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The
Foreign Exchange Management (Non-
debt Instruments) Rules, 20191
(FEM (Non-debt Instruments) Rules, 2019)

[Amended up to Noti. No. S.O. 3492(E), dated 16-8-2024]

[17th October, 2019]

In exercise of the powers conferred by clauses (aa) and (ab) of sub-

section (2) of Section 46 of the Foreign Exchange Management Act,
1999 (42 of 1999), and in supersession of the Foreign Exchange
Management (Transfer of Issue of Security by a Person Resident outside
India) Regulations, 2017 and the Foreign Exchange Management
(Acquisition and Transfer of Immovable Property in India) Regulations,
2018, except as respects things done or omitted to be done before such
supersession, the Central Government hereby makes the following
rules, namely—
CHAPTER I
PRELIMINARY
1. Short title and commencement.—(1) These rules may be called
the Foreign Exchange Management (Non-debt Instruments)
Rules, 2019.
(2) Save as otherwise provided in these rules, they shall come into
force from the date of their publication in the Official Gazette.
2. Definitions.—In these rules, unless the context otherwise
requires.—
(a) “Act” means the Foreign Exchange Management Act, 1999 (42
of 1999);
(b) “asset reconstruction company” means a company registered
with the Reserve Bank under Section 3 of the Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (54 of 2002);
(c) “authorised bank” shall have the meaning assigned to it in the
Foreign Exchange Management (Deposit) Regulations, 2016;
(d) “authorised dealer” includes a person authorised under sub-
section (1) of Section 10 of the Act;
2
[(da) ‘control’ shall have the same meaning as assigned to it in
the Companies Act, 2013 and for the purposes of Limited
Liability Partnership, shall mean the right to appoint majority of
the designated partners, where such designated partners, with
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specific exclusion to others, have control over all the policies of

an LLP;]
(e) ‘convertible note’ means an instrument issued by a startup
company acknowledging receipt of money initially as debt,
repayable at the option of the holder, or which is convertible
into such number of equity shares of that company, within a
3
period not exceeding [ten years] from the date of issue of the
convertible note, upon occurrence of specified events as per
other terms and conditions agreed and indicated in the
instrument;
(f) “debt instruments” means all instruments other than non-debt
instruments defined in clause (ai) of this rule;
(g) “depository receipt” means a foreign currency denominated
instrument, whether listed on an international exchange or not,
issued by a foreign depository in a permissible jurisdiction on
the back of eligible securities issued or transferred to that
foreign depository and deposited with a domestic custodian
and includes ‘global depository receipt’ as defined in the
Companies Act, 2013 (18 of 2013);
(h) “domestic custodian” means a custodian of securities
registered with the Securities and Exchange Board of India in
accordance with the SEBI (Custodian of Securities)
Regulations, 1996;
(i) “domestic depository” means a custodian of securities
registered with the Securities and Exchange Board of India and
authorised by the issuing entity to issue Indian depository
receipts;
(j) “ESOP” means ‘Employees' stock option’ as defined under the
Companies Act, 2013 and issued under the regulations by the
Securities and Exchange Board of India;
(k) “equity instruments” means equity shares, convertible
debentures, preference shares and share warrants issued by an
Indian company;
Explanation.—
4
[(i) Equity shares issued by an Indian Company in accordance
with the provisions of the Companies Act, 2013 or any other
applicable law, shall include equity shares that have been
partly paid. “Convertible debentures” means fully and
mandatorily convertible debentures which are fully paid.
“Preference shares” means fully and mandatorily convertible
preference shares which are fully paid. “Share Warrants” are
those issued by an Indian Company in accordance with the
regulations made by the Securities and Exchange Board of
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India, the Companies Act, 2013 or any other applicable law.

Equity instruments can contain an optionality clause subject
to a minimum lock-in period of one year or as prescribed for
the specific sector, whichever is higher, but without any
option or right to exit at an assured price.]
(ii) Partly paid shares that have been issued to a person
resident outside India shall be fully called-up within twelve
months of such issue or as may be specified by the Reserve
Bank from time to time. Twenty five per cent of the total
consideration amount (including share premium, if any)
shall be received upfront.
(iii) In case of share warrants, at least twenty-five per cent of
the consideration shall be received upfront and the balance
amount within eighteen months of the issuance of share
warrants.
(l) “escrow account” means an escrow account maintained in
accordance with the Foreign Exchange Management (Deposit)
Regulations, 2016;
(m) “FDI linked performance conditions” means the sector specific
conditions specified in Schedule I of these rules for companies
receiving foreign investment;
(n) “FVCI” means a Foreign Venture Capital Investor incorporated
and established outside India and registered with the
Securities and Exchange Board of India under the Securities
and Exchange Board of India (Foreign Venture Capital
Investors) Regulations, 2000;
(o) “foreign central bank” means an institution or organisation or
body corporate established in a country outside India and
entrusted with the responsibility of carrying out central bank
functions under the law for the time being in force in that
country;
(p) “FCNR (B) account” means a Foreign Currency Non-Resident
(Bank) account maintained in accordance with the Foreign
Exchange Management (Deposit) Regulations, 2016;
(q) “FCCB” or “Foreign Currency Convertible Bond” means a bond
issued under the Issue of Foreign Currency Convertible Bonds
and Ordinary Shares (Through Depository Receipt Mechanism)
Scheme, 1993;
(r) “FDI” or “Foreign Direct Investment” means investment
through equity instruments by a person resident outside India
in an unlisted Indian company; or in ten per cent or more of
the post issue paid-up equity capital on a fully diluted basis of
a listed Indian company;
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Note:—In case an existing investment by a person resident

outside India in equity instruments of a listed Indian company
falls to a level below ten per cent, of the post issue paid-up
equity capital on a fully diluted basis, the investment shall
continue to be treated as FDI;
Explanation.—Fully diluted basis means the total number of
shares that would be outstanding if all possible sources of
conversion are exercised;
(s) “foreign investment” means any investment made by a person
resident outside India on a repatriable basis in equity
instruments of an Indian company or to the capital of a LLP;
5
[Explanation.—If a declaration is made by a person as per the
provisions of the Companies Act, 2013 or any other applicable
law, as the case may be, 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;]
Note.—A person resident outside India may hold foreign
investment either as FDI or as FPI in any particular Indian
company;
(t) “foreign portfolio investment” means any investment made by
a person resident outside India through equity instruments
where such investment is less than ten per cent of the post
issue paid-up share capital on a fully diluted basis of a listed
Indian company or less than ten per cent of the paid-up value
of each series of equity instrument of a listed Indian company;
(u) “FPI” or “Foreign Portfolio Investor” means a person registered
in accordance with the provisions of the Securities and
Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014;
(v) “government approval” means the approval from the erstwhile
Secretariat for Industrial Assistance (SIA), Department of
Industrial Policy and Promotion, Government of India and/or
the erstwhile Foreign Investment Promotion Board (FIPB)
and/or any of the ministry/department of the Government of
India, as the case may be;
(w) “group company” means two or more enterprises which,
directly or indirectly, are in a position to (i) exercise twenty-six
per cent, or more of voting rights in other enterprise; or (ii)
appoint more than fifty per cent of members of Board of
Directors in the other enterprise;
(x) “hybrid securities” means hybrid instruments such as
optionally or partially convertible preference shares or
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debentures and other such instruments as specified by the

