Introducing Foreign Direct Investment (FDI) || FEMA & RBI Compliance Series || Episode 1

In this video, We cover the basics of foreign direct investment (FDI) in Indian companies. We'll speak about what it is, why it's important, and how it can be used to grow your business. Also, give you some tips on how to make the most of FDI in India.

Foreign Investment in India is governed by #ForeignExchangeManagement (Non-Debt Instruments) Rules 2019, (NDI Rules) and the consolidated #FDI Policy as amended from time to time and the provisions of the Foreign Exchange Management Act (#FEMA) 1999.

Foreign Investment: foreign Investment means any investment made by a Person resident outside India on a repatriable basis in the Equity Instruments of an Indian Company or to the Capital of LLP.

Explanation: If a declaration is made by a person as per the provisions of the Companies Act, 2013 about a beneficial interest being held by a person resident outside #India, then even though the investment may be made by a resident Indian citizen, the same shall be counted as foreign Investment.

So we need to see who is the ultimate beneficiary here.

Foreign Investment ki definition se nikalti hai 2 very important terms. The first is a repatriable basis and the second is Equity Instruments.

Repatriable basis means, an Investment, the sale/maturity proceeds of which are net of taxes, eligible to be repatriated out of India.

Equity Instruments: under Non-Debt Instruments Rules (NDI Rules) are”

1. Equity Shares
2. Preference Shares: Fully, compulsorily and mandatorily convertible into Equity
3. Convertible Debentures: Fully, compulsorily and mandatorily convertible into Equity
4. Share Warrants

Who can Invest:

1. A non-resident entity/PROI can invest in India subject to the FDI policy except in those sectors/ activities which are prohibited.
2. A citizen/entity of Bangladesh/Pakistan can invest in India Company only via Govt. Route.
3. A citizen/entity of Pakistan can invest only under the Government Route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

Foreign Investment into India comprises direct foreign investment from non-residents and indirect investments through resident Indian entities.

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