. Conditions under these rules for wholesale or cash and carry business and for retail business
have to be separately complied with by the respective business arms.
15.2 E-Commerce
15.2.1 B2B E-commerce activities 100% Automatic
Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter
alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.
15.2.2 Market place model of e-commerce 100 % Automatic
15.2.3 Other Conditions:
(a) E-commerce’ means buying and selling of goods and services including digital products over digital &
electronic network;
(b) ‘E-commerce entity’ means a company incorporated under Companies Act 1956 or the Companies Act,
2013
(c) ‘Inventory based model of e-commerce’ means an e-commerce activity where inventory of goods and

No(1) Cap(3)
(2) (4)
services is owned by e-commerce entity and is sold to the consumers directly;

(d) ‘Market place model of e-commerce’ means providing of an information technology platform by an
e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
(e) Digital and electronic network shall include network of computers, television channels and any other internet
application used in automated manner such as web pages, extranets, mobiles etc.
(f) Marketplace e-commerce entity shall be permitted to enter into transactions with sellers registered on its
platform on B2B basis.
(g) E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order
fulfilment, call centre, payment collection and other services.
(h) E-commerce entity providing a marketplace shall not exercise ownership over the inventory i.e. goods
purported to be sold.
Explanation: Inventory of a vendor shall be deemed to be controlled by e-commerce marketplace entity if

more than 25% of purchases of such vendor are from the marketplace entity or its group companies which
shall render the business into inventory based model.
(i) An entity having equity participation by e-commerce marketplace entity or its group companies or having
control on its inventory by e-commerce marketplace entity or its group companies, shall not be permitted to
sell its products on the platform run by such marketplace entity.’
(j) Goods/ services made available for sale electronically on website shall clearly provide name, address and
other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction
shall be responsibility of the seller.
(k) Payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines issued by
the Reserve Bank in this regard.
(l) Any warranty or guarantee of goods and services sold shall be the responsibility of the seller.
(m) E-commerce entities providing marketplace shall not directly or indirectly influence the sale price of goods
or services and shall maintain level playing field. Services should be provided by e-commerce marketplace
entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or
common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner.
Explanation: Such services shall include but not limited to fulfilment, logistics, warehousing, advertisement
or marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to
buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any
vendor on such terms which are not made available to other vendors in similar circumstances will be deemed
unfair and discriminatory.
(n) Guidelines on cash and carry wholesale trading as given in Sl. No. 15.1.2 above shall apply to B2B
e-commerce activities.
(o) No e-commerce marketplace entity shall mandate any seller to sell any of their product exclusively on its
platform.
(p) All existing investments shall have to be in compliance with the above conditions from the date of issue of
this Notification.
Note: Foreign investment is not permitted in inventory based model of e-commerce.
15.2.4 Sale of services through e-commerce shall be under automatic route subject to the sector specific conditions,

No(1) Cap(3)
(2) (4)
applicable laws/ regulations, security and other conditionalities.
15.3 Single Brand Product Retail Trading 100% Automatic up to 49%;

Foreign investment in Single Brand Product Retail Trading (SBRT) is Government route beyond
aimed at attracting investments in production and marketing, 49%
improving the availability of such goods for the consumer,
encouraging increased sourcing of goods from India and enhancing
competitiveness of Indian enterprises through access to global
designs, technologies and management practices.
15.3.1 Other conditions
(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products shall be sold under the same brand
in one or more countries other than India.
(c) 'Single Brand' product-retail trading shall cover only products which are branded during manufacturing.
(d) A person resident outside India, whether owner of the brand or otherwise, shall be permitted to undertake
‘single brand’ product retail trading in the country for the specific brand, either directly by the brand owner or
through a legally tenable agreement executed between the Indian entity undertaking single brand retail trading
and the brand owner.
(e) In respect of proposals involving foreign investment beyond 51 percent, sourcing of 30 percent of the value of
goods purchased, shall be done from India, preferably from MSMEs, village and cottage industries, artisans and
craftsmen, in all sectors. The quantum of domestic sourcing shall be self-certified by the company, to be
subsequently checked, by statutory auditors, from the duly certified accounts which the company shall be
required to maintain. The procurement requirement is to be met in the first instance as an average of five years
total value of goods purchased beginning 1st April of the year of the commencement of the business. Thereafter it
shall be met on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity
would be the company, incorporated in India, which is the recipient of foreign investment for the purpose of
carrying out single brand product retail trading.
(f) Subject to the conditions mentioned in this Para, a single brand retail trading entity operating through brick
and mortar stores, is permitted to undertake retail trading through e-commerce.
(g) Single brand retail trading entity shall be permitted to set off its incremental sourcing of goods from India for
global operations during initial 5 years, beginning 1st April of the year of the opening of first store, against the
mandatory sourcing requirement of 30% of purchases from India. For this purpose, incremental sourcing shall
mean the increase in terms of value of such global sourcing from India for that single brand (in INR terms) in a
particular financial year from India over the preceding financial year, by the non-resident entities undertaking
single brand retail trading, either directly or through their group companies. After completion of this 5 years
period, the SBRT entity shall be required to meet the 30% sourcing norms directly towards its India’s operation,
on an annual basis.
Note:
(1) Conditions mentioned at (b) and (d) above shall not be applicable for undertaking SBRT of Indian brands.
(2) Indian brands should be owned and controlled by resident Indian citizens and/ or companies which are owned
and controlled by resident Indian citizens.
(3) Sourcing norms shall not be applicable up to three years from commencement of the business i.e. opening of
the first store for entities undertaking single brand retail trading of products having 'state-of-art' and 'cutting-edge'

No(1) Cap(3)
(2) (4)
technology and where local sourcing is not possible. Thereafter, condition mentioned at 15.3.1(e) above shall be
applicable. A Committee under the Chairmanship of Secretary, DPIIT, with representatives from NITI Aayog,
concerned Administrative Ministry and independent technical expert(s) on the subject shall examine the claim of
applicants on the issue of the products being in the nature of ‘state-of-art’ and ‘cutting-edge’ technology where
local sourcing is not possible and give recommendations for such relaxation.
15.4 Multi Brand Retail Trading (MBRT) 51% Government
15.4.1 Other Conditions
(a) Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and
meat products, can be unbranded.
(b) Minimum amount to be brought in as foreign investment would be USD 100 million.
(c) At least 50 percent of the total foreign investment brought in the first tranche of USD 100 million, shall be
invested in 'back-end infrastructure' within three years, where 'back-end infrastructure' shall include capital
expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure shall include
investment made towards processing, manufacturing, distribution, design improvement, quality control,
packaging, logistics, storage, warehouse, agriculture market produce infrastructure etc. Expenditure on land cost
and rentals, if any, shall not be counted for purposes of back-end infrastructure. Subsequent investment in the
back-end infrastructure would be made by the MBRT retailer as needed, depending upon its business
requirements.
(d) At least 30 percent of the value of procurement of manufactured or processed products purchased shall be
sourced from Indian micro, small and medium industries, which have a total investment in plant and machinery
not exceeding USD2 million. This valuation refers to the value at the time of installation, without providing for
depreciation. The 'small industry' status shall be reckoned only at the time of first engagement with the retailer
and such industry shall continue to qualify as a 'small industry' for this purpose, even if it outgrows the said
investment of USD2 million during the course of its relationship with the said retailer. Sourcing from agricultural
co-operatives and farmers co-operatives shall also be considered in this category. The procurement requirement
shall have to be met, in the first instance, as an average of five years total value of the manufactured/ processed
products purchased, beginning 1st April of the year during which the first tranche of foreign investment is
received. Thereafter, it shall have to be met on an annual basis.
(e) Self-certification is required by the company, to ensure compliance of the conditions at serial nos. (b), (c) and
(d) above, which could be cross-checked, as and when required. Accordingly, the investors shall maintain
accounts, duly certified by statutory auditors.
(f) Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per the 2011 Census
or any other cities as per the decision of the respective State Governments, and may also cover an area of 10 kms.
Around the municipal or urban agglomeration limits of such cities; retail locations shall be restricted to
conforming areas as per the Master or Zonal Plans of the concerned cities and provision shall be made for
requisite facilities such as transport connectivity and parking.
(g) Government shall have the first right to procure agricultural products.
(h) The above policy is an enabling policy only and the State Governments or Union Territories shall be free to
take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in
those States or Union Territories which have agreed, or agree in future, to allow foreign investment in MBRT
under this policy. The States or Union Territories which have conveyed their agreement are mentioned at 15.4.2.
Such agreement, in future, to permit establishment of retail outlets under this policy, would be conveyed to the
Government of India through the Department of Industrial Policy and Promotion and additions shall be made to

No(1) Cap(3)
(2) (4)
the said list. The establishment of the retail sales outlets shall be in compliance of applicable State/ Union
Territory laws or regulations, such as the Shops and Establishments Act etc.
(i) Retail trading, in any form, by means of e-commerce, shall not be permissible, for companies with foreign
investment engaged in multi-brand retail trading.
(j) Applications shall be processed in the Department of Industrial Policy and Promotion, to determine whether
the proposed investment satisfies the notified guidelines, before being considered for Government approval.
15.4.2 States or Union territories are Andhra Pradesh, Assam, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir,
Karnataka, Maharashtra, Manipur, Rajasthan, Uttarakhand, Daman and Diu and Dadra and Nagar Haveli (Union
territories)
15.5 Duty Free Shops 100% Automatic
15.5.1 Other Conditions:
(a) Duty Free Shops would mean shops set up in custom bonded area at International Airports or International
Seaports and Land Custom Stations where there is transit of international passengers.
(b) Foreign investment in Duty Free Shops is subject to compliance of conditions stipulated under the Customs
Act, 1962 and other laws, rules and regulations.
(c) Duty Free Shop entity shall not engage into any retail trading activity in the Domestic Tariff Area of the
country.
16 Pharmaceuticals
16.1 Greenfield 100% Automatic
16.2 Brownfield 100% Automatic up to 74%;