Central Government from time to time, which can be issued by
an Indian company or trust to a person resident outside India;
6
[(y) “Indian company” means a company as defined in the
Companies Act, 2013 or a body corporate established or
constituted by or under any Central or State Act, which is
incorporated in India;]
Note: (i) It is clarified that reference to ‘company’ or ‘investee
company’ or ‘transferee company’ or ‘transferor company’ in
these rules also includes a reference to a body corporate
established or constituted by or under any Central or State Act.
(ii) It is further clarified that if the term ‘Company’ or ‘Indian
company’ or ‘Investee company’ or ‘transferee company’ or
‘transferor company’ is qualified by a reference to a company
incorporated under the Companies Act, 2013 such term shall
mean a company incorporated under the said Act but not a
body corporate.
(iii) It is also clarified that ‘Indian company’ does not include a
society, trust or any entity, which is excluded as an eligible
investee entity under the FDI Policy.]
(z) “IDR” or “Indian Depository Receipts (IDRs)” means any
instrument in the form of a depository receipt created by a
domestic depository in India and authorised by a company
incorporated outside India making an issue of such depository
receipts;
(aa) “Indian entity” shall mean an Indian company or a LLP;
7
[(aaa) “International Exchange” shall mean permitted stock
exchange in permissible jurisdictions which are listed at
Schedule XI annexed to these rules;]
(ab) “investing company” means an Indian company holding only
investments in other Indian company/ies directly or indirectly,
other than for trading of such holdings or securities;
(ac) “investment” means to subscribe, acquire, hold or transfer
any security or unit issued by a person resident in India;
Explanation.—
(i) Investment shall include to acquire, hold or transfer
depository receipts issued outside India, the underlying of
which is a security issued by a person resident in India;
(ii) for the purpose of LLP, investment shall mean capital
contribution or acquisition or transfer of profit shares;
(ad) “investment on repatriation basis” means an investment,
sale or maturity proceeds of which are net of taxes, eligible to
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be repatriated out of India, and the expression “investment on

non-repatriation basis”, shall be construed accordingly;
(ae) “investment vehicle” means an entity registered and
regulated under the regulations framed by the Securities and
Exchange Board of India or any other authority designated for
that purpose and shall include, namely:—(i) Real Estate
Investment Trusts (REITs) governed by the Securities and
Exchange Board of India (REITs) Regulations, 2014;(ii)
Infrastructure Investment Trusts (InvIts) governed by the
Securities and Exchange Board of India (InvIts) Regulations,
2014; (iii) Alternative Investment Funds (AIFs) governed by
the Securities and Exchange Board of India (AIFs) Regulations,
2012; 8[* * *]
(af) “LLP” means a limited liability partnership formed and
registered under the Limited Liability Partnership Act, 2008 (6
of 2009);
9
[(ag) “listed Indian company” means an Indian company which
has any of its equity instruments or debt instruments listed on
a recognised stock exchange in India and on an International
Exchange and the expression “unlisted Indian company” shall
be construed accordingly;]
(ah) “manufacture”, with its grammatical variations, means a
change in a non-living physical object or article or thing,:—(i)
resulting in transformation of the object or article or thing into
a new and distinct object or article or thing having a different
name, character and use; or (ii) bringing into existence of a
new and distinct object or article or thing with a different
chemical composition or integral structure;
(ai) “non-debt instruments” means the following instruments;
namely:—
(i) all investments in equity instruments in incorporated
entities: public, private, listed and unlisted;
(ii) capital participation in LLP;
(iii) all instruments of investment recognised in the FDI policy
notified from time to time;
(iv) investment in units of Alternative Investment Funds
(AIFs), Real Estate Investment Trust (REITs) and
Infrastructure Investment Trusts (InvIts);
(v) investment in units of mutual funds or Exchange-Traded
Fund (ETFs) which invest more than fifty per cent in equity;
(vi) junior-most layer (i.e. equity tranche) of securitisation
structure;
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(vii) acquisition, sale or dealing directly in immovable property;

(viii) contribution to trusts; and
(ix) depository receipts issued against equity instruments;
(aj) “NRI” or “Non-Resident Indian” means an individual resident
outside India who is a citizen of India;
(ak) “OCI” or “Overseas Citizen of India” means an individual
resident outside India who is registered as an Overseas Citizen
of India Cardholder under Section 7-A of the Citizenship Act,
1955 (57 of 1955);
10
[(aka) “permissible jurisdiction” means such jurisdiction as
notified by the Central Government under sub-clause (f) of sub
-rule (3) of Rule 9 of Prevention of Money-laundering
(Maintenance of Records) Rules, 2005;]
(al) “resident Indian citizen” means an individual who is a person
resident in India and is a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955;
(am) “sectoral cap” means the maximum investment including
both foreign investment on a repatriation basis by persons
11
resident outside India in equity [* * *] instruments of a
company or the capital of a LLP, as the case may be, and
indirect foreign investment, unless provided otherwise. This
shall be the composite limit for the Indian investee entity.
Explanation:
(i) FCCBs and DRs having underlying of instruments being in
the nature of debt shall not be included in the sectoral cap;
(ii) any equity holding by a person resident outside India
resulting from conversion of any debt instrument under any
arrangement shall be reckoned under the sectoral cap;
12
[(ama) “Share Based Employee Benefits” means issue of equity
instruments to employees or directors or employees or
directors of the holding company or joint venture or wholly
owned overseas subsidiary or subsidiaries who are resident
outside India, pursuant to Share Based Employee Benefits
schemes formulated by an Indian Company;]
13
[(an) “startup company” means a private company incorporated
under the Companies Act, 2013 (18 of 2013) and identified as
“startup” under the notification of the Government of India
number G.S.R. 127(E), dated the 19th February, 2019 issued
by the Department for Promotion of Industry and Internal
Trade, Ministry of Commerce and Industry, as amended from
time to time;]
14
[(ana) “subsidiary” shall have the same meaning as is assigned
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to it in the Companies Act, 2013, as amended from time to

time;]
(ao) “sweat equity shares” means sweat equity shares defined
under the Companies Act, 2013;
(ap) “transferable development rights (TDR)” shall have the
meaning assigned to it in the regulations made under sub-
section (2) of Section 6 of the Act;
(aq) “unit” means a beneficial interest of an investor in an
investment vehicle;
15
[Explanation.—For the purposes of this clause, unit shall
include unit that has been partly paid up, which is permitted
under the regulations framed by the Securities and Exchange
Board of India, in consultation with Government of India;]
(ar) “venture capital fund” means a fund established in the form
of a trust, a company including a body corporate and registered
under the Securities and Exchange Board of India (Alternative
Investment Funds) Regulations, 2012.
(2) The words and expressions used but not defined in these rules
shall have the same meanings respectively assigned to them in the Act,
rules and regulations.
16
[2-A. Reserve Bank to administer these rules.—(1) These rules
shall be administered by the Reserve Bank.
(2) While administrating these rules, the Reserve Bank may interpret
and issue such directions, circulars, instructions, clarifications, as it
may deem necessary, for effective implementation of the provisions of
these rules.]
CHAPTER II
GENERAL CONDITIONS APPLICABLE TO ALL INVESTORS
3. Restriction on investment in India by a person resident
outside India.—Save as otherwise provided in the Act or rules or
regulations made thereunder, no person resident outside India shall
make any investment in India:
Provided that an investment made in accordance with the Act or the
rules or the regulations made thereunder and held on the date of
commencement of these rules shall be deemed to have been made
under these rules and shall accordingly be governed by these rules:
Provided further that the Reserve Bank may, on an application made
to it and for sufficient reasons 17[* * *], permit a person resident
outside India to make any investment in India subject to such
conditions as may be considered necessary.
4. Restriction on receiving investment.—Save as otherwise
provided in the Act or rules or regulations made thereunder, an Indian
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entity or an investment vehicle, or a venture capital fund or a firm or an

association of persons or a proprietary concern shall not receive any
investment in India from a person resident outside India or record such
investment in its books:
Provided that the Reserve Bank may, on an application made to it
and for sufficient reasons 18[* * *], permit an Indian entity or an
investment vehicle, or a venture capital fund or a firm or an association
of persons or a proprietary concern to receive any investment in India
from a person resident outside India or to record such investment
subject to such conditions as may be considered necessary.
5. Permission for making investment by a person resident
outside India.—Unless otherwise specified in these rules or the
Schedules, any investment made by a person resident outside India
shall be subject to the entry routes, sectoral caps or the investment
limits, as the case may be, and the attendant conditionalities for such
investment as laid down in these rules.
CHAPTER III
INVESTMENT BY PERSON RESIDENT OUTSIDE INDIA
6. Investments by person resident outside India.—A person
resident outside India may make investment as under:—
(a) may subscribe, purchase or sell equity instruments of an
Indian company in the manner and subject to the terms and
conditions specified in Schedule I:
19
[Provided that an entity of a country, which shares land
border with India or the beneficial owner of an investment into
India who is situated in or is a citizen of any such country, shall
invest only with the Government approval:
Provided further that, a citizen of Pakistan or an entity
incorporated in Pakistan shall invest only under the
Government route, in sectors or activities other than defence,
space, atomic energy and such other sectors or activities
prohibited for foreign investment:
Provided also that in the event of the transfer of ownership of
any existing or future FDI in an entity in India, directly or
indirectly, resulting in the beneficial ownership falling within
the restriction or purview of the above provisos, such
subsequent change in beneficial ownership shall also require
government approval:]
20
[Provided also that a Multilateral Bank or Fund, of which India
is a member, shall not be treated as an entity of a particular
country nor shall any country be treated as the beneficial owner
of the investments of such Bank or Fund in India.]
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Note: Issue or transfer of “participating interest or right” in oil

