Foreign Direct Investment By Rsmg & Company

Foreign Direct InvestmentForeign Direct Investment In IndiaDue to rapid change in the global economy, India Government has decided to be liberal in the foreign direct investment for faster integration of Indian economy with the global economy. For this the Indian Government has announced various investment friendly schemes.Foreign direct investment is freely allowed in all sectors including the services sector, except a few sectors where the existing and notified sectoral policy does not permit FDI beyond a ceiling.FDI for virtually all items/activities can be brought in through the Automatic Route under powers delegated to the Reserve Bank of India (RBI), and for the remaining items/activities through Government approval. Government approvals are accorded on the recommendation of the Foreign Investment Promotion Board (FIPB).Procedure for Automatic RouteThe proposals for approval under the automatic route are to be made to the Reserve Bank of India in the FC (RBI) form. In a major drive to simplify procedures for foreign direct investment under the "automatic route", RBI has given permission to Indian Companies to accept investment under this route without obtaining prior approval from Reserve Bank of India.However, investors are required to notify the concerned Regional Offices of RBI of receipt of inward remittances within 30 days of such receipt and will have to file the required documents with the concerned Regional Office of the RBI within 30 days after issue of shares to foreign investors. This facility is available to NRI/OCB investment also.Procedure for Government ApprovalForeign Investment Promotion BoardAll other proposals for foreign investment, including NRI/OCB investment and foreign investment in EOU/EPZ/STP/EHTP units, which do not fulfill any or all of the parameters prescribed for automatic approval are considered for approval by the Foreign Investment Promotion Board (FIPB). The FIPB also grants composite approvals involving foreign technical collaborations and setting up of Export Oriented Units involving foreign investment foreign technical collaboration.Applications to FIPB for approval of foreign investment should be submitted in Form FC-IL. Plain paper applications carrying all relevant details are also accepted. No fee is payable. The following information should form part of the proposals submitted to FIPBWhether the applicant has had or has any previous financial/technical collaboration or trademark agreement in India in the same or allied field for which approval has been soughtIf so, details thereof and the justification for proposing the new venture/technical collaboration (including trade marks).Foreign investment proposals received in the Department of Economic Affairs (DEA) are placed before the Foreign Investment Promotion Board (FIPB) within 15 days of its receipt. The recommendations of FIPB in respect of project proposals involving a total investment of up to Rs. 6 billion are considered and approved by the Finance Minister. Projects with a total investment exceeding Rs. 6 billion are submitted to the Cabinet Committee on Economic Affairs (CCEA) for decision.The decision of the Government in all cases is conveyed by the DEA normally within 30 days.For inward remittance and issue of shares to NRI/OCB up to 100 per cent equity also, prior permission of RBI is not required. These companies have to file the required documents with the concerned Regional Offices of RBI within 30 days after the issue of shares to NRIs/OCBs.100% EXPORT ORIENTED UNITS AND UNITS SET UP IN EPZ/FTZIndian Government has started various schemes for the development of the economy. Various tax exemption and rebates have been granted to the 100% export processing units and the units setup in EPZ/FTZ.Procedure for Approval for EOUsApplications for 100 per cent EOUs should be submitted to the Development Commissioners (DCs) of the Export Processing Zones (EPZs) concerned for automatic approval and to the SIA for Government approval. The application should be submitted along with the prescribed fee.Procedure for Automatic Approval for 100% EOUsApplications in the prescribed form for 100 per cent EOUs should be submitted to the DCs of the EPZs. Wherever, the proposals meet the criteria for automatic approval, as mentioned in the policy, the DC of the EPZ would issue approval letters within 2 weeks.Procedure for Government Approval for EOUsProposals not covered by the automatic route shall be forwarded by the DC to the Board of Approval (BoA) for consideration. On consideration of the proposal by the board, the decision would normally be conveyed in six weeks.Procedure for foreign direct investment/NRI investmentFor proposals not covered under Automatic Route, the applicant should seek separate approval of the FIPB, as per the procedure outlined in above para.Procedure for Approval for units located In EPZ/FTZ/SEZApplications for setting up units in EPZs/SEZs be submitted to the concerned DC of the EPZ/SEZ. The application should be submitted along with a prescribed fee.Procedure for Automatic Approval for units located in EPZ/FTZ/SEZApplications in the prescribed form for 100 per cent EOUs should be submitted to the DCs of the EPZs/SEZs. Wherever, the proposals meet the criteria for automatic approval, as given in the policy, the DC of the EPZ/SEZ would issue approval letters within 2 weeks.Procedure for Government Approval for units located in EPZ/FTZ /SEZProposals not covered by the automatic route shall be forwarded by the DC to the Board of Approval (BOA) for consideration. On consideration of the proposal by the Board, the decision would normally be conveyed in six weeks.Procedure for Foreign Direct Investment / NRI InvestmentAll proposals for FDI/NRI/OCB investment in EPZ/EOU/SEZ are eligible for approval under Automatic Route subject to parameters listed in the policy. For proposals not covered under Automatic Route, the applicant should seek separate approval of the FIPB, as per the procedure outlined in the policy.Procedure for Approval for EHTP/STP UnitsApplication, in the prescribed form, should be submitted to the concerned Directors of STPs or the Designated Officers of EHTPs for automatic approval, and to the SIA for Government approval. The application should be submitted along with the prescribed fee.Procedure for Automatic Approval for EHTP/STPApplication, in the prescribed form, should be submitted to the concerned Directors of STPs or the Designated Officers of EHTPs for automatic approval. Wherever, the proposals meet the criteria for automatic approval, as given in the policy, the approval letters are issued within 2 weeks. All other proposals shall be forwarded to the Inter Ministerial Standing Committee for consideration.Procedure for Government Approval for EHTP/STPApplication, in the prescribed form, should be submitted to the Officer designated by the Ministry of Information. Such applications shall be forwarded by the Officer designated to the Inter Ministerial Standing Committee in the Ministry of Information Technology for consideration. On consideration by the Inter Ministerial Standing Committee, a decision would be normally conveyed within six weeks.Procedure for Foreign Direct Investment / NRI InvestmentAll proposals for FDI/NRI/OCB investment in EHTP/STP Units are eligible for approval under Automatic Route subject to parameters listed in the policy. For proposals not covered under Automatic Route, the applicant should seek separate approval of the FIPB, as per the procedure outlined in policy.