74%
(a) 'Non-compete' clause shall not be allowed except in special circumstances with the Government approval.
(b) The prospective investor and the prospective investee are required to provide a certificate given at 16.4 along
with the application submitted for Government approval.
(c) Government approval may incorporate appropriate conditions for foreign investment in brownfield cases.
(d) Foreign investment in brownfield pharmaceuticals, irrespective of entry route, is further subject to the
following conditions :
(i) The production level of National List of Essential Medicines (NLEM) drugs and/ or consumables and their
supply to the domestic market at the time of induction of foreign investment, being maintained over the next five
years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level
of production of NLEM drugs and/ or consumables in the three financial years, immediately preceding the year
of induction of foreign investment. Of these, the highest level of production in any of these three years shall be
taken as the level.
(ii) Research and Development (R&D) expenses being maintained in value terms for 5 years at an absolute
quantitative level at the time of induction of foreign investment. The benchmark for this level would be decided
with reference to the highest level of R&D expenses which has been incurred in any of the three financial years
immediately preceding the year of induction of foreign investment.

No(1) Cap(3)
(2) (4)
(iii) The administrative Ministry shall be provided complete information pertaining to the transfer of
technology, if any, along with induction of foreign investment into the investee company.
(iv) The administrative Ministry (s) i.e. Ministry of Health and Family Welfare, Department of
Pharmaceuticals or any other regulatory Agency/Development as notified by Central Government from time to
time, shall monitor the compliance of conditionalities.
Note :
(1) Foreign investment up to 100% under the automatic route is permitted for manufacturing of medical devices.
The abovementioned conditions shall, therefore, not be applicable to greenfield as well as brownfield projects of
this industry.
(2) Medical device means :-

(a) Any instrument, apparatus, appliance, implant, material or other article, whether used alone or in
combination, including the software, intended by its manufacturer to be used specially for human beings or
animals for one or more of the specific purposes of:-
(aa) Diagnosis, prevention, monitoring, treatment or alleviation of any disease or disorder;
(ab) diagnosis, monitoring, treatment, alleviation of, or assistance for, any injury or disability;
(ac) investigation, replacement or modification or support of the anatomy or of a physiological process;

(ad) supporting or sustaining life;
(ae) disinfection of medical devices;
(af) control of conception;

and which does not achieve its primary intended action in or on the human body or animals by any
pharmacological or
immunological or metabolic means, but which may be assisted in its intended function by such means;
(b) an accessory to such an instrument, apparatus, appliance, material or other article;
(c) “in-vitro diagnostic device which is a reagent, reagent product, calibrator, control material, kit, instrument,
apparatus, equipment or system, whether used alone or in combination thereof intended to be used for
examination and providing information for medical or diagnostic purposes by means of examination of
specimens derived from the human bodies or animals.
16.4 Certificate to be furnished by the Prospective Investor as well as the Prospective Recipient Entity
It is certified that the following is the complete list of all inter-se agreements, including the shareholders
agreement, entered into between foreign investor(s) and investee brownfield pharmaceutical entity
1. ………………
2. ……………….
3. ……………….
(copies of all agreements to be enclosed)
It is also certified that none of the inter-se agreements, including the shareholders agreement, entered into

No(1) Cap(3)
(2) (4)
between foreign investor(s) and investee brownfield pharmaceutical entity contain any non-compete clause in
any form whatsoever.
It is further certified that there are no other contracts/agreements between the foreign investor(s) and investee
brownfield pharma entity other than those listed above.
The foreign investor(s) and investee brownfield pharma entity undertake to submit to the FIPB any inter-se
agreements that may be entered into between them subsequent to the submission and consideration of this
application.
17 Railway Infrastructure
17.1 Construction, operation and maintenance of the following: 100% Automatic

(i) Suburban corridor projects through PPP, (ii) high-speed train
projects, (iii) Dedicated freight lines, (iv) Rolling stock including train
sets, and locomotives/ coaches manufacturing and maintenance
facilities, (v) Railway Electrification, (vi) Signalling systems, (vii)
Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in
industrial park pertaining to railway line/ sidings including electrified
railway lines and connectivity to main railway line and (x) Mass
Rapid Transport Systems.
(a) Foreign investment in this sector open to private-sector participation is subject to sectoral guidelines of
Ministry of Railways.
(b) Proposals involving foreign investment beyond 49 percent sensitive areas from security point of view, will be
brought by the Ministry of Railways before the Cabinet Committee on Security (CCS) for consideration on a
case to case basis.
F FINANCIAL SERVICES
Investment in financial services, other than those indicated below, would require prior Government approval.
F.1 Asset Reconstruction Companies 100% Automatic
F.1.1 Other Conditions
(a) Investment limit of a sponsor in the shareholding of an ARC shall be governed by the provisions of
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Similarly,
investment by institutional or non-institutional investors shall also be governed by the said Act.
(b) FPIs can invest in the Security Receipts (SRs) issued by ARCs. FPIs may be allowed to invest up to 100
percent of each tranche in SRs issued by ARCs, subject to directions/ guidelines of Reserve Bank. Such
investment shall be within the relevant regulatory cap as applicable.
(c) All investments shall be subject to provisions of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002.
F.2 Banking - Private sector 74% Automatic up to 49%

49% and up to 74%
F.2.1 Other conditions:


No(1) Cap(3)
(2) (4)
(a) At all times, at least 26 percent of the paid up capital shall have to be held by residents, except in regard to a
wholly-owned subsidiary of a foreign bank.
(b) In case of NRIs individual holdings is restricted to 5 percent of the total paid up capital both on repatriation
and non-repatriation basis and aggregate limit cannot exceed 10 percent of the total paid up capital both on
repatriation and non-repatriation basis. However, NRI holdings shall be allowed up to 24 percent of the total paid
up capital both on repatriation and non-repatriation basis subject to a special resolution to this effect passed by
the banking company’s general body.
(c) Applications for foreign investment in private banks having joint venture or subsidiary in insurance sector
may be addressed to the Reserve Bank for consideration in consultation with the Insurance Regulatory and
Development Authority of India (IRDAI) in order to ensure that the 49 percent limit of investment applicable for
the insurance sector is not breached.
(d) Transfer of shares under FDI from residents to non-residents shall require approval of the Reserve Bank and/
or the Government, wherever applicable.
(e) The policies and procedures prescribed by RBI and other institutions such as Securities and Exchange Board
of India, Ministry of Corporate Affairs and IRDAI on these matters shall apply.
(f) RBI guidelines relating to acquisition by purchase or otherwise of capital instruments of a private bank, if
such acquisition results in any person owning or controlling 5 percent or more of the paid up capital of the
private bank shall apply to foreign investment as well.
(g) Setting up of a subsidiary by foreign banks:

(i) Foreign banks shall be permitted to either have branches or subsidiaries but not both.
(ii) Foreign banks regulated by banking supervisory authority in the home country and meeting Reserve
Bank's licensing criteria shall be allowed to hold 100 percent paid-up capital to enable them to set up a wholly-
owned subsidiary in India.
(iii) A foreign bank may operate in India through only one of the three channels viz., (i) branches (ii) a
wholly-owned subsidiary (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 percent in a
private bank.
(iv) A foreign bank shall be permitted to establish a wholly-owned subsidiary either through conversion of
existing branches into a subsidiary or through a fresh banking license. A foreign bank shall be permitted to
establish a subsidiary through acquisition of shares of an existing private sector bank provided at least 26 percent
of the paid-up capital of the private sector bank is held by residents at all times consistent with para (c) above.
(v) A subsidiary of a foreign bank shall be subject to the licensing requirements and conditions broadly
consistent with those for new private sector banks.
(vi) Guidelines for setting up a wholly-owned subsidiary of a foreign bank shall be issued separately by RBI.
(vii) All applications by a foreign bank for setting up a subsidiary or for conversion of their existing
branches to subsidiary in India shall have to be made to the RBI.
(h) The present limit of 10 percent on voting rights in respect banking companies may be noted by the potential
investor.
(i) All investments shall be subject to the guidelines prescribed for the banking sector under the Banking
Regulation Act, 1949 and the Reserve Bank of India Act, 1934.
F.3 Banking - Public Sector


No(1) Cap(3)
(2) (4)
F.3.1 Banking - Public Sector subject to Banking Companies (Acquisition 20% Government
& Transfer of Undertakings) Acts, 1970/ 80. This ceiling is also
applicable to the State Bank of India.
F.4 Infrastructure Companies in the Securities Market
F.4.1 Infrastructure companies in Securities Markets, namely, stock 49% Automatic

exchanges, commodity derivative exchanges, depositories and
clearing corporations, in compliance with Securities and Exchange
Board of India Regulations.
F.4.2 Other conditions:
(a) Foreign investment, including investment by FPIs, shall be subject to the Guidelines or Rules or Regulations
issued by the Central Government, Securities and Exchange Board of India and the Reserve Bank from time to
time.
(b) Words and expressions used herein and not defined in these rules but defined in the Companies Act, 2013 (18
of 2013) or the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of
India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) or in the concerned Regulations issued
by Securities and Exchange Board of India shall have the same meanings respectively assigned to them in those
Acts or Regulations.
F.5 Commodities Spot Exchange 49% Automatic
F.5.1 Investment shall be subject to guidelines prescribed by the Central or State Government.
F.6 Power Exchanges
Power Exchanges under the Central Electricity Regulatory 49% Automatic