fields by Indian companies to a person resident outside India
would be treated as foreign investment and shall comply with
the conditions laid down in Schedule I.
(b) A person resident outside India, other than a citizen of
Bangladesh or Pakistan or an entity incorporated in Bangladesh
or Pakistan, may invest either by way of capital contribution or
by way of acquisition or transfer of profit shares of an LLP, in
the manner and subject to the terms and conditions specified
in Schedule VI.
(c) A person resident outside India, other than a citizen of
Bangladesh or Pakistan or an entity incorporated in Bangladesh
or Pakistan, may invest in units of an investment vehicle, in the
manner and subject to the terms and conditions specified in
Schedule VIII.
(d) A person resident outside India may invest in the depository
receipts (DRs) issued by foreign depositories against eligible
securities in the manner and subject to the terms and
conditions specified in Schedule IX.
7. Acquisition through rights issue or bonus issue.—A person
resident outside India and having investment in an Indian company
may make investment in equity instruments (other than share
warrants) issued by such company as a rights issue or a bonus issue,
provided that,—
(a) the offer made by the Indian company is in compliance with
the provisions of the Companies Act, 2013;
(b) such issue shall not result in a breach of the sectoral cap
applicable to the company;
(c) the share holding on the basis of which the rights issue or the
bonus issue has been made must have been acquired and held
as per the provisions of these rules;
(d) in case of a listed Indian company, the rights issue to persons
resident outside India shall be at a price determined by the
company;
(e) in case of an unlisted Indian company, the rights issue to
persons resident outside India shall not be at a price less than
the price offered to persons resident in India;
(f) such investment made through rights issue or bonus issue
shall be subject to the conditions as are applicable at the time
of such issue;
(g) the mode of payment and attendant conditions for such
transactions shall be specified by the Reserve Bank.
(h) an individual who is a person resident outside India exercising
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a right which was issued when he or she was a person resident

in India shall hold the equity instruments (other than share
warrants) so acquired on exercising the option on a non-
repatriation basis.
21
Explanation: [* * *]
22
[7-A. Acquisition after renunciation of rights.—A person
resident outside India who has acquired a right from a person resident
in India who has renounced it may acquire equity instruments (other
than share warrants) against the said rights as per pricing guidelines
specified under Rule 21 of these rules.]
23
[8. Issue of Employees Stock Options, sweat equity and
Share Based Employee Benefits to persons resident outside
India.—An Indian company may issue “employees' stock option”,
“sweat equity shares”, and “Share Based Employee Benefits” to its
employees or directors or employees or directors of its holding company
or joint venture or wholly owned overseas subsidiary or subsidiaries
who are resident outside India:
Provided that—
(a) the scheme has been drawn either in terms of regulations
issued under the Securities and Exchange Board of India Act,
1992 or the Companies (Share Capital and Debentures) Rules,
2014 or as per other applicable law, as the case may be;
(b) the “employee's stock option” or “sweat equity shares” or
“Share Based Employee Benefits” so issued under the
applicable rules or regulations are in compliance with the
sectoral cap applicable to the said company;
(c) the issue of “employee's stock option” or “sweat equity
shares” or “Share Based Employee Benefits” in a company
where foreign investment is under the approval route shall
require prior government approval;
(d) issue of “employee's stock option” or “sweat equity shares” or
“Share Based Employee Benefits” to a citizen of Bangladesh or
Pakistan shall require prior government approval:
Provided further that an individual who is a person resident outside
India exercising an option which was issued when he or she was a
person resident in India shall hold the shares so acquired on exercising
the option on a non-repatriation basis.]
9. Transfer of equity instruments of an Indian company by or
to a person resident outside India.—A person resident outside India
holding equity instruments of an Indian company or units in accordance
with these rules or a person resident in India, may transfer such equity
instruments or units so held by him in compliance with the conditions,
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if any, specified in the Schedules of these rules and subject to the

terms and conditions prescribed hereunder:
(1) a person resident outside India, not being a non-resident
Indian or an overseas citizen of India or an erstwhile overseas
corporate body may transfer by way of sale or gift the equity
instruments of an Indian company or units held by him to any person
resident outside India;
Explanation: It shall also include transfer of equity instruments of
an Indian company pursuant to liquidation, merger, de-merger and
amalgamation of entities or companies incorporated or registered
outside India.
Provided that.—
24
[(i) prior Government approval shall be obtained for transfer in
all cases wherever Government approval is applicable;]
(ii) where the equity instruments are held by the person resident
outside India on a non-repatriable basis, the transfer by way of
sale where the transferee intends to hold the equity
instruments on a repatriable basis, shall be in compliance with
and subject to the adherence to entry routes, sectoral caps or
investment limits, as specified in these rules and attendant
conditionalities for such investment, pricing guidelines,
documentation and reporting requirements for such transfers,
as may be specified by the Reserve Bank from time to time;
(2) A person resident outside India, holding equity instruments of
an Indian company or units in accordance with these rules may
transfer the same to a person resident in India by way of sale or gift
or may sell the same on a recognised stock exchange in India in the
manner specified by the Securities and Exchange Board of India:
Provided that.—
(i) the transfer by way of sale shall be in compliance with and
subject to the adherence to pricing guidelines, documentation
and reporting requirements for such transfers as may be
specified by the Reserve Bank in consultation with the Central
Government from time to time;
(ii) where the equity instruments are held by the person resident
outside India on a non-repatriable basis, conditions at item (i)
of the proviso shall not apply.
(3) A person resident in India holding equity instruments of an
Indian company or units, may transfer the same to a person resident
outside India by way of sale, subject to the adherence to entry
routes, sectoral caps or investment limits, pricing guidelines and
other attendant conditions as applicable for investment by a person
resident outside India and documentation and reporting requirements
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for such transfers as may be specified by the Reserve Bank in

consultation with the Central Government from time to time;
(4) A person resident in India holding equity instruments or units
25
of an Indian company [* * *] may transfer the same to a person
resident outside India by way of gift with the prior approval of the
Reserve Bank, in the manner prescribed, and subject to the following
conditions, namely:—
(i) the donee is eligible to hold such a security under the
Schedules of these Rules;
(ii) the gift does not exceed five per cent of the paid up capital of
the Indian company or each series of debentures or each
mutual fund scheme;
Explanation: The five per cent of the paid up capital of the
Indian company or each series of debentures or each mutual
fund scheme will be on cumulative basis by a single person to
another single person.
(iii) the applicable sectoral cap in the Indian company is not
breached;
(iv) the donor and the donee shall be “relatives” within the
meaning in clause (77) of Section 2 of the Companies Act,
2013;
(v) the value of security to be transferred by the donor together
with any security transferred to any person residing outside
India as gift during the financial year does not exceed the
rupee equivalent of fifty-thousand US Dollars;
(vi) such other conditions as considered necessary in public
interest by the Central Government.
(5) A person resident outside India holding equity instruments of
an Indian company containing an optionality clause in accordance
with these rules and exercising the option or right, may exit without
any assured return, subject to the pricing guidelines prescribed in
these rules and a minimum lock-in period of one year or minimum
lock-in period as prescribed in these rules, whichever is higher.
(6) In case of transfer of equity instruments between a person
resident in India and a person resident outside India, an amount not
exceeding twenty five per cent of the total consideration,—
(i) may be paid by the buyer on a deferred basis within a period
not exceeding eighteen months from the date of the transfer
agreement; or
(ii) may be settled through an escrow arrangement between the
buyer and the seller for a period not exceeding eighteen
months from the date of the transfer agreement; or
(iii) may be indemnified by the seller for a period not exceeding
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eighteen months from the date of the payment of the full

