Foreign Exchange Management (Overseas Investment) Rules, 2022
(1) These rules may be called the Foreign Exchange Management (Overseas Investment) Rules, 2022.
(2) They shall come into force on the date of their publication in the Official Gazette.
(1) In these rules, unless the context otherwise requires,--
(a) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999);
(b) "Authorised Dealer Category-I bank or "AD bank" means a person authorised as such under sub-section (1) of section 10 of the Act and for the purposes of these rules, shall mean only the domestic branches of such AD bank;
(c) "control" means the right to appoint majority of the directors or to control management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders' agreements or voting agreements that entitle them to ten per cent. or more of voting rights or in any other manner in the entity;
(d) "disinvestment" means partial or full extinguishment of right, title or possession of equity capital acquired under these rules;
(e) "equity capital" means equity shares or perpetual c
(1) These rules shall be administered by the Reserve Bank.
(2) The Reserve Bank may issue such directions, circulars, instructions and clarifications as it may deem necessary for the effective implementation of the provisions of these rules.
Nothing in these rules or the Foreign Exchange Management (Overseas Investment) Regulations, 2022 shall apply to--
(a) any investment made outside India by a financial institution in an IFSC;
(b) acquisition or transfer of any investment outside India made,--
(i) out of Resident Foreign Currency Account; or
(ii) out of foreign currency resources held outside India by a person who is employed in India for a specific duration irrespective of length thereof or for a specific job or assignment, duration of which does not exceed three years; or
(iii) in accordance with sub-section (4) of section 6 of the Act.
Explanation.-- For the purposes of this rule, the expression "financial institution" shall have the same meaning as assigned to it in the International Financial Services Centres Authority Act, 2019 (50 of 2019).
The following shall be the debt instruments and non-debt instruments as determined by the Central Government under sub-section (7) of section 6 of the Act, namely:--
(A) Debt instruments:
(i) Government bonds;
(ii) corporate bonds;
(iii) all tranches of securitisation structure which are not equity tranche;
(iv) borrowings by firms through loans; and
(v) depository receipts whose underlying securities are debt securities;
(B) Non-debt instruments:
(i) all investments in equity in incorporated entities (public, private, listed and unlisted);
(ii) capital participation in Limited Liability Partnerships;
(iii) all instruments of investment as recognised in the Foreign Direct Investment policy from time to time;
(iv) investment in units of Alternative Investment Funds and Real Estate Investment Trust and Infrastructure Investment Trusts;
(v) investment in units of mutual funds and Exchange-Traded Fund wh
Any investment or financial commitment outside India made in accordance with the Act or the rules or regulations made thereunder and held as on the date of publication of these rules in the Official Gazette, shall be deemed to have been made under these rules and the Foreign Exchange Management (Overseas Investment) Regulations, 2022.
(1) Any person resident in India who has acquired and continues to hold equity capital of any foreign entity in accordance with the provisions of the Act or the rules or regulations made thereunder--
(a) may invest in the equity capital issued by such entity as a rights issue; or
(b) may be granted bonus shares subject to the terms and conditions under these rules.
(2) The person resident in India acquiring the rights under sub-rule (1) may renounce such rights in favour of a person resident in India or a person resident outside India.
Save as otherwise provided in the Act or these rules or the regulations made or directions issued under the Act, no person resident in India shall make or transfer any investment or financial commitment outside India.
(1) Save as otherwise provided in these rules or the Foreign Exchange Management (Overseas Investment) Regulations, 2022, any investment made outside India by a person resident in India shall be made in a foreign entity engaged in a bona fide business activity, directly or through step down subsidiary or the special-purpose vehicle, subject to the limits and the conditions laid down in these rules and the said regulations:
Provided that the structure of such subsidiary or step down subsidiary of the foreign entity shall comply with the structural requirements of a foreign entity:
Provided further that Overseas Investment or transfer of such investment including swap of securities in a foreign entity formed, registered or incorporated in Pakistan or in any other jurisdiction as may be advised by the Central Government from time to time shall require prior approval of the Central Government.
Explanation.-- For the purposes of this sub-rule, "bonafide
(1) Any person resident in India who,--
(i) has an account appearing as a non-performing asset; or
(ii) is classified as a wilful defaulter by any bank; or
(iii) is under investigation by a financial service regulator or by investigative agencies in India, namely, the Central Bureau of Investigation or Directorate of Enforcement or Serious Frauds Investigation Office, shall, before making any financial commitment or undertaking disinvestment under these rules or the Foreign Exchange Management (Overseas Investment) Regulations, 2022, obtain a No Objection Certificate from the lender bank or regulatory body or investigative agency by making an application in writing to such bank or regulatory body or investigative agency concerned:
Provided that where the lender bank or regulatory body or investigative agency concerned fails to furnish the certificate within sixty days from the date of receipt of such application, it may be presumed that there was no
An Indian entity may make Overseas Direct Investment in the manner and subject to the terms and conditions prescribed in Schedule I.