Commission (Power Market) Regulations, 2010.
F.6.1 Other conditions
(a) A person resident outside India including persons acting in concert should not hold more than 5 percent.
(b) The investment shall be in compliance with Securities and Exchange Board of India Regulations, other
applicable laws/ rules/ regulations, security and other conditionalities.
F.7 Credit Information Companies 100% Automatic
(a) Foreign investment in Credit Information Companies is subject to the Credit Information Companies
(Regulation) Act, 2005 and regulatory clearance from the Reserve Bank.
(b) FPI investment shall be permitted subject to the following conditions:

(i) A single entity shall directly or indirectly hold below 10 percent equity;
(ii) Any acquisition in excess of 1 percent shall have to be reported to Reserve Bank as a mandatory
requirement; and
(iii) FPIs investing in Credit Information Companies shall not seek a representation on the Board of Directors
based upon their shareholding.
F.8 Insurance

No(1) Cap(3)
(2) (4)
F.8.1 (a) Insurance Company 49% Automatic

(b) Insurance Brokers
(c) Third Party Administrators
(d) Surveyors and Loss Assessors

(e) Other Insurance Intermediaries appointed under the provisions of
Insurance Regulatory and Development Authority Act, 1999 (41 of
1999).
(a) Foreign investment in this sector shall be subject to compliance with the provisions of the Insurance Act,
1938 and subject to necessary license or approval from the Insurance Regulatory and Development Authority of
India for undertaking insurance and related activities.
(b) An Indian Insurance company shall ensure that its ownership and control remains at all times with resident
Indian entities as determined by the Central Government or Insurance Regulatory and Development Authority of
India as per the rules/ regulation issued.
(c) Where an entity like a bank, whose primary business is outside the insurance area, is allowed by the Insurance
Regulatory and Development Authority of India to function as an insurance intermediary, the foreign equity
investment caps applicable in that sector shall continue to apply, subject to the condition that the revenues of
such entities from their primary (i.e., non-insurance related) business must remain above 50 percent of their total
revenues in any financial year.
(d) The provisions of paragraphs F.2.1 relating to 'Banking-Private Sector', shall be applicable in respect of bank
promoted insurance companies.
(e) Terms 'Control', 'Equity Share Capital', 'Foreign Direct Investment' (FDI), 'Foreign Investors', 'Foreign
Portfolio Investment', 'Indian Insurance Company', 'Indian Company', 'Indian Control of an Indian Insurance
Company', 'Indian Ownership', 'Non-resident Entity', 'Public Financial Institution', 'Resident Indian Citizen',
'Total Foreign Investment' will have the same meaning as provided in Notification No. G.S.R 115 (E), dated 19th
February, 2015 issued by Department of Financial Services and regulations issued by Insurance Regulatory and
Development Authority of India from time to time.
F.9 Pension Sector 49% Automatic
(a) Foreign investment in this sector shall be in accordance with the Pension Fund Regulatory and Development
Authority (PFRDA) Act, 2013.
(b) Foreign investment in Pension Funds shall be subject to the condition that entities investing in capital
instruments issued by an Indian Pension Fund as per Section 24 of the PFRDA Act, 2013 shall obtain necessary
registration from the PFRDA and comply with other requirements as per the PFRDA Act, 2013 and Rules and
Regulations framed under it for so participating in Pension Fund Management activities in India.
(c) An Indian pension fund shall ensure that its ownership and control remains at all times with resident Indian
entities as determined by the Government of India/ PFRDA as per the rules or regulation issued by them.
F.10 Other Financial Services 100% Automatic


No(1) Cap(3)
(2) (4)
(a) Other Financial Services shall mean financial services activities regulated by financial sector regulators, viz.,
Reserve Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority,
Pension Fund Regulatory and Development Authority, National Housing Bank or any other financial sector
regulator as may be notified by the Government of India.
(b) Foreign investment in 'Other Financial Services' activities shall be subject to

conditionalities, including minimum capitalization norms, as specified by the concerned Regulator/Government
Agency
(c) 'Other Financial Services' activities need to be regulated by one of the Financial Sector Regulators. In all such
financial services activity which are not regulated by any Financial Sector Regulator or where only part of the
financial services activity is regulated or where there is doubt regarding the regulatory oversight, foreign
investment up to 100 percent will be allowed under Government approval route subject to conditions including
minimum capitalization requirement, as may be decided by the Government.
(d) Any activity which is specifically regulated by an Act, the foreign investment limits shall be restricted to
those levels/ limit that may be specified in that Act, if so mentioned.
(e) Downstream investments by any of these entities engaged in "Other Financial Services" that is treated as
indirect foreign investment for the investee entity shall be subject to these rules.
SCHEDULE II
(See rule 10(1))
Investments by Foreign Portfolio Investors

(1) Purchase or sale of equity instruments by Foreign Portfolio Investors
(a) Purchase and sale of equity instruments.-
A FPI may purchase or sell equity instruments of an Indian company listed or to be listed on a recognised stock exchange
in India subject to the following conditions, namely:-
(i) The total holding by each FPI or an investor group, shall be less than 10 percent of the total paid-up equity capital on a
fully diluted basis or less than 10 percent of the paid-up value of each series of debentures or preference shares or share
warrants issued by an Indian company and the total holdings of all FPIs put together, including any other direct and
indirect foreign investments in the Indian company permitted under these rules, shall not exceed 24 per cent of paid-up
equity capital on a fully diluted basis or paid up value of each series of debentures or preference shares or share warrants.
The said limit of 10 percent and 24 percent shall be called the individual and aggregate limit, respectively.
(ii) With effect from the 1st April, 2020, the aggregate limit shall be the sectoral caps applicable to the Indian company as
laid out in sub-paragraph (b) of paragraph 3of Schedule I of these rules, with respect to its paid-up equity capital on a
fully diluted basis or such same sectoral cap percentage of paid up value of each series of debentures or preference shares
or share warrants:
Provided that the aggregate limit as provided above may be decreased by the Indian company concerned to a lower
threshold limit of 24% or 49% or 74% as deemed fit, with the approval of its Board of Directors and its General Body
through a resolution and a special resolution, respectively before 31st March, 2020:
Provided further, that the Indian company which has decreased its aggregate limit to 24% or 49% or 74%, may
increase such aggregate limit to 49% or 74% or the sectoral cap or statutory ceiling respectively as deemed fit, with the
approval of its Board of Directors and its General Body through a resolution and a special resolution, respectively:
Provided also that once the aggregate limit has been increased to a higher threshold, the Indian company cannot reduce
the same to a lower threshold:
Provided also that the aggregate limit with respect to an Indian company in a sector where FDI is prohibited shall be
24 per cent.
Explanation: In case, two or more FPI’s including foreign Governments/their related entities are having common
ownership, directly or indirectly, of more than fifty percent or common control, all such FPI’s shall be treated as forming
part of an investor group. Control includes the right to appoint majority of the directors or to control the management or
policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by
virtue of shareholding or management rights or shareholders agreements or voting agreements or in any other manner.
(iii) The FPIs investing in breach of the prescribed limit shall have the option of divesting their holdings within 5 trading
days from the date of settlement of the trades causing the breach. In case the FPI chooses not to divest, then the entire
investment in the company by such FPI and its investor group shall be considered as investment under Foreign Direct
Investment (FDI) and the FPI and its investor group shall not make further portfolio investment in the company
concerned. The FPI, through its designated custodian, shall bring the same to the notice of the depositories as well as the
concerned company for effecting necessary changes in their records, within 7 trading days from the date of settlement of
the trades causing the breach. The breach of the said aggregate or sectoral limit on account of such acquisition for the
period between the acquisition and sale or conversion to FDI within the prescribed time, shall not be reckoned as a
contravention under these Rules.
(iv) The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government or
its related entities for the purpose of calculation of 10 percent limit for FPI investments in a single company, if they form
part of an investor group. However, certain foreign Government agencies and its related entities may be exempt from
such clubbing requirements and other investment conditions either by way of an agreement or treaty with other sovereign
governments or by an order of the Central Government.
(v) A FPI may purchase equity instruments of an Indian company through public offer or private placement, subject to
the individual and aggregate limits specified under this Schedule:
Provided that -
(A) in case of public offer, the price of the shares to be issued is not less than the price at which shares are issued to
residents, and
(B) in case of issue by private placement, the price is not less than- (a) the price arrived in terms of guidelines issued by
the Securities and Exchange Board of India, or (b) the fair price worked out as per any internationally accepted pricing
methodology for valuation of shares on arm’s length basis, duly certified by a Merchant Banker or Chartered Accountant
or a practicing Cost Accountant, as applicable registered with the Securities and Exchange Board of India
(vi) A FPI may, undertake short selling as well as lending and borrowing of securities subject to such conditions as may
be stipulated by the Reserve Bank and the Securities and Exchange Board of India from time to time.
(vii) Investments made under this Schedule shall be subject to the limits and margin requirements specified by the
Reserve Bank or the Securities and Exchange Board of India as well as the stipulations regarding collateral securities as
specified by the Reserve Bank from time to time.
(b) Purchase or sale of securities other than equity instruments by FPIs.-