consideration, if the total consideration has been paid by the
buyer to the seller:
Provided that the total consideration finally paid for the shares
shall be compliant with the applicable pricing guidelines.
(7) In case of transfer of equity instruments between a person
resident in India and a person resident outside India, a person
resident outside India may open an escrow account in accordance
with the Foreign Exchange Management (Deposit) Regulations, 2016
and such escrow account may be funded by way of inward remittance
through banking channels and/or by way of guarantee issued by an
authorised dealer bank, subject to the terms and conditions as
specified in the Foreign Exchange Management (Guarantees)
Regulations, 2000.
(8) The transfer of equity instruments of an Indian company or
units of an investment vehicle by way of pledge is subject to the
following terms and conditions, namely:—
(i) any person being a promoter of a company registered in India
(borrowing company), which has raised external commercial
borrowing in compliance with the Foreign Exchange
Management (Borrowing and Lending in Foreign Exchange)
Regulations, 2000 may pledge the shares of the borrowing
company or that of its associate resident companies for the
purpose of securing the external commercial borrowing raised
by the borrowing company subject to the following further
conditions, namely:—
(A) the period of such pledge shall be co-terminus with the
maturity of the underlying external commercial borrowing;
(B) in case of invocation of pledge, transfer shall be made in
accordance with these rules and directions issued by the
Reserve Bank;
(C) the statutory auditor has certified that the borrowing
company shall utilise or has utilised the proceeds of the
external commercial borrowing for the permitted end-use
only;
(D) no person shall pledge any such share unless a no-
objection has been obtained from an authorised dealer bank
that the above conditions have been complied with;
(ii) any person resident outside India holding equity instruments
in an Indian company or units of an investment vehicle may
pledge the equity instruments or units, as the case may be,—
(A) in favour of a bank in India to secure the credit facilities
being extended to such Indian company for bona fide
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purposes,
(B) in favour of an overseas bank to secure the credit facilities
being extended to such person or a person resident outside
India who is the promoter of such Indian company or the
overseas group company of such Indian company,
(C) in favour of a non-banking financial company registered
with the Reserve Bank to secure the credit facilities being
extended to such Indian company for bona fide purposes,
(D) subject to the authorised dealer bank satisfying itself of the
compliance of the conditions stipulated by the Reserve Bank
in this regard;
(iii) in case of invocation of pledge, transfer of equity instruments
of an Indian company or units shall be in accordance with entry
routes, sectoral caps or investment limits, pricing guidelines
and other attendant conditions at the time of creation of
pledge.
26
[9-A. Swap of equity instruments and equity capital.—The
transfer of equity instruments of an Indian company between a person
resident in India and a person resident outside India may be by way
of—
(i) swap of equity instruments, in compliance with the rules
prescribed by the Central Government and the regulations
specified by the Reserve Bank from time to time;
(ii) swap of equity capital of a foreign company in compliance with
the rules prescribed by the Central Government including the
Foreign Exchange Management, (Overseas Investment) Rules,
2022, and the regulations specified by the Reserve Bank from
time to time:
Provided that prior Government approval shall be obtained for
transfer in all cases wherever Government approval is applicable.
Explanation.—For the purposes of this clause, the expression “equity
capital” shall have the same meaning as assigned to it in the Foreign
Exchange Management, (Overseas Investment) Rules, 2022, as
amended from time to time.]
CHAPTER IV
INVESTMENT BY FOREIGN PORTFOLIO INVESTOR (FPI)
10. Investment by FPI.—A FPI may make investments as under:—
(1) A FPI may purchase or sell equity instruments of an Indian
company which is listed or to be listed on a recognised stock
exchange in India, and/or may purchase or sell securities other
than equity instruments, in the manner and subject to the
terms and conditions specified in Schedule II.
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Note—A FPI may trade or invest in all exchange traded

derivative contracts approved by Securities and Exchange
Board of India from time to time subject to the limits specified
by the Securities and Exchange Board of India and the
conditions prescribed in Schedule II.
(2) A FPI may purchase, hold, or sell Indian Depository Receipts
(IDRs) of companies resident outside India and issued in the
Indian capital market, in the manner and subject to the terms
and conditions as prescribed in Schedule X.
27
[11. Transfer of equity instruments of an Indian company by
FPI.—A FPI holding equity instruments of an Indian company or units
in accordance with these rules, may transfer such equity instruments or
units held by him in compliance with the conditions, if any, specified in
the Schedules annexed to these rules, subject to the terms and
conditions specified therein and by the Securities and Exchange Board
of India:
Provided that,—
(i) prior Government approval shall be obtained for any transfer in
case the company is engaged in a sector which requires the
Government approval;
(ii) where the acquisition of equity instruments by FPI under
Schedule II has resulted in a breach of the applicable
aggregate FPI limits or sectoral limits the provisions of item
(iii) of sub-paragraph (a) of paragraph (1) of Schedule II shall
apply.]
CHAPTER V
INVESTMENT BY NON-RESIDENT INDIAN OR AN OVERSEAS CITIZEN
OF INDIA
12. Investment by NRI or OCI.—A NRI or an OCI may make
investments as under:—
(1) A NRI or an OCI may, on repatriation basis, purchase or sell
equity instruments of a listed Indian company and other
securities in the manner and subject to the terms and
conditions prescribed in Schedule III.
(2) A NRI or an OCI may, on non-repatriation basis, purchase or
sell equity instruments of an Indian company or other
securities or contribute to the capital of a LLP or a firm or
proprietary concern, in the manner and subject to the terms
and conditions specified in Schedule IV.
Note: A NRI or an OCI may trade or invest in all exchange
traded derivative contracts approved by the Securities and
Exchange Board of India from time to time subject to the limits
specified by Securities and Exchange Board of India and
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conditions prescribed in Schedule III.

(3) A NRI or an OCI may purchase, hold, or sell Indian Depository
Receipts (IDRs) of companies resident outside India and issued
in the Indian capital market, in the manner and subject to the
terms and conditions specified in Schedule X.
13. Transfer of equity instruments by NRI or OCI.—A NRI or an
OCI holding equity instruments of an Indian company or units in
accordance with these rules may transfer such equity instruments or
units so held by him in compliance with the conditions, if any,
prescribed in the Schedules of these rules and subject to the terms and
conditions prescribed hereunder:
(1) A NRI or an OCI holding equity instruments of an Indian
company or units on repatriation basis may transfer the same by way
of sale or gift to any person resident outside India:
Provided that,—
(i) prior Government approval shall be obtained for any transfer in
case the company is engaged in a sector which requires
Government approval;
(ii) where the acquisition of equity instruments by an NRI or an
OCI under the provisions of Schedule III of these rules has
resulted in a breach of the applicable aggregate NRI or OCI
limit or sectoral limits, the NRI or the OCI shall sell such equity
instruments to a person resident in India eligible to hold such
instruments within the time stipulated by the Reserve Bank of
India in consultation with the Central Government and the
breach of the said aggregate or sectoral limit on account of
such acquisition for the period between the acquisition and
sale, provided the sale is within the prescribed time, shall not
be reckoned as a contravention under these rules.
(2) A NRI or an OCI or an eligible investor under Schedule IV of
these rules, holding equity instruments of an Indian company or units
on a non-repatriation basis, may transfer the same to a person
resident outside India by way of sale, subject to the adherence to
entry routes, sectoral caps or investment limits, pricing guidelines
and other attendant conditions as applicable for investment by a
person resident outside India and documentation and reporting
requirements for such transfers as may be specified by the Reserve
Bank in consultation with the Central Government from time to time;
Provided that the entry routes, sectoral caps or investment limits,
pricing guidelines and other attendant conditions shall not apply in
case the transfer is to an NRI or an OCI or an eligible investor under
Schedule IV of these rules acquiring such investment.
(3) A NRI or an OCI or an eligible investor under Schedule IV of
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these rules holding equity instruments or units of an Indian company

