fmi-foreign investment

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WELCOME



GOOD

AFTERNOON !!!



REGULATORY FRAMEWORK FOR

FOREIGN INVESTMENTIN INDIA

PRESENTED BY,

NITU SINGH

SWAPNA CHITRA SAHOO

REGULATORY FRAMEWORK FOR

FOREIGN INVESTMENT IN INDIA

PRESENTED BY,

NITU SINGH

SWAPNA CHITRA SAHOO

(As per RBI)



TYPES OF FOREIGN INVESTMENT

FOREIGN

DIRECT

INVESTMENT FOREIGN

INSTITUTIO-

NAL

INVESTORS

PROCEDURE FOROPENING

BRANCH/LIAISON

/PROJECT OFFICE

INVESTMENT

IN GOVT.

SECURITIES

FOREIGN

PORTFOLIOINVESTMENT

FOREIGN

VENTURE

CAPITAL

INVESTMENT



F OREIGN INSTITUTIONAL

INVESTORS

Permission of RBI

Paid-up Capital

Purchase and Sale

Receipt and Payment



F OREIGN DIRECT INVESTMENT

Procedure for receiving FDIs:

Automatic route

Government route

Procedure followed after investment is made:

On receipt of share application money

Upon issue of shares to non-resident

investors



Contd

Transfer of shares/fully and mandatorily convertibledebentures by way of sale

Transfer of shares/fully and mandatorily convertibledebentures by way of gift

Method of payment in case of transfer of sharesbetween resident and non-resident

Investment in Preference shares

Issue of Debentures



Contd

Investment in shares issued by an

Unlisted company in India

Set up of

Partnership/Proprietorship concernin India



F OREIGN PORT F OLIO

INVESTMENT Regulations regarding Portfolio investment

by SEBI registered FIIs:

Permission from RBIPaid-up Capital

Regulations regarding Portfolio investmentby NRIs/PIOs:

Route for sale and purchase transactions

Paid up Capital



ADRS/GDRS & F CCBS

Issue of Bonds and Shares

Eligibility of Indian Listed CompaniesEligibility of Indian Unlisted Companies

Eligibility of OCBs

Pricing of ADRs/GDRs



INVESTMENT IN GOVT. SECURITIES &

CORPORATE DEBT

WHO CAN INVEST IN GOVT. SECURITIES /

TREASURY BILLS & CORPORATE DEBT ?

FEMA regulations:- Only NRI & SEBI registered

FIIs are permitted to purchase govt. securities& corporate debt.



WHAT CAN THE NRIs PURCHASE?

ON REPATRIATION BASISON NON-REPATRIATION

BASIS

Govt. dated

securities(other thanbearer securities)

CONVERTIBLE

DEBENTURES

Shares in PSE being

disinvested

Treasury bills

Units of domestic

mutual funds

National plan/

saving certificates



WHAT CAN FIIs PURCHASE?

B) A SEBI registered FII maypurchase , on repatriation basis,

Dated Govt. securities / treasury

bills

Non-convertible debentures / bondsissued by an Indian company

Units of domestic mutual funds



FRAMEWORK FOR FIIs

FIIs total investment allocation, shouldnot exceed the ratio 70:30



FRAMEWORK FOR FIIs

If FII is set up as 100% debtFII, it can invest the entirecorpus in:-

GOVT. DATED

SECURITIES

TREASURY BILLS

NON-CONVERTIBLEDEBENTURES

BONDS



FOREIGN VENTURE CAPITAL

INVESTMENT

SEBI Foreign Venture Capital

Investment Regulations

prescribes the following guidelines:-

1. The foreign venture capital investormust disclose its investment strategy

& life cycle to SEBI.



CONTD..

2. At least 66.67% of the investible

funds must be invested in unlistedequity shares or equity linked

instruments.



CONTD..

3. Not more than 33.33% of the investible

funds may be invested by way of:-

i. Subscription to initial public offer of a

venture capital undertaking.

i. Debt or debt instruments of a venture

capital undertaking .



CONTD..

iii. Preferential allotment of equity shares

of a listed company.

iv. Equity shares or equity linked

instruments of a financially weak

industrial company.



OPENING BRANCH/PROJECT/LIAISON OFFICE

IN INDIA

Foreign company can set up liaison/branch

office in India after obtaining approval from

RBI.

RBI has given general permission to foreign co.

to establish project office in India, subject to

certain conditions.



OPENING LIAISON OFFICE

� Desirous co. can make an application in

form FNC 1 alongwith the documents

mentioned therein to � Foreign Investment Division, Foreign

Exchange Department , RBI, central office

Mumbai.



CONTD..

� A liaison office can carry on only

liaison activities .

� It is not allowed to undertake any

business activity in India.



CONTD..

� Permission to set up such office is initially

granted for 3 yrs.

� And this may be extended from time to

time by the Regional Office of the RBI.



BENEFITS

� Providing information

� Promotions of export/import

� Facilitate technical & financial

collaboration



SETTING UP PROJECT OFFICE

� General permission has been granted by RBI

vide Notification No. FEMA 95/2003-RB dated

July 2,2003 to foreign co. to open project

office/s in India.

� Provided they have secured from an Indian

co., a contract to execute a project in India.



CONTD..

� The project is funded directly by inward

remittance from abroad ; or

�

The project is funded by a bilateral ormultilateral International Financing Agency; or

� The project has been cleared by an

appropriate authority.



CONTD..

� However , if the above criteria is not met, or

� If the parent entity is established in Pakistan ,

Bangladesh, Sri Lanka, Afghanistan, Iran orChina

� Such applications have to be forwarded to

central office of the FED of RBI at Mumbai for

approval.



BENEFITS

� Advanced technology

� Professional services

� Completion of project in due time



SETTING UP BRANCH OFFICE

� Permission for setting up branch office is granted

by the RBI.

� While scrutinizing the application, RBI considers :-

i. The track record of the applicant company.

ii. Existing trade relations with India

iii. The activity of the co. proposing to set up office

in India

iv. Financial position of the co.



BENEFITS

� To represent the parent co. in India e.g. Acting

as buying/selling agent in India

� To conduct research work in the area in which

the parent co. is engaged.

� To undertake export & import activity &

trading on wholesale basis.



RESTRICTIONS ON BRANCH OFFICE

� It is not allowed to carry out manufacturing,

processing activities directly or indirectly.

�

Not allowed to undertake retail trade activityof any nature in India

� It have to submit Activity certificate from a CA

on an annual basis to the central office of the

FED.



Q UESTIONS???

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