(i) A FPI may purchase units of domestic mutual funds or Category III Alternative Investment Fund or offshore fund for
which no objection is issued in accordance with the SEBI (Mutual Fund) Regulations, 1996, which in turn invest more
than 50 percent in equity instruments on repatriation basis subject to the terms and conditions specified by the Securities
and Exchange Board of India and the Reserve Bank.
(ii) An FPI may purchase units of REITs and InVITs on repatriation basis subject to the terms and conditions specified
by the Securities and Exchange Board of India.
(2) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be
specified by the Reserve Bank.
SCHEDULE III
(See rule 12(1))
Investments by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis
(1) Purchase or sale of equity instruments of a listed Indian company

A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may purchase or sell equity instruments of a listed
Indian company on repatriation basis, on a recognized stock exchange in India, subject to the following conditions,
namely :-
(a) NRIs or OCIs may purchase and sell equity instruments through a branch designated by an Authorized Dealer for the
purpose;
(b) The total holding by any individual NRI or OCI shall not exceed 5 percent of the total paid-up equity capital on a
fully diluted basis or shall not exceed 5 percent of the paid-up value of each series of debentures or preference shares or
share warrants issued by an Indian company and the total holdings of all NRIs and OCIs put together shall not exceed ten
percent of the total paid-up equity capital on a fully diluted basis or shall not exceed ten percent of the paid-up value of
each series of debentures or preference shares or share warrants:
Provided that the aggregate ceiling of 10 percent may be raised to 24 percent if a special resolution to that effect is
passed by the General Body of the Indian company.
(2) Purchase or sale of units of domestic mutual funds
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may without limit purchase or sell units of domestic
mutual funds which invest more than 50 percent in equity.
(3) Purchase or sale of shares in public sector enterprises
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may, without limit purchase or sell shares in public
sector enterprises being disinvested by the Central Government, provided the purchase is in accordance with the terms
and conditions stipulated in the notice inviting bids.
(4) Subscription to National Pension System.-
A NRI or an OCI may subscribe to the National Pension System governed and administered by Pension Fund Regulatory
and Development Authority (PFRDA), provided such person is eligible to invest as per the provisions of the Pension
Fund Regulatory and Development Authority Act. The annuity/ accumulated saving will be repatriable:
Provided that NRIs or OCIs may offer such instruments as permitted by the Reserve Bank from time to time as
collateral to the recognised Stock Exchanges in India for their transactions in exchange traded derivative contracts as
prescribed in sub-clause (2) of clause 12 of these Rules.
(5) The mode of payment and attendant conditions for remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
SCHEDULE IV
(See rule 12(2))

Investment by NRI or OCI on non-repatriation basis
A. Purchase or sale of equity instruments of an Indian company or units or contribution to the capital of a LLP by
Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on Non-repatriation basis.
(1) Purchase or sale of equity instruments or convertible notes or units or contribution to the capital of a LLP.
(a) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI), including a company, a trust and a partnership
firm incorporated outside India and owned and controlled by NRIs or OCIs, may purchase or contribute, as the case may
be, on non-repatriation basis the following, namely:-
(i) a equity instrument issued by a company without any limit either on the stock exchange or outside it;
(ii) units issued by an investment vehicle without any limit, either on the stock exchange or outside it;
(iii) The capital of a Limited Liability Partnership without any limit;
(iv) convertible notes issued by a startup company in accordance with these rules.
(b) The investment detailed at sub-paragraph (a) of paragraph (1) above shall be deemed to be domestic investment at
par with the investment made by residents.
(2) Purchase or sale of units of domestic mutual funds
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may without limit purchase or sell units of domestic
mutual funds on non-repatriation basis which invest more than 50% in equity.
(3) Prohibition on purchase of equity instruments of certain companies.
Notwithstanding anything contained in paragraph 1, a NRI or an OCI including a company, a trust and a partnership firm
incorporated outside India and owned and controlled by NRIs or OCIs, shall not make any investment, under this
Schedule, in equity instruments or units of a Nidhi company or a company engaged in agricultural or plantation activities
or real estate business or construction of farm houses or dealing in transfer of development rights.
Explanation: Real estate business shall have the same meaning as specified in sub-paragraph (b) of paragraph (3) of
Schedule 1.
Reserve Bank.
B. Investment in a firm or a proprietary concern.

(1) Contribution to capital of a firm or a proprietary concern.
A NRI or an OCI may invest on a non-repatriation basis, by way of contribution to the capital of a firm or a proprietary
concern in India provided such firm or proprietary concern is not engaged in any agricultural or plantation activity or
print media or real estate business.
Explanation: Real estate business shall have the same meaning as specified in sub paragraph (b) of paragraph (3) of
Schedule I.
Reserve Bank.
SCHEDULE V
(See Rule (14))
Investment by other non-resident investors
Permission to other non-resident investors for purchase of securities

(1) Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance
Funds, Pension Funds and Foreign Central Banks may purchase securities subject to such terms and conditions as may be
specified by the Reserve Bank and the Securities and Exchange Board of India.
(2) “Eligible Foreign Entity (EEE)” as defined in SEBI circular dated the 9th October 2018 and having actual exposure to
Indian physical commodity market may participate in domestic commodity derivative markets in accordance with
framework specified by the Securities and Exchange Board of India.
the Reserve Bank.
SCHEDULE VI
(See rule 6(b))
Investment in a Limited Liability Partnership (LLP)
(a) A person resident outside India (other than a citizen of Pakistan or Bangladesh)or an entity incorporated outside
India (other than an entity incorporated in Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a
Foreign Venture Capital Investor (FVCI), may contribute to the capital of an LLP operating in sectors or activities where
foreign investment up to 100 per cent is permitted under automatic route and there are no FDI linked performance
conditions.
(b) Investment by way of “profit share” shall fall under the category of reinvestment of earnings.
(c) Investment in a LLP is subject to the compliance of the conditions of Limited Liability Partnership Act, 2008.
(d) A company having foreign investment, engaged in a sector where foreign investment up to 100 percent is permitted
under the automatic route and there are no FDI linked performance conditions, may be converted into a LLP under the
automatic route.
(e) A LLP having foreign investment, engaged in a sector where foreign investment up to 100 per cent is permitted
under the automatic route and there are no FDI linked performance conditions, may be converted into a company under
the automatic route.
(f) Investment in a LLP either by way of capital contribution or by way of acquisition or transfer of profit shares, should
not be less than the fair price worked out as per any valuation norm which is internationally accepted or adopted as per
market practice (hereinafter referred to as “fair price of capital contribution or profit share of a LLP”) and a valuation
certificate to that effect shall be issued by the Chartered Accountant or by a practising Cost Accountant or by an
approved valuer from the panel maintained by the Central Government.
(g) In case of transfer of capital contribution or profit share from a person resident in India to a person resident outside
India, the transfer shall be for a consideration not less than the fair price of capital contribution or profit share of a LLP.
Further, in case of transfer of capital contribution or profit share from a person resident outside India to a person resident
in India, the transfer shall be for a consideration which is not more than the fair price of the capital contribution or profit
share of an LLP.
(h) The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by
the Reserve Bank .
SCHEDULE VII
(See rule 16)
Investment by a Foreign Venture Capital Investor (FVCI)

(1) Subject to the terms and conditions as may be laid down by the Central Government, a Foreign Venture Capital
Investor (FVCI) may purchase,- -
(i) securities, issued by an Indian company engaged in any sector mentioned in paragraph (4) of this Schedule and whose
securities are not listed on a recognised stock exchange at the time of issue of the said securities;
(ii) units of a Venture Capital Fund (VCF) or of a Category I Alternative Investment Fund (Cat-I AIF) or units of a
scheme or of a fund set up by a VCF or by a Cat-I AIF.
(iii) equity or equity linked instrument or debt instrument issued by an Indian ‘start-up’ irrespective of the sector in
which the start-up is engaged. The definition of ‘start-up’ shall be as per Department for Promotion of Industry and
Internal Trade’s Notification No. G.S.R. 364(E), dated the 11th April, 2018 :
Provided that if the investment is in equity instruments, then the sectoral caps, entry routes and attendant conditions
shall apply.
(2) A FVCI may purchase the securities or instruments mentioned above either from the issuer of these securities/
instruments or from any person holding these securities or instruments. The FVCI may invest in securities on a
recognised stock exchange subject to the provisions of the Securities and Exchange Board of India (FVCI) Regulations,
2000.
(3) The FVCI may acquire, by purchase or otherwise, from, or transfer, by sale or otherwise, to, any person resident in or
outside India, any security or instrument it is allowed to invest in, at a price that is mutually acceptable to the buyer and
the seller/ issuer. The FVCI may also receive the proceeds of the liquidation of VCFs or of Cat-I AIFs or of schemes or
funds set up by the VCFs or Cat-I AIFs.
the Reserve Bank of India
(5) List of sectors in which a Foreign Venture Capital Investor is allowed to invest is as follows :-
(a) biotechnology;
(b) IT related to hardware and software development;
(c) nanotechnology;
(d) seed research and development;

(e) research and development of new chemical entities in pharmaceutical sector.
(f) dairy industry;
(g) poultry industry;