on a non-repatriation basis may transfer the same to a person
resident outside India by way of gift with the prior approval of the
Reserve Bank of India, in the manner prescribed, and subject to the
following conditions, namely:—
(i) the donee is eligible to hold such a security under relevant
Schedules of these rules;
(ii) the gift does not exceed five per cent of the paid up capital of
the Indian company or each mutual fund scheme;
Explanation: The five per cent shall be on cumulative basis by
a single person to another single person.
(iii) the applicable sectoral cap in the Indian company is not
breached;
(iv) the donor and the donee shall be “relatives” within the
meaning in clause (77) of Section 2 of the Companies Act,
2013;
(v) the value of security to be transferred by the donor together
with any security transferred to any person residing outside
India as gift during the financial year does not exceed the
rupee equivalent of USD 50000;
(vi) such other conditions as may be considered necessary in
public interest by the Central Government.
(4) A NRI or an OCI or an eligible investor specified under
Schedule IV of these rules holding equity instruments of an Indian
company or units on a non-repatriation basis, may transfer the same
by way of gift to an NRI or an OCI or an eligible investor under
Schedule IV of these rules who shall hold it on a non-repatriable
basis.
(5) An erstwhile OCB may transfer equity instruments subject to
the directions issued by the Reserve Bank of India from time to time
in this regard.
Explanation: “Overseas Corporate Body (OCB)” means an entity de
-recognised through Foreign Exchange Management [Withdrawal of
General Permission to Overseas Corporate Bodies (OCBs)]
Regulations, 2003.
CHAPTER VI
INVESTMENT BY OTHER NON-RESIDENT INVESTORS
14. Investment in securities by other non-resident investors.—
The other non-resident investors may make investments in securities in
the manner and subject to the terms and conditions specified in
Schedule V.
15. Transfer of securities by other non-resident investors.—The
other non-resident investors, holding securities in accordance with
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these rules, may transfer the securities subject to such terms and
conditions prescribed in Schedule V and as specified by the Securities
and Exchange Board of India and the Reserve Bank.
CHAPTER VII
INVESTMENT BY FOREIGN VENTURE CAPITAL INVESTOR
16. Investment by FVCI.—A Foreign Venture Capital Investor
(FVCI) may make investments in the manner and subject to the terms
and conditions specified in Schedule VII.
17. Transfer of equity instruments of an Indian company by or
to a FVCI.—A FVCI holding equity instruments of an Indian company
or units in accordance with these rules or a person resident in India,
may transfer such equity instruments or units so held by him in
compliance with the conditions, if any, prescribed in Schedule VII of
these rules and as specified by the Securities and Exchange Board of
India and the Reserve Bank.
CHAPTER VIII
GENERAL PROVISIONS
18. Issue of Convertible Notes by an Indian startup company.
—(1) A person resident outside India (other than an individual who is
citizen of Pakistan or Bangladesh or an entity which is registered or
incorporated in Pakistan or Bangladesh), may purchase convertible
notes issued by an Indian startup company for an amount of twenty
five lakh rupees or more in a single tranche.
(2) A startup company, engaged in a sector where investment by a
person resident outside India requires Government approval, may issue
convertible notes to a person resident outside India only with such
approval. Further, issue of equity shares against such convertible notes
shall be in compliance with the entry route, sectoral caps, pricing
guidelines and other attendant conditions for foreign investment.
(3) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
(4) A NRI or an OCI may acquire convertible notes on non-
repatriation basis in accordance with Schedule IV of these rules.
(5) A person resident outside India may acquire or transfer by way
of sale, convertible notes, from or to, a person resident in or outside
India, provided the transfer takes place in accordance with the entry
routes and pricing guidelines as prescribed for capital instruments.
19. Merger or demerger or amalgamation of Indian companies.
28
— [(1) Where a scheme of compromise or arrangement or merger or
amalgamation of two or more Indian companies or a reconstruction by
way of demerger or otherwise of an Indian company, or transfer of
undertaking of one or more Indian company to another Indian
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company, or involving division of one or more Indian company, has

been approved by the National Company Law Tribunal (NCLT) or other
authority competent to do so by law, the transferee company or the
new company, as the case may be, may issue equity instruments to the
existing shareholders of the transferor company resident outside India,
subject to the following conditions, namely—
(a) the transfer or issue is in compliance with the entry routes,
sectoral caps or investment limits, as the case may be and the
attendant conditionalities of investment by a person resident
outside India:
Provided that where the percentage is likely to breach the
sectoral caps or the attendant conditionalities, the transferor
company or the transferee or new company may obtain
necessary approval from the Central Government;
(b) the transferor company or the transferee company or the new
company is not engaged in any sector prohibited for
investment by a person resident outside India.
Note: Government approval shall not be required in case of mergers
and acquisitions taking place in sectors under automatic route.]
(2) Where a scheme of 29[compromise or arrangement or] merger or
amalgamation of two or more Indian companies or a reconstruction by
way of demerger or otherwise of an Indian company where any of the
companies involved is listed on a recognised stock exchange in India,
then the scheme of arrangement shall be in compliance with the SEBI
(Listing Obligation and Disclosure Requirement) Regulations, 2015.
20. Reporting requirements.—The reporting requirements for any
investment in India by a person resident in India shall be as specified
by the Reserve Bank.
21. Pricing guidelines.—(1) The pricing guidelines specified in
these rules shall not be applicable for any transfer by way of sale done
in accordance with Securities and Exchange Board of India regulations
where the pricing is specified by Securities and Exchange Board of
India.
(2) Unless otherwise prescribed in these rules, the price of equity
instruments of an Indian company,—
(a) issued by such company to a person resident outside India
shall not be less than:
(i) the price worked out in accordance with the Securities and
Exchange Board of India guidelines in case of a listed Indian
company or in case of a company going through a delisting
process as per the Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009;
(ii) the valuation of equity instruments done as per any
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internationally accepted pricing methodology for valuation

on an arm's length basis duly certified by a Chartered
Accountant or a Merchant Banker registered with the
Securities and Exchange Board of India or a practising Cost
Accountant, in case of an unlisted Indian Company.
30
[Explanation.—In case of convertible equity instruments,
the price or conversion formula of the instrument should be
determined upfront at the time of issue of the instrument.
The price at the time of conversion should not in any case be
lower than the fair value worked out, at the time of issuance
of such instruments, in accordance with these rules.]
(b) transferred from a person resident in India to a person
resident outside India shall not be less than,—
(i) the price worked out in accordance with the Securities and
Exchange Board of India guidelines in case of a listed Indian
company;
(ii) the price at which a preferential allotment of shares can be
made under the Securities and Exchange Board of India
Guidelines, as applicable, in case of a listed Indian company
or in case of a company going through a delisting process as
per the Securities and Exchange Board of India (Delisting of
Equity Shares) Regulations, 2009;
(iii) the valuation of equity instruments done as per any
internationally accepted pricing methodology for valuation
on an arm's length basis duly certified by a Chartered
Accountant or a Merchant Banker registered with the
Securities and Exchange Board of India or a practising Cost
Accountant, in case of an unlisted Indian company.
(c) transferred by a person resident outside India to a person
resident in India shall not exceed:
(i) the price worked out in accordance with the relevant
Securities and Exchange Board of India guidelines in case of
a listed Indian company;
(ii) the price at which a preferential allotment of shares can be
made under the Securities and Exchange Board of India
Guidelines, as applicable, in case of a listed Indian company
or in case of a company going through a delisting process as
per the Securities and Exchange Board of India (Delisting of
Equity Shares) Regulations, 2009:
Provided that the price is determined for such duration as
specified in the Securities and Exchange Board of India
Guidelines, preceding the relevant date, which shall be the
date of purchase or sale of shares;
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(iii) the valuation of equity instruments done as per any

internationally accepted pricing methodology for valuation
on an arm's length basis duly certified by a Chartered
Accountant or a Merchant Banker registered with the
Securities and Exchange Board of India or a practising Cost
Accountant, in case of an unlisted Indian company.
Explanation: The guiding principle shall be that the person
resident outside India is not guaranteed any assured exit
price at the time of making such investment or agreement
and shall exit at the price prevailing at the time of exit.
(iv) in case of swap of equity instruments, subject to the
condition that irrespective of the amount, valuation involved
in the swap arrangement shall have to be made by a
Merchant Banker registered with the Securities and
Exchange Board of India or an investment banker outside
India registered with the appropriate regulatory authority in
the host country.
(v) where shares in an Indian company are issued to a person
resident outside India in compliance with the provisions of
the Companies Act, 2013, by way of subscription to
Memorandum of Association, such investments shall be
made at face value subject to entry route and sectoral caps.
(vi) in case of share warrants, their pricing and the price or
conversion formula shall be determined upfront:
Provided that these pricing guidelines shall not be applicable
for investment in equity instruments by a person resident
outside India on a non-repatriation basis.
22. Taxes and remittances of sale proceeds.—(1) Taxes: All
transaction under these rules shall be undertaken through banking
channels in India and subject to the payment of applicable taxes and
other duties or levies in India.
(2) Remittance of sale proceeds: (a) No remittance of sale proceeds
of an Indian security held by a person resident outside India shall be
made otherwise than in accordance with these rules, the conditions
prescribed in the relevant Schedule and as specified by the Reserve
Bank.
(b) An authorised dealer may allow the remittance of sale proceeds
of a security (net of applicable taxes) to the seller of shares resident
outside India:
Provided that—
(i) the security was held by the seller on repatriation basis; and
(ii) either the security has been sold in compliance with the
pricing guidelines or the Reserve Bank's approval has been
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obtained in other cases for sale of the security and remittance

