Oct 11, 2022

Want to expand business, CAN SETUP IN OVERSEAS MARKET?

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An Indian entity is eligible to set-up business via investment in the equity capital of foreign entity by way of Overseas Direct Investment (ODI) as well as permitted to make portfolio investment vide Overseas Portfolio Investment (OPI).

Let’s understand the key provisions.

Overseas Direct Investment (ODI) means an investment by way of acquisition of equity capital of a foreign company which is engaged in a bonafide business activity.

Overseas Portfolio Investment (OPI) means investment by way of acquisition of equity capital of a foreign listed company.

Amount of investment permitted for overseas investment?

Investment up to 400% of the net-worth subject to upper limit of amount of investment up to USD 1 billion.

Any condition for investment in Start-up abroad?

ODI in the start-ups recognised under the laws of host country. The said investment shall be done only from the owned funds.

Investment in IFSC-GIFT City. Will the investment be treated as ODI?

Yes, the investment made in IFSC will be treated as ODI.

Can Indian entity extend investment in the foreign entity through other modes than equity?

Investment can be made in the foreign entity where Indian entity has invested through equity instruments, by way of debt, guarantee and pledge or charge subject to compliances with the applicable conditions and provisions.

If the account of the Indian entity is appearing as NPA, is it eligible to make investment outside India?

Yes, RBI has permitted Indian entities who are listed as wilful defaulter, or has account appearing as NPA or are under investigation by financial regulator/ CBI/ ED/ SFIO to invest outside India subject to submission of NOC.

Compliances to done for making investment outside India?

Investment made is subject to the compliances with the provisions related to investment route, investment limit, pricing guidelines, reporting requirements, obligations and many more as stated in the Overseas Investment Regulatory Framework comprising Rules, Regulations and Master Directions. The overall compliances have been categorized under event based as well as annual compliances head.

Whether Indian company is permitted to invest in a foreign entity having investment in India/ invests in India?

Yes, under the new regime, RBI has permitted investment in foreign company that has invested/ invests into India directly/ indirectly subject to a structure of maximum 2 layers of subsidiaries.

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Head of Corporate Affairs & Compliances

ACS, LLB

ankit@indiacp.com

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