(h) production of bio-fuels;
(i) hotel-cum-convention centres with seating capacity of more than three thousand;
(j) Infrastructure sector. The term “Infrastructure Sector” has the same meaning as given in the Harmonised Master List
of Infrastructure sub-sectors approved by Government of India vide notification F. No. 13/06/2009- INF, dated the
March 27, 2012 as amended or updated.
SCHEDULE VIII
(See Rule 6(c))
Investment by a person resident outside India in an Investment Vehicle
(1) A person resident outside India (other than a citizen of Pakistan or Bangladesh)or an entity incorporated outside
India (other than an entity incorporated in Pakistan or Bangladesh) may invest in units of Investment Vehicles.
(2) A person resident outside India who has acquired or purchased units in accordance with this Schedule may sell or
transfer in any manner or redeem the units as per regulations framed by the Securities and Exchange Board of India or
directions issued by the Reserve Bank.
(3) An Investment vehicle may issue its units to a person resident outside India against swap of equity instruments of a
Special Purpose Vehicle (SPV) proposed to be acquired by such Investment Vehicle.
(4) Investment made by an Investment Vehicle into an Indian entity shall be reckoned as indirect foreign investment for
the investee Indian entity if the Sponsor or the Manager or the Investment Manager (i) is not owned and not controlled by
resident Indian citizens or (ii) is owned or controlled by persons resident outside India.
Provided that for sponsors or managers or investment managers organised in a form other than companies or
LLPs, Securities and Exchange Board of India shall determine whether the sponsor or manager or investment manager is
foreign owned and controlled.
Explanation: “Control” of the AIF should be in the hands of “sponsors” and “managers or investment managers”, with
the general exclusion to others. In case the “sponsors” and “managers or investment managers” of the AIF are
individuals, for the treatment of downstream investment by such AIF as domestic, “sponsors” and “manager or
investment managers” should be resident Indian citizens.
(5) An Alternative Investment Fund Category III which has received any foreign investment shall make portfolio
investment in only those securities or instruments in which a FPI is allowed to invest under the Act or rules or regulations
made thereunder.
the Reserve Bank .
SCHEDULE IX
(See rule 6(d))
Investment in Depository Receipts by a person resident outside India

(1) Issue or transfer of eligible instruments to a foreign depository for the purpose of issuance of depository
receipts by eligible person(s).-
(a) Any security or unit in which a person resident outside India is allowed to invest under these rules shall be eligible
instruments for issue of Depository Receipts in terms of Depository Receipts Scheme, 2014 (DR Scheme,2014).
(b) A person shall be eligible to issue or transfer eligible instruments to a foreign depository for the purpose of issuance
of depository receipts in accordance with the DR Scheme, 2014 and guidelines issued by the Central Government in this
regard.
(c) A domestic custodian may purchase eligible instruments on behalf of a person resident outside India, for the purpose
of converting the instruments so purchased into depository receipts in terms of DR Scheme, 2014.
(d) The aggregate of eligible instruments which may be issued or transferred to foreign depositories, along with eligible
instruments already held by persons resident outside India, shall not exceed the limit on foreign holding of such eligible
instruments under the Act, rules or regulations framed thereunder.
(e) The eligible instruments shall not be issued or transferred to a foreign depository for the purpose of issuing
depository receipts at a price less than the price applicable to a corresponding mode of issue or transfer of such
instruments to domestic investors under the applicable laws.
(2) Saving.-
Depository Receipts issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through
Depository Receipt Mechanism) Scheme, 1993 shall be deemed to have been issued under the corresponding provisions
of DR Scheme 2014 and have to comply with the provisions specified in this Schedule.
SCHEDULE X
(See rule 10(2))

Issue of Indian Depository Receipts
(1) Issue of IDRs.-Companies incorporated outside India may issue IDRs through a Domestic Depository, to persons
resident in India and outside India, subject to the following conditions:
(a) the issue of IDRs is in compliance with the Companies (Registration of Foreign Companies) Rules, 2014 and the
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(b) any issue of IDRs by financial or banking companies having presence in India, either through a branch or subsidiary,
shall require prior approval of the sectoral regulator(s);
(c) IDRs shall be denominated in Indian rupee only;

(d) the proceeds of the issue of IDRs shall be immediately repatriated outside India by the companies issuing such IDRs.
(2) Purchase or sale of IDRs.-

A FPI or a NRI or an OCI may purchase, hold, or sell IDRs, subject to the following terms and conditions, namely:-
(a) the mode of payment and attendant conditions for remittance of sale or maturity proceeds shall be as specified by the
Reserve Bank;
(b) limited two way fungibility of IDRs shall be permissible subject to the terms and conditions stipulated by the
Reserve Bank in this regard;
(c) IDR shall not be redeemable into underlying equity shares before the expiry of one year from the date of issue;
(d) Redemption or conversion of IDRs into underlying equity shares of the issuing company shall be in compliance with
the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004.
[F.No. 1/14/EM/2015]
ANAND MOHAN BAJAJ, Jt. Secy.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054. ALOK KUMAR Digitally signed by ALOK KUMAR
Date: 2019.10.19 12:01:01
+05'30'
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[Qk- la- 1@14@bZ,e@2015]
टी. रिब शंकर, मुय महाबंधक
RESERVE BANK OF INDIA

(Financial Markets Regulation Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 17th October, 2019
No. FEMA 396/2019-RB
Foreign Exchange Management (Debt Instruments) Regulations, 2019
G.S.R . 796(E).— In exercise of the powers conferred by clause (a) of sub-section (2) of section 6 and section
47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of the Foreign Exchange
Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2017, the Reserve Bank
makes the following regulations to regulate investment in India by a Person Resident Outside India, namely:-
CHAPTER I
PRELIMINARY
1. Short title and commencement :- (1) These Regulations may be called the Foreign Exchange Management (Debt
Instruments) Regulations, 2019.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. Definitions: - In these Regulations, unless the context otherwise requires,:-
a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999);
b) “asset reconstruction company” means a company registered with the Reserve Bank under section 3 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of
2002);
8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
c) “authorised dealer” includes a person authorised under sub-section (1) of section 10 of the Act;
d) “debt instruments” means the instruments listed under Schedule 1 of the regulations;
e) “foreign central bank” means an institution or organisation or body corporate established in a country outside
India and entrusted with the responsibility of carrying out central bank functions under the law for the time
being in force in that country;
f) “FCNR (B) account” means a Foreign Currency Non-Resident (Bank) account maintained in accordance with
the Foreign Exchange Management (Deposit) Regulations, 2016;
g) “FPI” or “Foreign Portfolio Investor” means a person registered in accordance with the provisions of the
Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014;
h) “Indian company” means a company incorporated in India;
i) “Indian entity” shall mean an Indian company or a LLP ;
j) “investment” means to subscribe, acquire, hold or transfer any debt instrument or unit issued by a person
resident in India;
k) “investment on repatriation basis” means an investment, sale or maturity proceeds of which are net of taxes,
eligible to be repatriated out of India, and the expression “investment on non-repatriation basis”, shall be
construed accordingly;
l) “mutual fund” means an entity governed by the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996;
m) “LLP” means a limited liability partnership formed and registered under the Limited Liability Partnership Act,
2008 (6 of 2009);
n) “listed Indian company” means an Indian company which has any of its equity instruments or debt
instruments listed on a recognised stock exchange in India and the expression “unlisted Indian company” shall
be construed accordingly;
o) “municipal bonds” mean debt instruments issued by municipalities constituted under Article 243Q of the
Constitution of India;
p) “NRI” or “Non-Resident Indian” means an individual resident outside India who is a citizen of India;
q) “OCI” or “Overseas Citizen of India” means an individual resident outside India who is registered as an
Overseas Citizen of India Cardholder under section 7(A) of the Citizenship Act, 1955 ( 57 of 1955);
r) “unit” means a beneficial interest of an investor in a mutual fund;
s) “venture capital fund” means a fund established in the form of a trust, a company including a body corporate
and registered under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations,
2012.
(2) The words and expressions used but not defined in these regulations shall have the same meanings respectively
assigned to them in the Act, rules and regulations.
CHAPTER II
GENERAL CONDITIONS APPLICABLE TO ALL INVESTORS
3. Restriction on investment by a person resident outside India. - Save as otherwise provided in the Act, or rules or
regulations made thereunder, no person resident outside India shall make any investment in India.
Provided that an investment made in accordance with the Act or the rules or the regulations framed thereunder and held
on the date of commencement of these Regulations, shall be deemed to have been made under these Regulations and
shall accordingly be governed by these Regulations:
Provided further that the Reserve Bank may, on an application made to it and for sufficient reasons, permit a person
resident outside India to make any investment in India subject to such conditions as may be considered necessary.
4. Restriction on receiving investment.- Save as otherwise provided in the Act or rules or regulations made thereunder,
an Indian entity or a mutual fund, or a venture capital fund or a firm or an association of persons or a proprietary concern
shall not receive any investment in India from a person resident outside India or record such investment in its books :
Provided that the Reserve Bank may, on an application made to it and for sufficient reasons, permit an Indian entity or a
mutual fund, or a venture capital fund or a Firm or an Association of Persons or a proprietary concern to receive any
investment in India from a person resident outside India or to record such investment subject to such conditions as may
be considered necessary.
5. Permission for making investment by a person resident outside India.- Unless otherwise specified in these
regulations or the relevant Schedules, any investment made by a person resident outside India shall be subject to the entry
routes, the investment limits and the attendant conditionalities for such investment as laid down in these regulations.
(1) A person resident outside India, permitted for the purpose by the Reserve Bank in consultation with Central
Government, may purchase or sell debt instruments in the manner and subject to the terms and conditions specified
in Schedule 1.
(2) A person resident outside India may trade in all exchange traded derivative contracts approved by Securities and
Exchange Board of India from time to time subject to the limits prescribed by Securities and Exchange Board of India
and conditions specified in Schedule 1.
(3) A person resident outside India may enter into contract in any derivative transaction subject to conditions laid down
by the Reserve Bank from time to time.
6. Merger or demerger or amalgamation of Indian companies
Where a Scheme of Arrangement for an Indian company has been approved by National Company Law Tribunal
(NCLT)/ Competent Authority , the Indian company may issue non-convertible redeemable preference shares or non-
convertible redeemable debentures out of its general reserves by way of distribution as bonus to the shareholders resident
outside India, subject to the following conditions, namely:
a. the original investment made in the Indian company by a person resident outside India is in accordance with
these Regulations and the conditions specified in the relevant Schedule;
b. the said issue is in accordance with the provisions of the Companies Act, 2013 and the terms and conditions, if
any, stipulated in the scheme approved by National Company Law Tribunal (NCLT)/ Competent Authority have
been complied with;
c. the Indian company shall not engage in any activity/ sector in which investment by a person resident outside
India is prohibited.
7. Taxes and Remittance of sale proceeds.
7.1. Taxes
All transaction under these regulations shall be undertaken through banking channels in India and subject to payment of
applicable taxes and other duties/ levies in India.
7.2. Remittance of sale proceeds
(1) No remittance of sale proceeds of a debt instrument held by a person resident outside India shall be made otherwise
than in accordance with these Regulations and the conditions specified in the relevant Schedule.
(2) An authorised dealer may allow the remittance of sale proceeds of a debt instrument (net of applicable taxes) to the
seller of such instrument resident outside India -
Provided -
(i) the instrument was held by the seller on repatriation basis; and
(ii) Reserve Bank's approval has been obtained in other cases for sale of the instrument and remittance of the sale
proceeds thereof;
(3) An authorised dealer may allow remittances – both inward and outward – related for permitted derivatives
transactions.
SCHEDULE 1
Purchase and sale of debt instruments by a person resident outside India
1. Permission to persons resident outside India
A. Permission to Foreign Portfolio Investors (FPIs)
An FPI may purchase the following debt instruments on repatriation basis subject to the terms and conditions specified
by the Securities and Exchange Board of India and the Reserve Bank:
(a) dated Government securities/ treasury bills;
(b) non-convertible debentures/ bonds issued by an Indian company;
(c) commercial papers issued by an Indian company;