of the sale proceeds thereof.
23. Downstream investment.—(1) Indian entity which has
received indirect foreign investment shall comply with the entry route,
sectoral caps, pricing guidelines and other attendant conditions as
applicable for foreign investment.
Explanation: Downstream investment by an LLP not owned and not
controlled by resident Indian citizens or owned or controlled by persons
resident outside India is allowed in an Indian company operating in
sectors where foreign investment up to one hundred per cent is
permitted under automatic route and there are no FDI linked
performance conditions.
(2) With effect from the 31st day of July, 2012, downstream
investment(s) made under Corporate Debt Restructuring (CDR), or
other loan restructuring mechanism, or in trading book, or for
acquisition of shares due to defaults in loans, by a banking company, as
defined in clause (c) of Section 5 of the Banking Regulation Act, 1949
(10 of 1949) incorporated in India, which is not owned and not
controlled by resident Indian citizens or owned or controlled by persons
resident outside India, shall not count towards indirect foreign
investment, however, their strategic downstream investment shall be
counted towards indirect foreign investment for the company in which
such investment is being made.
(3) Guidelines for calculating total foreign investment in Indian
companies are as follows,—
(a) any equity holding by a person resident outside India
resulting from conversion of any debt instrument under any
arrangement shall be reckoned for total foreign investment;
(b) FCCBs and DRs having underlying of instruments in the
nature of debt shall not be reckoned for total foreign
investment;
(c) the methodology for calculating total foreign investment shall
apply at every stage of investment in Indian companies and
thus in each and every Indian company;
(d) for the purpose of downstream investment, the portfolio
investment held as on 31st March of the previous financial year
in the Indian company making the downstream investment
shall be considered for computing its total foreign investment;
(e) indirect foreign investment received by a wholly owned
subsidiary of an Indian company shall be limited to the total
foreign investment received by the company making the
downstream investment.
(4) Downstream investment that is treated as indirect foreign
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investment for the investee entity shall be subject to the following

conditions, namely:—
(a) downstream investment shall have the approval of the Board
of Directors as also a shareholders' Agreement, if any;
(b) for the purpose of downstream investment, the Indian entity
making the downstream investment shall bring in requisite
funds from abroad and not use funds borrowed in the domestic
markets and the downstream investments may be made
through internal accruals and for this purpose, internal accruals
shall mean profits transferred to reserve account after payment
of taxes. Further raising of debt and its utilisation shall be in
compliance with the Act, rules or regulations made thereunder.
(5) Equity instrument of an Indian company held by another Indian
company which has received foreign investment and is not owned and
not controlled by resident Indian citizens or is owned or controlled by
persons resident outside India may be transferred to—
(a) a person resident outside India, subject to the reporting
requirements as specified by the Reserve Bank.
(b) a person resident in India subject to adherence to pricing
guidelines;
(c) an Indian company which has received foreign investment and
is not owned and not controlled by resident Indian citizens or
owned or controlled by persons resident outside India.
(6) The first level Indian company making downstream investment
shall be responsible for ensuring compliance with the provisions of
these rules for the downstream investment made by it at second level
and so on and so forth and such first level company shall obtain a
certificate to this effect from its statutory auditor on an annual basis
and such compliance of these rules shall be mentioned in the Director's
report in the Annual Report of the Indian company. In case statutory
auditor has given a qualified report, the same shall be immediately
brought to the notice of the regional office of the Reserve Bank in
whose jurisdiction the Registered Office of the company is located and
shall also obtain acknowledgement from the Registered Office.
(7) The provisions (5) and (6) of Rule 23 shall apply mutatis
mutandis to a LLP.
Note: Downstream investment that is treated as indirect foreign
investment for the investee entity made in accordance with the
guidelines in existence prior to the 13th February, 2009 shall not
require any modification to conform to these rules and all such
investments, after the said date, shall come under the ambit of these
rules. Downstream investment that is treated as indirect foreign
investment for the investee entity made between the 13th
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February,2009 and 21st June 2013 which is not in conformity with

these rules shall have to be intimated to the Reserve Bank by 3rd
October,2013 for treating such cases as compliant with these Rules.
Explanation.—For the purposes of this rule,—
(a) “ownership of an Indian company” shall mean beneficial
holding of more than fifty per cent of the equity instruments of
such company and “ownership of an LLP” shall mean
contribution of more than fifty per cent in its capital and having
majority profit share;
(b) “company owned by resident Indian citizens” shall mean an
Indian company where ownership is vested in resident Indian
citizens and/or Indian companies, which are ultimately owned
and controlled by resident Indian citizens and “LLP owned by
resident Indian citizens” shall mean an LLP where ownership is
vested in resident Indian citizens and/or Indian entities, which
are ultimately owned and controlled by resident Indian
citizens;
(c) “company owned by persons resident outside India” shall
mean an Indian company that is owned by persons resident
outside India and “LLP owned by persons resident outside
India” shall mean an LLP that is owned by persons resident
outside India;
31
(d) [* * *]
(e) “company controlled by resident Indian citizens” means an
Indian company, the control of which is vested in resident
Indian citizens and/or Indian companies which are ultimately
owned and controlled by resident Indian citizens and “LLP
controlled by resident Indian citizens” shall mean an LLP, the
control of which is vested in resident Indian citizens and/or
Indian entities, which are ultimately owned and controlled by
resident Indian citizens;
(f) “company controlled by persons resident outside India” shall
mean an Indian company that is controlled by persons resident
outside India and “LLP controlled by persons resident outside
India” shall mean an LLP that is controlled by persons resident
outside India;
(g) “downstream investment” shall mean investment made by an
Indian entity which has total foreign investment in it, or an
Investment Vehicle in the capital instruments or the capital, as
the case may be, of another Indian entity;
(h) “holding company” shall have the same meaning as assigned
to it under Companies Act, 2013;
(i) “indirect foreign investment” means downstream investment
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received by an Indian entity from,—

(A) another Indian entity (IE) which has received foreign
investment and (i) the IE is not owned and not controlled by
resident Indian citizens or (ii) is owned or controlled by
persons resident outside India; or
(B) an investment vehicle whose sponsor or manager or
investment manager (i) is not owned and not controlled by
resident Indian citizens or (ii) is owned or controlled by
persons resident outside India:
Provided that no person resident in India other than an
Indian entity can receive Indirect Foreign Investment;
32
[Explanation.—An investment made by an Indian entity
which is owned and controlled by a Non-Resident Indian or
an Overseas Citizen of India including a company, a trust
and a partnership firm incorporated outside India and owned
and controlled by a Non-Resident Indian or an Overseas
Citizen of India, on a non-repatriation basis in compliance
with Schedule IV of these rules, shall not be considered for
calculation of indirect foreign investment.]
(j) “total foreign investment” means the total of foreign
investment and indirect foreign investment and the same will
be reckoned on a fully diluted basis;
(k) “strategic downstream investment” means investment by
banking companies incorporated in India in their subsidiaries,
joint ventures and associates.
CHAPTER IX
ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA
24. Acquisition and transfer of property in India by a NRI or an
OCI.—A NRI or an OCI may—
(a) acquire immovable property in India other than an agricultural
land or farm house or plantation property:
Provided that the consideration, if any, for transfer, shall be
made out of:
(i) funds received in India through banking channels by way of
inward remittance from any place outside India; or
(ii) funds held in any non-resident account maintained in
accordance with the provisions of the Act, rules or
regulations framed thereunder:
Provided further that no payment for any transfer of immovable
property shall be made either by traveller's cheque or by
foreign currency notes or by any other mode other than those
specifically permitted under this clause;
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(b) acquire any immovable property in India other than

