Reserve Bank Of India
A. P. (DIR Series) Circular No.23
August 14, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Overseas Direct Investments
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited
to the
Notification No. FEMA.120/RB-2004 dated July 7, 2004, [Foreign Exchange
Management (Transfer or Issue of Any Foreign Security) Regulations, 2004], as
amended from time to time (the Notification) and the
A.P. (DIR Series) Circular
No. 11 dated September 26, 2007;
A.P. (DIR Series) Circular No. 48 dated June 3,
2008 and A.P. (DIR Series) Circular No. 99 dated April 23, 2013. On a review, it
has been decided to rationalize the regulations governing the overseas direct
investments with immediate effect as under:
- Reduction of limit for Overseas Direct Investment
In terms of the extant provisions under the Foreign Exchange Management Act,
1999 (FEMA, 1999) on overseas direct investments, the total overseas direct
investment (ODI) of an Indian Party in all its Joint Ventures (JVs) and / or
Wholly Owned Subsidiaries (WOSs) abroad engaged in any bonafide business
activity should not exceed 400 per cent of the net worth of the Indian Party as
on the date of the last audited balance sheet under the Automatic Route.
It has now been decided:
- To reduce the existing limit of 400 per cent of the net worth of the Indian
Party to 100 per cent of its net worth under the Automatic Route. Accordingly,
AD Category - I banks may allow overseas direct investments under the Automatic
Route up to 100 per cent of the net worth of the Indian party, as on the date of
the last audited balance sheet;
- To reduce the existing limit of 400 per cent of the net worth of the Indian
company, investing in the overseas unincorporated entities in the energy and
natural resources sectors, under the automatic route, to 100 per cent of the net
worth of the Indian company investing in the overseas unincorporated entities in
the energy and natural resources sectors, as on the date of last audited balance
sheet; and
- Any ODI in excess of 100% of the net worth shall be considered under the
Approval Route by the Reserve Bank of India.
- In respect of the Navaratna Public Sector Undertakings (PSUs), ONGC Videsh
Limited (OVL) and Oil India Ltd (OIL), the extant provision for investing in
overseas unincorporated entities and the overseas incorporated entities in the
oil sector (i.e., for exploration and drilling for oil and natural gas, etc.),
which are duly approved by the Government of India, without any limits under the
automatic route, would however continue as hitherto.
- The above provisions shall come into effect with immediate effect and would
apply to all fresh Overseas Direct Investment proposals on a prospective basis
but would not apply to the existing JV/WOS set up under the extant regulations.
- AD Category - I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
- Necessary amendments to the
Notification No. FEMA.120/2004-RB dated July 7,
2004, [Foreign Exchange Management (Transfer or Issue of Any Foreign Security)
Regulations 2004] are being notified separately.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are
without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully,
(C.D. Srinivasan)
Chief General Manager
RBI/2013-14/180
| Related Press Release/Notification |
| Aug 14, 2013 |
RBI announces measures to rationalise Foreign Exchange Outflows by Resident
Indians |
| Aug 14, 2013 |
Liberalised Remittance Scheme for Resident Individuals- Reduction of limit from
USD 200,000 to USD 75,000 |