(d) units of domestic mutual funds or Exchange-Traded Funds (ETFs) which invest less than or equal to 50 percent in
equity;
(e) Security Receipts (SRs) issued by Asset Reconstruction Companies;
(f) debt instruments issued by banks, eligible for inclusion in regulatory capital;
(g) Credit enhanced bonds;
(h) Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 6 of these
Regulations;
(i) Securitised debt instruments, including (i) any certificate or instrument issued by a special purpose vehicle (SPV)
set up for securitisation of asset/s with banks, Financial Institutions or NBFCs as originators;
(j) Rupee denominated bonds/ units issued by Infrastructure Debt Funds;
Provided this will include such instruments issued on or after November 22, 2011 and held by deemed FPIs.
(k) Municipal Bonds :
Provided that FPIs may offer such instruments as permitted by the Reserve Bank from time to time as collateral to the
recognized Stock Exchanges in India for their transactions in exchange traded derivative contracts as specified in sub-
Regulation 2 of Regulation 5.
B. Permission to Non-resident Indians (NRIs) or Overseas Citizens of India (OCIs) – Repatriation basis
(1) A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) may, without limit, purchase the following
instruments on repatriation basis,
a. Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds or
Exchange-Traded Funds (ETFs) which invest less than or equal to 50 percent in equity;
b. Bonds issued by a Public Sector Undertaking (PSU) in India;
c. Bonds issued by Infrastructure Debt Funds;
d. Listed non-convertible/ redeemable preference shares or debentures issued in terms of Regulation 6 of these
Regulations;
(2) An NRI or an OCI may purchase on repatriation basis debt instruments issued by banks, eligible for inclusion in
regulatory capital.
(3) An NRI may subscribe to National Pension System governed and administered by Pension Fund Regulatory and
Development Authority (PFRDA), provided such person is eligible to invest as per the provisions of the PFRDA Act.
The annuity/ accumulated saving will be repatriable:
Provided that NRI/ OCIs may offer such instruments as permitted by the Reserve Bank from time to time as collateral to
the recognized Stock Exchanges in India for their transactions in exchange traded derivative contracts as specified in sub-
regulation 2 of regulation 5.
C. Permission to Non-resident Indians (NRIs) or Overseas Citizens of India (OCIs) – Non-Repatriation basis
(1) An NRI or an OCI may, without limit, purchase on non-repatriation basis, dated Government securities (other than
bearer securities), treasury bills, units of domestic mutual funds or Exchange-Traded Funds (ETFs) which invest less than
or equal to 50 percent in equity, or National Plan/ Savings Certificates.
(2) An NRI or an OCI may, without limit, purchase on non-repatriation basis, listed non-convertible/ redeemable
preference shares or debentures issued in terms of Regulation 6 of these Regulations.
(3) An NRI or an OCI may, without limit, on non-repatriation basis subscribe to the chit funds authorised by the
Registrar of Chits or an officer authorised by the State Government in this behalf.
D. Permission to Foreign Central Banks or a Multilateral Development Bank for purchase of Government
Securities
(1) Foreign Central Banks, Multilateral Development Banks or any other entity permitted by the Reserve Bank, may
purchase or sell dated Government Securities/treasury bills, as per terms and conditions specified by the Reserve Bank.
2. Mode of Payment
(1) The amount of consideration for purchase of instruments by FPIs shall be paid out of inward remittance from abroad
through banking channels or out of funds held in a foreign currency account and/ or Special Non-Resident Rupee
(SNRR) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. The
foreign currency account and SNRR account shall be used only and exclusively for transactions under this Schedule.
(2) The amount of consideration for purchase of instruments by NRIs or OCIs on repatriation basis shall be paid out of
inward remittances from abroad through banking channels or out of funds held in NRE/ FCNR(B) account maintained in
accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.
(3) The amount of consideration for (a) purchase of instruments by NRIs or OCIs on non-repatriation basis and (b)
subscriptions to the National Pension System by NRIs shall be paid out of inward remittances from abroad through
banking channels or out of funds held in NRE/ FCNR(B)/ NRO account maintained in accordance with the Foreign
Exchange Management (Deposit) Regulations, 2016.
(4) The amount of consideration for purchase of Government dated securities by a Foreign Central Bank or a Multilateral
Development Bank shall be paid out of inward remittances from abroad through banking channels or out of funds held in
an account opened with the specific approval of the RBI.
(5) The amount of consideration for purchase of instruments by other non-resident investors shall be paid out of inward
remittances from abroad through banking channels.
3. Permission for Sale of instruments
A person resident outside India who has purchased instruments in accordance with this Schedule may sell/ redeem the
instruments subject to such terms and conditions as may be specified by the Reserve Bank and the Securities Exchange
Board of India.
4. Remittance/ credit of sale/ maturity proceeds
(1) The sale/ maturity proceeds (net of taxes) of instruments held by Foreign Portfolio Investors (FPIs) may be remitted
outside India or may be credited to the foreign currency account or SNRR account of the FPI.
(2) The net sale/ maturity proceeds (net of taxes) of instruments held by NRIs or OCIs, may be:
a. Credited to the NRO account person concerned where the instruments were held on non-repatriation basis
b. Credited to the NRO account person concerned where the payment for the purchase of the instruments sold was
made out of funds held in NRO account, or
c. Remitted abroad or at the NRI/ OCI investor's option, credited to his NRE/ FCNR(B)/ NRO account, where the
instruments were purchased on repatriation basis.
(3) In all other cases, the sale/ maturity proceeds (net of taxes) may be remitted abroad or credited to an account opened
with the prior permission of the Reserve Bank.
[F. No. 1/14/EM/2015]