agricultural land or farm house or plantation property by way of
gift from a person resident in India or from an NRI or from an
OCI, who in any case is a relative as defined in clause (77) of
Section 2 of the Companies Act, 2013;
(c) acquire any immovable property in India by way of inheritance
from a person resident outside India who had acquired such
property:—
(i) in accordance with the provisions of the foreign exchange
law in force at the time of acquisition by him or the
provisions of these rules; or
(ii) from a person resident in India;
(d) transfer any immovable property in India to a person resident
in India;
(e) transfer any immovable property other than agricultural land
or farm house or plantation property to an NRI or an OCI.
25. Joint acquisition by the spouse of a NRI or an OCI:.—A
person resident outside India, not being an NRI or an OCI, who is a
spouse of an NRI or an OCI may acquire one immovable property (other
than agricultural land or farm house or plantation property), jointly with
his or her NRI or OCI spouse:
Provided that—
(a) consideration for transfer, shall be made out of—
(i) funds received in India through banking channels by way of
inward remittance from any place outside India; or
(ii) funds held in any non-resident account maintained in
accordance with the provisions of the Act and the
regulations made by the Reserve Bank;
(b) no payment for any transfer of immovable property shall be
made either by traveller's cheque or by foreign currency notes
or by any other mode other than those specifically permitted
under this clause:
Provided that the marriage has been registered and subsisted for a
continuous period of not less than two years immediately preceding the
acquisition of such property:
Provided further that the non-resident spouse is not otherwise
prohibited from such acquisition.
26. Acquisition of immovable property for carrying on a
permitted activity.—A person resident outside India who has
established in India in accordance with the Foreign Exchange
Management (Establishment in India of a Branch office or a liaison
office or a project office or any other place of business) Regulations,
2016, as amended from time to time, a branch, office or other place of
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business for carrying on in India any activity, excluding a liaison office,

may—
(a) acquire any immovable property in India, which is necessary
for or incidental to carrying on such activity:
Provided that,—
(i) all applicable laws, rules, regulations, for the time being in
force are duly complied with; and
(ii) the person files with the Reserve Bank a declaration in the
Form IPI as specified by the Reserve Bank from time to
time, not later than ninety days from the date of such
acquisition;
(b) transfer by way of mortgage to an authorised dealer as a
security for any borrowing, the immovable property acquired in
pursuance of clause (a) of Rule 26:
Provided that no person of Pakistan or Bangladesh or Sri Lanka
or Afghanistan or China or Iran or Hong Kong or Macau or
Nepal or Bhutan or Democratic People's Republic of Korea
(DPRK) shall acquire immovable property, other than on lease
not exceeding five years, without prior approval of the Reserve
Bank.
27. Purchase or sale of immovable property by Foreign
Embassies or Diplomats or Consulate Generals.—A Foreign
Embassy or Diplomat or Consulate General may purchase or sell
immovable property in India other than agricultural land or plantation
property or farm house provided:
(i) clearance from Government of India, Ministry of External
Affairs is obtained for such purchase or sale; and
(ii) the consideration for acquisition of immovable property in
India is paid out of funds remitted from abroad through
banking channels.
28. Acquisition by a long-term visa holder.—A person being a
citizen of Afghanistan, Bangladesh or Pakistan belonging to minority
communities in those countries, namely, Hindus, Sikhs, Buddhists,
Jains, Parsis and Christians who is residing in India and has been
granted a Long Term Visa (LTV) by the Central Government may
purchase only one residential immovable property in India as dwelling
unit for self-occupation and only one immovable property for carrying
out self-employment subject to the following conditions, namely:—
(a) the property shall not be located in and around restricted or
protected areas so notified by the Central Government and
cantonment areas;
(b) the person submits a declaration to the Revenue Authority of
the district where the property is located, specifying the source
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of funds and that he or she is residing in India on LTV;

(c) the registration documents of the property shall mention the
nationality and the fact that such person is on LTV;
(d) the property of such person may be attached or confiscated in
the event of his or her indulgence in anti-India activities;
(e) a copy of the documents of the purchased property shall be
submitted to the Deputy Commissioner of Police (DCP) or
Foreigners Registration Office (FRO) or Foreigners Regional
Registration Office (FRRO) concerned and to the Ministry of
Home Affairs (Foreigners Division);
(f) such person shall be eligible to sell the property only after
acquiring Indian citizenship, however, transfer of the property
before acquiring Indian citizenship shall require prior approval
of DCP or FRO or FRRO concerned.
29. Repatriation of sale proceeds.—(1) A person referred to in
sub-section (5) of Section 6 of the Act, or his successor shall not,
except with the general or specific permission of the Reserve Bank,
repatriate outside India the sale proceeds of any immovable property
referred to in that sub-section.
(2) In the event of sale of immovable property other than
agricultural land or farm house or plantation property in India by an
NRI or an OCI, the authorised dealer may allow repatriation of the sale
proceeds outside India, provided the following conditions are satisfied,
namely:—
(a) the immovable property was acquired by the seller in
accordance with the provisions of the foreign exchange law in
force at the time of acquisition or the provisions of these rules;
(b) the amount for acquisition of the immovable property was
paid in foreign exchange received through banking channels or
out of funds held in Foreign Currency Non-Resident Account or
out of funds held in Non-Resident External Account;
(c) in the case of residential property, the repatriation of sale
proceeds is restricted to not more than two such properties.
(3) In the event of failure in repayment of external commercial
borrowing availed by a person resident in India under the provisions of
the Foreign Exchange Management (Borrowing or Lending in Foreign
Exchange) Regulations, 2000, as amended from time to time, a bank
which is an authorised dealer may permit the overseas lender or the
security trustee (in whose favour the charge on immovable property
has been created to secure the ECB) to sell the immovable property on
which the said loan has been secured only to a (by the) person resident
in India and to repatriate the sale proceeds towards outstanding dues
in respect of the said loan and not any other loan.
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30. Prohibition on transfer of immovable property in India.—

(1) Save as otherwise provided in the Act or rules, no person resident
outside India shall transfer any immovable property in India:
Provided that:—
(a) the Reserve Bank may, for sufficient reasons, permit the
transfer subject to such conditions as may be considered
necessary;
(b) a bank which is an authorised dealer may, subject to the
directions issued by the Reserve Bank in this behalf, permit a
person resident in India or on behalf of such person to create
charge on his immovable property in India in favour of an
overseas lender or security trustee, to secure an external
commercial borrowing availed under the provisions of the
Foreign Exchange Management (Borrowing or Lending in
Foreign Exchange) Regulations, 2000;
(c) an authorised dealer in India being the Indian correspondent
of an overseas lender may, subject to the directions issued by
the Reserve Bank in this regard, create a mortgage on an
immovable property in India owned by an NRI or an OCI, being
a director of a company outside India, for a loan to be availed
by the company from the said overseas lender:
Provided further that:—
(i) the funds shall be used by the borrowing company only for
its core business purposes overseas;
(ii) in case of invocation of charge, the Indian bank shall sell
the immovable property to an eligible acquirer and remit the
sale proceeds to the overseas lender.
(2) A person resident outside India who has acquired any immovable
property in India in accordance with foreign exchange laws in force at
the time of such acquisition or with the general or specific permission of
the Reserve Bank may transfer such property to a person resident in
India provided the transaction takes place through banking channels in
India and provided further that the resident is not otherwise prohibited
from such acquisition.
31. Prohibition on acquisition or transfer of immovable
property in India by citizens of certain countries.—No person
being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China,
Iran, Nepal, Bhutan, Hong Kong or Macau or Democratic People's
Republic of Korea (DPRK) without prior permission of the Reserve Bank
shall acquire or transfer immovable property in India, other than lease
not exceeding five years:
Provided that this prohibition shall not apply to an OCI. Explanation:
For the purpose of this rule, the term “citizen” shall include natural
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persons and legal entities.

