New Delhi: The government today notified the Foreign Exchange Management (Overseas Investment) Rules, 2022 that came into force on the date of their publication in the Official Gazette today. The government claimed it to be another step towards ease of doing business.
The Ministry of Finance claimed that clarity on Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI) has been brought in and various overseas investment-related transactions that were earlier under the approval route are now under the automatic route, significantly enhancing “Ease of Doing Business”.
It may be mentioned that an Indian entity may make ODI by way of investment in equity capital for the purpose of undertaking bonafide business activity in the manner and subject to the limits and conditions provided in this Schedule. Moreover, an Indian entity may make OPI which shall not exceed fifty per cent of its net worth as on the date of its last audited balance sheet, in the manner and subject to the conditions laid down in this Schedule. A listed Indian company may make OPI, including by way of reinvestment.
“In view of the evolving needs of businesses in India, in an increasingly integrated global market, there is a need for Indian corporates to be part of the global value chain. The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics,” the Ministry stated.
Presently, the overseas investment by a person resident in India is governed by the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015.
In line with the amendment in the Foreign Exchange Management Act 2015, the Government framed Outward Investments Rules in consultation with the Reserve Bank of India. They undertook a comprehensive exercise to simplify these regulations. Draft Foreign Exchange Management (Overseas Investment) Rules and draft Foreign Exchange Management (Overseas Investment) Regulations were also put in the public domain for consultations. Extant regulations pertaining to Overseas Investments and Acquisition and Transfer of Immovable Property Outside India have been subsumed within these rules and regulations.
– global bihari bureau
