Ministry of Finance
Notification No. S.O. 3206(E)
dtd: 06/08/2021
The Ministry of Finance vide its notification dated 06th August, 2021 has amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.
These rules may be called the Foreign Exchange Management (Non-Debt Instruments) (Amendment) Rules, 2021.
They shall come into force on the date of their publication in the Official Gazette.
In the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, under Rule 23 in sub-rule (7), in clause (i), after sub-clause (B), for the purpose of sub-clause (A), the following Explanation shall be inserted, namely:-
Explanation: An investment made by an Indian entity which is owned and controlled by NRI(s), on a non-repatriation basis, shall not be considered for calculation of indirect foreign investment.
Rule 23(7)(i) of said rules is provided below for your ready reference:-
(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 :
Explanation: An investment made by an Indian entity which is owned and controlled by NRI(s), on a non-repatriation basis, shall not be considered for calculation of indirect foreign investment. Provided that no person resident in India other than an Indian entity can receive Indirect Foreign Investment;...
Through this amendment, all Indirect Foreign Investment would not be counted for the purpose of investments made by NRI-owned Indian Entity.
Direct link 👇
Notification No. S.O. 3206(E)- https://egazette.nic.in/WriteReadData/2021/228847.pdf
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