An Indian entity may make Overseas Portfolio Investment in the manner and subject to the terms and conditions prescribed in Schedule II.
A resident individual may make Overseas Investment in the manner and subject to the terms and conditions prescribed in Schedule III.
A person resident in India, other than an Indian entity and a resident individual, may make Overseas Investment in the manner and subject to the terms and conditions prescribed in Schedule IV.
A person resident in India may make Overseas Investment in an IFSC in India in the manner and subject to the terms and conditions prescribed in Schedule V.
(1) Unless otherwise provided in these rules, the issue or transfer of equity capital of a foreign entity from a person resident outside India or a person resident in India to a person resident in India who is eligible to make such investment or from a person resident in India to a person resident outside India shall be subject to a price arrived on an arm's length basis.
(2) The AD bank, before facilitating a transaction under sub-rule (1), shall ensure compliance with arm's length pricing taking into consideration the valuation as per any internationally accepted pricing methodology for valuation.
(1) Unless otherwise provided in these rules, a person resident in India holding equity capital in accordance with these rules may transfer such investment, in compliance with the limits and subject to the conditions for such investment or disinvestment, pricing guidelines or documentation and reporting requirements, in the manner provided in these rules and the Foreign Exchange Management (Overseas Investment) Regulations, 2022.
(2) A person resident in India may transfer equity capital by way of sale to a person resident in India, who is eligible to make such investment under these rules, or to a person resident outside India.
(3) In case the transfer is on account of merger, amalgamation or demerger or on account of buyback of foreign securities, such transfer or liquidation in case of liquidation of the foreign entity, shall have the approval of the competent authority as per the applicable laws in India or the laws of the host country or host jurisdiction, as the
A person resident in India who has made ODI in a foreign entity may permit restructuring of the balance sheet by such foreign entity, which has been incurring losses for the previous two years as evidenced by its last audited balance sheets, subject to ensuring compliance with reporting, documentation requirements and subject to the diminution in the total value of the outstanding dues towards such person resident in India on account of investment in equity and debt, after such restructuring not exceeding the proportionate amount of the accumulated losses:
Provided that in case of such diminution where the amount of corresponding original investment is more than USD 10 million or in the case where the amount of such diminution exceeds twenty per cent of the total value of the outstanding dues towards the Indian entity or investor, the diminution in value shall be duly certified on an arm's length basis by a registered valuer as per the Companies Act, 2013 (18 of 2013) o
(1) Unless otherwise provided in the Act or these rules, no person resident in India shall make ODI in a foreign entity engaged in---
(a) real estate activity;
(b) gambling in any form; and
(c) dealing with financial products linked to the Indian rupee without specific approval of the Reserve Bank.
Explanation.-- For the purposes of this sub-rule, the expression "real estate activity" means buying and selling of real estate or trading in Transferable Development Rights but does not include the development of townships, construction of residential or commercial premises, roads or bridges for selling or leasing.
(2) Any ODI in start-ups recognised under the laws of the host country or host jurisdiction as the case may be, shall be made by an Indian entity only from the internal accruals whether from the Indian entity or group or associate companies in India and in case of resident individuals, from own funds of such an individual.
(3) N
The mode of payment, deferred payment of consideration, reporting, realisation, and other requirements for any investment outside India by a person resident in India shall be as per the regulations made in this behalf by the Reserve Bank under the Act.
(1) Save as otherwise provided in the Act or this rule, no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank:
Provided that nothing contained in this rule shall apply to a property --
(i) held by a person resident in India who is a national of a foreign State;
(ii) acquired by a person resident in India on or before the 8th day of July, 1947 and continued to be held by such person with the permission of the Reserve Bank;
(iii) acquired by a person resident in India on a lease not exceeding five years.
(2) Notwithstanding anything contained in sub-rule (1) --
(i) a person resident in India may acquire immovable property outside India by way of inheritance or gift or purchase from a person resident in India who has acquired such property as per the foreign exchange provisions in force at the time of such acquisition;
(ii) a per
Elevate your legal practice with advanced AI-driven research and drafting solutions. Experience unmatched efficiency, precision, and security, tailored exclusively for legal professionals.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
AI Assistant