T. RABI SANKAR, Chief General Manager
and Published by the Controller of Publications, Delhi-110054. MANOJ Digitally signed by
MANOJ KUMAR
KUMAR VERMA
Date: 2019.10.18
VERMA 20:08:56 +05'30'
उjम म8 िनवेश के तौर-तरीक के साथ (िव1तार काय&Lम के साथ/ उसके िबना) इस कार के िनवेश के 30 9दन के भीतर
औjोिगक सहायता सिचवालय, डीपीआईआईटी को अिधसूिचत करेगी, चाहे इ9Tटी िलखत आबं/टत न क गई ह।
बी. फॉम& डीआई: 9कसी अEय भारतीय एंटीटी म8 डाउन1uीम िनवेश करने वाली भारतीय सं1था या िनवेश मा<यम, िजस
िनवेश को िनयमावली के िनयम-22 के अनुसार िनवेश ाUकता& भारतीय एंटीटी के िलए अGय? िवदेशी िनवेश माना
जाता है, वह इ9Tटी िलखत के आबंटन क तारीख से 30 9दन के अंदर /रज़व& ब4क को फॉम& डीआई 1तुत करेगी ।
(12) फॉम परवतनीय नोट (सी एन):
एन):
ए. भारतीय 1टाट&-अप कं पनी, जो भारत से बाहर के िनवासी 9कसी 7ि को प/रवत&नीय नोट जारी करती है, उसे इस
कार के िनग&म के 30 9दन के अंदर फॉम& सी एन 1तुत करना होगा।
बी. भारत का िनवासी कोई 7ि जो भारतीय 1टाट&-अप कं पनी ारा जारी 9कए गए प/रवत&नीय नोट का, चाहे
ह1तांतरणकता& या ह1तांत/रती हो, वह इस कार के ह1तांतरण के 30 9दन के भीतर भारत से बाहर के िनवासी 7ि
को या उस 7ि से, जैसा भी मामला हो, इस कार के ह1तांतरण के संबंध म8 िववरण फाम& सीएन म8 /रपोट& करेगा।
बशतa 9क इस संबंध म8 ऐसी /रपो=टग के पB, अविध और 1तुित के तरीके का िनधा&रण /रज़व& ब4क ारा 9कया गया हो ।
बशतa 9क जब तक इन िविनयम म8 िवशेष 2प से कु छ अलग नह[ बताया गया हो, सभी कार क /रपो=टग ािधकृ त 7ापारी
ब4क के मा<यम से या उसके ारा, जैसी भी ि1थित हो, क जाएगी।
5. रपो&टग म: िवलंब
उपयु& िविनयम-4 म8 ावधान क गई /रपोटw क फाइqलग के िलए िजमेदार 7ि / एंटीटी /रपो=टग म8 9कसी कार का
िवलंब होने पर क8 सरकार के परामश& से /रज़व& ब4क ारा िनधा&/रत 9कए जाने वाले िवलंब 1तुित शुYक के भुगतान के िलए
उरदायी होगी।
[फा. सं. 1/14/ई एम/2015]
अजय कु मार िमt, भारी मुxय महाबंधक
RESERVE BANK OF INDIA

(Foreign Exchange Department)
(CENTRAL OFFICE)
NOTIFICATION
Mumbai, the 17th October, 2019
No. FEMA. 395/2019-RB
Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments)
Regulations, 2019
G.S.R . 795(E).— In exercise of the powers conferred by section 47 of the Foreign Exchange Management Act,
1999 (42 of 1999) and consequent to the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019, the
Reserve Bank makes the following regulations relating to mode of payment and reporting requirements for investment in
India by a person resident outside India, namely:
1. Short title & commencement:-
a) These regulations may be called the Foreign Exchange Management (Mode of Payment and Reporting of Non-
Debt Instruments) Regulations, 2019.
b) They shall come into force from the date of their publication in the Official Gazette.
2. Definitions
In these regulations, unless the context requires otherwise, -
a) 'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999);
b) ‘Rules’ means Foreign Exchange Management (Non-Debt Instrument) Rules, 2019;
c) The words and expressions used but not defined in these regulations shall have the same meanings respectively
assigned to them in the Act or the Rules.
3. Mode of Payment and Remittance of sale proceeds:
3.1
Schedule of the Rules Instructions on Mode of payment and Remittance of sale proceeds
I. Schedule I A. Mode of payment
(Purchase or sale of (1) The amount of consideration shall be paid as inward remittance from abroad through
equity instruments of an banking channels or out of funds held in NRE/FCNR(B)/Escrow account maintained in
Indian company by a accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.
person resident outside Explanation : The amount of consideration shall include:
India)
(i) Issue of equity shares by an Indian company against any funds payable by it to the
investor
(ii) Swap of equity instruments.
(2) Equity instruments shall be issued to the person resident outside India making such
investment within sixty days from the date of receipt of the consideration.
Explanation: In case of partly paid equity shares, the period of 60 days shall be reckoned
from the date of receipt of each call payment
(3) Where such equity instruments are not issued within sixty days from the date of
receipt of the consideration the same shall be refunded to the person concerned by
outward remittance through banking channels or by credit to his NRE/ FCNR (B)
accounts, as the case may be within fifteen days from the date of completion of sixty
days.
(4) An Indian company issuing equity instruments under this Schedule may open a
foreign currency account with an Authorised Dealer in India in accordance with Foreign
Exchange Management (Foreign currency accounts by a person resident in India)
Regulations, 2016.
B. Remittance of sale proceeds
The sale proceeds (net of taxes) of the equity instruments may be remitted outside India or
may be credited to the NRE/ FCNR (B) of the person concerned.
II. Schedule II A. Mode of payment
(Investments by Foreign (1) The amount of consideration shall be paid as inward remittance from abroad through
Portfolio Investors) banking channels or out of funds held in a foreign currency account and/ or a Special
Non-Resident Rupee (SNRR) account maintained in accordance with the Foreign
Provided balances in SNRR account shall not be used for making investment in units of
Investment Vehicles other than the units of domestic mutual fund.
(2) The foreign currency account and SNRR account shall be used only and exclusively
for transactions under this Schedule.
The sale proceeds (net of taxes) of equity instruments and units of domestic mutual fund
may be remitted outside India or credited to the foreign currency account or a SNRR
account of the FPI.
The sale proceeds (net of taxes) of units of investment vehicles other than domestic
mutual fund may be remitted outside India.
III. Schedule III A. Mode of payment
(Investments by Non- (1) The amount of consideration shall be paid as inward remittance from abroad through
Resident Indian (NRI) or banking channels or out of funds held in a Non-Resident External (NRE) account
Overseas Citizen of India maintained in accordance with the Foreign Exchange Management (Deposit) Regulations,
(OCI) on repatriation 2016.
basis)
(2) The NRE account will be designated as an NRE (PIS) Account and the designated
account shall be used exclusively for putting through transactions permitted under this
Schedule.
(3) Investment in units of domestic mutual fund shall be paid as inward remittance from
abroad through banking channels or out of funds held in NRE/FCNR(B) account.
(4) Subscription to National Pension System shall be paid as inward remittance from
abroad through banking channels or out of funds held in NRE/FCNR(B)/NRO account.
The sale proceeds (net of taxes) of equity instruments may be remitted outside India or
may be credited to NRE (PIS) account of the person concerned.
The sale proceeds (net of taxes) of units of mutual funds and subscription to National
Pension System may be remitted outside India or may be credited to NRE
(PIS)/FCNR(B)/NRO account of the person concerned at the option of the NRI/OCI
investor.
IV. Schedule IV 1. Purchase or sale of equity instruments of an Indian company or units or
contribution to the capital of a LLP by Non-Resident Indian (NRI) or Overseas
(Investment by NRI or
Citizen of India (OCI) on Non-repatriation basis.
OCI on non-
repatriation basis) A. Mode of Payment
The amount of consideration shall be paid as inward remittance from abroad through
banking channels or out of funds held in NRE/FCNR(B)/NRO account maintained in
B. Sale/maturity proceeds
(1) The sale/maturity proceeds (net of applicable taxes) of equity instruments or units or
disinvestment proceeds of a LLP shall be credited only to the NRO account of the
investor, irrespective of the type of account from which the consideration was paid;
(2) The amount invested in equity instruments of an Indian company or the consideration
for contribution to the capital of a LLP and the capital appreciation thereon shall not be
allowed to be repatriated abroad.
2. Investment in a firm or a proprietary concern.
A. Mode of payment
The amount of consideration shall be paid as inward remittance from abroad through
banking channels or out of funds held in NRE/FCNR(B)/NRO account maintained in
B. Sale/maturity proceeds
(1) The disinvestment proceeds shall be credited only to the NRO account of the person
concerned, irrespective of the type of account from which the consideration was paid;
(2) The amount invested for contribution to the capital of a firm or a proprietary concern
and the capital appreciation thereon shall not be allowed to be repatriated abroad.
V. Schedule V A. Mode of Payment
(Investment by other non- The amount of consideration shall be paid out of inward remittances from abroad through
resident investors) banking channels.
B. Remittance/credit of sale/ maturity proceeds
The sale/ maturity proceeds (net of taxes) may be remitted abroad.
VI. Schedule VI A. Mode of payment

(Investment in a Limited Payment by an investor towards capital contribution of an LLP shall be made by way of
Liability Partnership) an inward remittance through banking channels or out of funds held in NRE or FCNR(B)
account maintained in accordance with the Foreign Exchange Management (Deposit)
Regulations, 2016.
B. Remittance of disinvestment proceeds
The disinvestment proceeds may be remitted outside India or may be credited to NRE or
FCNR(B) account of the person concerned.
VII. Schedule VII A. Mode of payment
(Investment by a Foreign (1) The amount of consideration shall be paid as inward remittance from abroad through
Venture Capital Investor) banking channels or out of funds held in a foreign currency account and/or a Special
Non-Resident Rupee (SNRR) account maintained in accordance with the Foreign
(2) The foreign currency account and SNRR account shall be used only and exclusively
for transactions under this Schedule.
B. Remittance of sale/maturity proceeds
The sale/maturity proceeds (net of taxes) of the securities may be remitted outside India or
may be credited to the foreign currency account or a Special Non-resident Rupee Account
of the FVCI.
VIII. Schedule VIII A. Mode of payment
(Investment by a person The amount of consideration shall be paid as inward remittance from abroad through
resident outside India in banking channels or by way of swap of shares of a Special Purpose Vehicle or out of
an Investment Vehicle) funds held in NRE or FCNR(B) account maintained in accordance with the Foreign
The sale/maturity proceeds (net of taxes) of the units may be remitted outside India or
may be credited to the NRE or FCNR(B) account of the person concerned.
IX. Schedule X A. Mode of Payment
(Issue of Indian NRIs or OCIs may invest in the IDRs out of funds held in their NRE/FCNR(B) account,
Depository Receipts) maintained in accordance with the Foreign Exchange Management (Deposit) Regulations,
2016.
Redemption/conversion of IDRs into underlying equity shares of the issuing company
shall be a compliance the Foreign Exchange Management (Transfer or Issue of any
Foreign Security) Regulations, 2004.
3.2 Issue of Convertible Notes by an Indian start-up company:

