Overseas Direct Investment - Rationalisation of Forms

RBI/2006-2007/426
A. P. (DIR Series) Circular No. 68

June 01, 2007

To,
All Category - I Authorised Dealer Banks
Madam / Sir,

Overseas Direct Investment - Rationalisation of Forms

1. Attention of Authorised Dealer Category-I (AD Category - I) banks is invited to Notification No.FEMA120/RB-2004 dated July 7, 2004, [Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000] as amended from time to time.
   
   
2. At present, application for overseas direct investment is required to be made in any one of the three forms viz., ODA for direct investments in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) under automatic route, ODI for investments under approval route and ODB for issue of ADRs / GDRs on back to back basis. Further, reporting of remittances is currently required to be made through AD Category -I banks in either of the two forms viz., ODR for remittances made for overseas direct investments and ODG for overseas acquisitions made under ADR / GDR Stock Swap Scheme. Form APR is the Annual Performance Report on the functioning of overseas JV / WOS. The liberalisation in the policy on overseas investments has enabled many Indian corporates to establish presence in overseas markets, redefining the global outreach of Indian entities. However, the reporting framework has not kept pace with the developments and does not capture data comprehensively on overall costs of acquisition, funding patterns, performance indicators, etc.
   
   
3. Accordingly, as announced in the Annual Policy for the Year 2007-08 (para 133), with a view to improving the coverage and to ensure monitoring of the flows in a dynamic environment, it has now been decided to revise the existing reporting system. As per the new reporting package, all the forms have been subsumed into one form viz. ODI, comprising of four parts:
   Part I - which includes the following:
   Section A – Details of the Indian Party
   Section B – Details of Investment in New Project
   Section C - Details of Investment in Existing Project
   Section D – Funding for JV / WOS
   Section E – Declaration by the Indian Party
   Section F - Certificate by the Statutory Auditors of the Indian Party
   
   Part II - Reporting of Remittances
   
   Part III - Annual Performance Report (APR)
   
   Part IV – Report on Closure / Disinvestment / Voluntary Liquidation / Winding
   up of JV / WOS.
   
   
4. A new system has also been introduced for reporting Closure / Disinvestment / Winding up / Voluntary Liquidation of the overseas JV / WOS under general permission (Part IV of form ODI). The revised ODI form and instructions for filling up the forms are annexed . Reporting in the revised form ODI will come into effect from June 1, 2007. The form can also be downloaded from Reserve Bank’s website www.rbi.org.in.
   
   
5. It is reiterated that the revised form is only a rationalisation of the reporting procedure and there is no change or dilution in the existing eligibility criteria / documentation / limits. Eventually, these reports will be received on line by Reserve Bank.
   
   
6. Accordingly, AD Category - I banks may take action as under:
   1. In cases of Automatic Route – Parts I and II of form ODI should be submitted to The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Overseas Investment Division, Amar Bldg. 3rd floor, Sir P. M. Road, Fort, Mumbai 400001.
      
      
   2. In case of Approval Route – Part I of form ODI, along with the supporting documents, is required to be submitted after scrutiny and with specific recommendations by the designated AD Category - I bank, at the address mentioned above. In case the proposal is approved, Part I will be returned by the Reserve Bank to the AD Category - I bank. After effecting the remittance, the AD Category – I bank should resubmit the same to the Reserve Bank along with Part II of form ODI.
      
      
   3. In case of disinvestment / closure / winding up / voluntary liquidation under the Automatic Route, in terms of A. P. (Dir Series) Circular No. 29 dated March 27, 2006, a report should be submitted by the designated AD Category - I bank, in Part IV of form ODI. In all other cases of disinvestment, an application along with the necessary supporting documents should be submitted to the Reserve Bank as per the current procedure.
      
      
7. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
   
   
8. 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 is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,
(Salim Gangadharan)
Chief General Manager