A start-up company issuing convertible notes to a person resident outside India shall receive the amount of consideration
by inward remittance through banking channels or by debit to the NRE/FCNR(B)/Escrow account maintained by the
person concerned in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016. Repayment or
sale proceeds may be remitted outside India or credited to NRE/FCNR(B) account maintained by the person concerned in
4. Reporting Requirements:
The reporting requirement for any Investment in India by a person resident outside India shall be as follows:
(1) Form Foreign Currency-Gross Provisional Return (FC-GPR): An Indian company issuing equity instruments to
a person resident outside India and where such issue is reckoned as Foreign Direct Investment, defined under the
rules, shall report such issue in Form FC-GPR, not later than thirty days from the date of issue of equity instruments.
Issue of 'participating interest/rights' in oil fields shall be reported in Form FC-GPR.
(2) Annual Return on Foreign Liabilities and Assets (FLA): An Indian Company which has received FDI or an LLP
which has received investment by way of capital contribution in the previous year including the current year, shall
submit form FLA to the Reserve Bank on or before the 15th day of July of each year.
Explanation: Year for this purpose shall be reckoned as April to March.
(3) Form Foreign Currency-Transfer of Shares (FC-TRS):
(a) Form FCTRS shall be filed for transfer of equity instruments in accordance with the rules, between:
i. a person resident outside India holding equity instruments in an Indian company on a repatriable basis
and person resident outside India holding equity instruments on a non-repatriable basis; and
ii. a person resident outside India holding equity instruments in an Indian company on a repatriable basis
and a person resident in India,
The onus of reporting shall be on the resident transferor/transferee or the person resident outside India holding
equity instruments on a non-repatriable basis, as the case may be.
Note: Transfer of equity instruments in accordance with the rules by way of sale between a person resident
outside India holding equity instruments on a non-repatriable basis and person resident in India is not required to
be reported in Form FC-TRS.
(b) Transfer of equity instruments on a recognised stock exchange by a person resident outside India shall be
reported by such person in Form FC-TRS.
(c) Transfer of equity instruments prescribed in Rule 9(6) of the Rules, shall be reported in Form FC-TRS on
receipt of every tranche of payment. The onus of reporting shall be on the resident transferor/transferee.
(d) Transfer of 'participating interest/rights' in oil fields shall be reported Form FC-TRS.
The form FCTRS shall be filed within sixty days of transfer of equity instruments or receipt/remittance of funds
whichever is earlier.
(4) Form Employees' Stock Option (ESOP): An Indian company issuing employees' stock option to persons resident
outside India who are its employees/directors or employees/directors of its holding company/joint venture / wholly
owned overseas subsidiary/subsidiaries shall file Form-ESOP, within 30 days from the date of issue of employees'
stock option.
(5) Form Depository Receipt Return (DRR): The Domestic Custodian shall report in Form DRR, the issue / transfer
of depository receipts issued in accordance with the Depository Receipt Scheme, 2014 within 30 days of close of the
issue.
(6) Form LLP (I): A Limited Liability Partnerships (LLP) receiving amount of consideration for capital contribution
and acquisition of profit shares shall file Form LLP (I), within 30 days from the date of receipt of the amount of
consideration.
(7) Form LLP (II): The disinvestment/transfer of capital contribution or profit share between a resident and a non-
resident (or vice versa) shall be filed in Form LLP(II) within 60 days from the date of receipt of funds. The onus of
reporting shall be on the resident transferor/transferee.
(8) LEC(FII): The Authorised Dealer Category I banks shall report to the Reserve Bank in Form LEC (FII) the
purchase/transfer of equity instruments by FPIs on the stock exchanges in India.
(9) LEC(NRI): The Authorised Dealer Category I banks shall report to the Reserve Bank in Form LEC (NRI) the
purchase/transfer of equity instruments by Non-Resident Indians or Overseas Citizens of India on stock exchanges in
India.
(10) Form InVI: An Investment vehicle which has issued its units to a person resident outside India shall file Form
InVI within 30 days from the date of issue of units.
(11) Downstream Investment
a. An Indian entity or an investment vehicle making downstream investment in another Indian entity which is
considered as indirect foreign investment for the investee Indian entity in terms of the Rules, shall notify the
Secretariat for Industrial Assistance, DPIIT within 30 days of such investment, even if equity instruments
have not been allotted, along with the modality of investment in new/existing ventures (with/without
expansion programme).
b. Form DI: An Indian entity or an investment Vehicle making downstream investment in another Indian entity
which is considered as indirect foreign investment for the investee Indian entity in terms of Rule 22 of the
Rules shall file Form DI with the Reserve Bank within 30 days from the date of allotment of equity
instruments.
(12) Form Convertible Notes (CN):
a. The Indian start-up company issuing Convertible Notes to a person resident outside India shall file Form CN
within 30 days of such issue.
b. A person resident in India, who may be a transferor or transferee of Convertible Notes issued by an Indian
start-up company shall report such transfers to or from a person resident outside India, as the case may be, in
Form CN within 30 days of such transfer.
Provided, the format, periodicity and manner of submission of such reporting shall be as prescribed by Reserve Bank
in this regard.
Provided further that unless otherwise specifically stated in these regulations all reporting shall be made through or
by an Authorised Dealer bank, as the case may be.
5. Delays in reporting
The person/entity responsible for filing the reports provided in Regulation 4 above shall be liable for payment of late
submission fee, as may be decided by the Reserve Bank, in consultation with the Central Government, for any delays
in reporting.
[F. No. 1/14/EM/2015]
AJAY KUMAR MISRA, Chief General Manager-in-charge
and Published by the Controller of Publications, Delhi-110054. MANOJ Digitally signed
by MANOJ
KUMAR KUMAR VERMA
Date: 2019.10.18
VERMA 22:14:17 +05'30'

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54 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC.

2. Definitions: - In these rules, unless the context otherwise requires:-

(y) “Indian company” means a company incorporated in India;

(aa) “Indian entity” shall mean an Indian company or a LLP ;

(ai) “non-debt instruments” means the following instruments; namely :-

(vii) acquisition, sale or dealing directly in immovable property;

(viii) contribution to trusts; and

(aq) “unit” means a beneficial interest of an investor in an investment vehicle;

GENERAL CONDITIONS APPLICABLE TO ALL INVESTORS

INVESTMENT BY PERSON RESIDENT OUTSIDE INDIA

INVESTMENT BY FOREIGN PORTFOLIO INVESTOR (FPI)

INVESTMENT BY OTHER NON-RESIDENT INVESTORS

INVESTMENT BY FOREIGN VENTURE CAPITAL INVESTOR

(b) a person resident in India subject to adherence to pricing guidelines;

Explanation.- For the purposes of this rule,-

ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA

(d) transfer any immovable property in India to a person resident in India;

(a) consideration for transfer, shall be made out of -

Provided further that :-

Provided that this prohibition shall not apply to an OCI.

(a) through banking channels in India;

(See rule 6(a))

(ii) import of capital goods or machinery or equipment (excluding second-hand machinery); or

(iii) pre-operative or pre-incorporation expenses (including payments of rent etc.) :

(2) Sectors prohibited for FDI.-

(c) Chit funds

(d) Nidhi company

(f) Real estate business or construction of farm houses

(a) Entry routes.-

(b) Sectoral caps.—

Sl. Sector/ Activity Sectoral Entry Route

1. Agriculture and Animal Husbandry

(b) Development and production of seeds and planting material;

(c) Animal Husbandry (including breeding of dogs), Pisciculture,

Sl. Sector/ Activity Sectoral Entry Route

Aquaculture and Apiculture; and

(d) Services related to agro and allied sectors.

1.2 Other Conditions

The term ‘under controlled conditions’ covers the following:

2.1 (a) Tea sector including tea plantations 100% Automatic

(c) Rubber plantations

(d) Cardamom plantations

(f) Olive oil tree plantation

Note: Foreign investment is not allowed in any plantation sector/

2.2 Other Conditions

3.2 Coal and Lignite

(b) Setting up coal processing plants like washeries, subject to the

Sl. Sector/ Activity Sectoral Entry Route

3.4 Other Conditions

4. Petroleum and Natural Gas

5. Manufacturing 100% Automatic

Sl. Sector/ Activity Sectoral Entry Route

6.2 Other Conditions

7.1 Broadcasting Carriage Services

7.1.1 (a) Teleports (setting up of up-linking HUBs/ Teleports); 100% Automatic

(b) Direct to Home (DTH);

(e) Head-end-in-the Sky Broadcasting Service (HITS)

7.2 Broadcasting Content Services

Sl. Sector/ Activity Sectoral Entry Route

7.2.2 Up-Linking of ‘News & Current Affairs’ TV Channels 49% Government