32. Miscellaneous.—Any transaction involving acquisition or
transfer of immovable property under these rules shall be undertaken:
—
(a) through banking channels in India;
(b) subject to payment of applicable taxes and other duties or
levies in India.
33. Savings.—Any existing holding of immovable property in India
by a person resident outside India made in accordance with the policy
in existence at the time of such acquisition would not require any
modifications to conform to these rules.
33
[CHAPTER X
INVESTMENT BY PERMISSIBLE HOLDER IN EQUITY SHARES OF PUBLIC
COMPANIES INCORPORATED IN INDIA AND LISTED ON
INTERNATIONAL EXCHANGES
34. Investment by permissible holder.—(1) A permissible holder
may purchase or sell equity shares of a public Indian company which is
listed or to be listed on an International Exchange under Direct Listing
of Equity Shares of Companies Incorporated in India on International
Exchanges Scheme as specified in Schedule XI.
(2) The mode of payment and other attendant conditions for
remittance of proceeds of issue shall be as specified by the Reserve
Bank.]
SCHEDULE I
[See Rule 6(a)]
Purchase or sale of equity instruments of an Indian company by a
person resident outside India
(1) Purchase or sale of equity instruments of an Indian
company by a person resident outside India
(a) An Indian company may issue equity instruments to a person
resident outside India subject to entry routes, sectoral caps and
attendant conditionalities prescribed in this Schedule.
(b) A person resident outside India may purchase equity
instruments of a listed Indian company on a stock exchange in
India:
Provided that—
(i) the person resident outside India making the investment has
already acquired control of such company in accordance with
SEBI (Substantial Acquisition of Shares and Takeover)
Regulations, 2011 and continues to hold such control;
(ii) the amount of consideration may be paid as per the mode of
payment specified by the Reserve Bank or out of the dividend
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payable by Indian investee company in which the person

resident outside India has acquired and continues to hold the
control in accordance with SEBI (Substantial Acquisition of
Shares and Takeover) Regulations, 2011 provided the right to
receive dividend is established and the dividend amount has
been credited to a specially designated non-interest bearing
rupee account for acquisition of shares on the recognised stock
exchange.
(c) A wholly owned subsidiary set up in India by a non-resident
entity, operating in a sector where 100 per cent foreign
investment is allowed in the automatic route and there are no FDI
linked performance conditions, may issue equity instruments to
the said non-resident entity against pre-incorporation or pre-
operative expenses incurred by the said non resident entity up to
a limit of five per cent of its authorised capital or USD 500,000
whichever is less, subject to the condition that within thirty days
from the date of issue of equity instruments but not later than
one year from the date of incorporation or such time as the
Reserve Bank permits, the Indian company shall report the
transaction to the Reserve Bank as per the reporting requirements
as specified by the Reserve Bank.
34
[(d) An Indian company may issue, subject to compliance with the
rules prescribed by the Central Government and the regulations
specified by the Reserve Bank from time to time, equity
instruments to a person resident outside India against,—
(i) swap of equity instruments; or
(ii) import of capital goods or machinery or equipment (excluding
second hand machinery); or
(iii) pre-operative or pre-incorporation expenses (including
payments of rent, etc.);
(iv) swap of equity capital of a foreign company in compliance
with the rules prescribed by the Central Government including
Foreign Exchange Management, (Overseas Investment) Rules
2022, and the regulations specified by the Reserve Bank from
time to time.
Explanation.—For the purposes of this clause, the expression “equity
capital” shall have the same meaning as assigned to it in the Foreign
Exchange Management, (Overseas Investment) Rules, 2022, as
amended from time to time:
Provided that Government approval shall be obtained in all cases
wherever Government approval is applicable and the applications for
approval shall be made in the manner prescribed by the Central
Government from time to time.]
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(e) An Indian company may issue equity shares against any funds
payable by it to a person resident outside India, the remittance of
which is permitted under the Act or the rules and regulations
framed or directions issued thereunder or does not require prior
permission of the Central Government or the Reserve Bank under
the Act or the rules and regulations framed or directions issued
thereunder or has been permitted by the Reserve Bank under the
Act or the rules and regulations framed or directions issued
thereunder:
Provided that in case where permission has been granted by the
Reserve Bank for making remittance, the Indian company may issue
equity shares against such remittance provided all regulatory actions
with respect to the delay or contravention under the Act or the rules or
the regulations framed thereunder have been completed.
(f) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
(2) Sectors prohibited for FDI.—
(a) Lottery business including Government or private lottery, online
lotteries, etc.
(b) Gambling and betting including casinos, etc.
(c) Chit funds
(d) Nidhi company
(e) Trading in Transferable Development Rights
(f) Real estate business or construction of farm houses
35
[Explanation: For the purpose of this rule, ‘real estate business’
means dealing in land and immovable property with a view to earning
profit from there and does not include development of townships,
construction of residential or commercial premises, roads or bridges,
educational institutions, recreational facilities, city and regional level
infrastructure, townships, real estate broking services and Real Estate
Investment Trusts (REITs) registered and regulated under the SEBI
(REITs) Regulations 2014 and earning of rent or income on lease of the
property, not amounting to transfer.]
(g) Manufacturing of cigars, cheroots, cigarillos and cigarettes, of
tobacco or of tobacco substitutes.
(h) Activities or sectors not open to private sector investment e.g.
(I) Atomic energy and (II) Railway operations (other than
permitted activities mentioned in paragraph (3) of Schedule I)
(i) Foreign technology collaborations in any form including licensing
for franchise, trademark, brand name, management contract is
also prohibited for lottery business and gambling and betting
activities.
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(3) Permitted sectors, entry routes and sectoral caps for total
foreign investment.—Unless otherwise specified in these Rules or the
Schedules, the entry routes and sectoral caps for the total foreign
investment in an Indian entity shall be as follows, namely:—
(a) Entry routes.—
(i) “automatic route” means the entry route through which
investment by a person resident outside India does not require
the prior approval of the Reserve Bank or the Central
Government;
(ii) “government route” means the entry route through which
investment by a person resident outside India requires prior
Government approval and foreign investment received under
this route shall be in accordance with the conditions stipulated
by the Government in its approval.
36
[(iii) The aggregate foreign portfolio investment up to the
sectoral or statutory cap shall not require Government approval
or compliance of sectoral conditions as the case may be, if such
investment does not result in transfer of ownership and/or
control of the resident Indian company from resident Indian
citizens to persons resident outside India and other
investments by a person resident outside India shall be subject
to the conditions of Government approval and compliance of
sectoral conditions as laid down in these rules.]
(b) Sectoral caps.—
(i) Sectoral cap for the sectors or activities specified in the table is
the limit indicated against each sector. The total foreign
investment shall not exceed the sectoral or statutory cap.
(ii) Foreign investment in the following sectors or activities is
subject to applicable laws or regulations, security and other
conditionalities.
(iii) In sectors or activities not listed below or not prohibited
under paragraph (2) of Schedule I of these rules, foreign
investment is permitted up to one hundred per cent on the
automatic route, subject to applicable laws or regulations,
security and other conditionalities:
Provided that foreign investment in financial services other than those
indicated under serial number “F” below would require prior approval of
the Government.
(iv) Wherever there is a requirement of minimum capitalisation, it
shall include premium received along with the face value of the
equity instrument, only when it is received by the company
upon issue of such instruments to the person resident outside
India and the amount paid by the transferee during post-issue
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transfer beyond the issue price of the capital instrument, shall

not be taken into account while calculating minimum
capitalization requirement.
(v) (A) Foreign Investment in investing companies not registered
as Non-Banking Financial Companies with the Reserve Bank
and in core investment companies (CICs), both engaged in the
activity of investing in the capital of other Indian entities, shall
require prior approval of the Government.
Note: Compliance to these rules by the core investment companies is in
addition to the compliance of the regulatory framework prescribed to
such companies as NBFCs under the Reserve Bank of India Act, 1934
and regulations framed thereunder.
(v) (B) Foreign investment in investing companies registered as
Non-Banking Financial Companies (NBFCs) with the Reserve
Bank, shall be under 100% automatic route.
(vi) For undertaking activities which are under automatic route
and without FDI linked performance conditions, an Indian
company which does not have any operations and also has not
made any downstream investment that is treated as indirect
foreign investment for the investee entity, may receive
investment in its equity instruments from persons resident
outside India under automatic route, however, approval of the
Government shall be required for such companies for
undertaking activities which are under Government route and
as and when such a company commences business or makes
downstream investment that is treated as indirect foreign
investment for the investee entity, it shall have to comply with
the relevant sectoral conditions on entry route, conditionalities
and caps.
(vii) The onus of compliance with the sectoral or statutory caps on
such foreign investment and attendant conditions, if any, shall
be on the company receiving foreign investment.
(viii) Wherever the person resident outside India who has made
foreign investment specifies a particular auditor or audit firm
having international network for the audit of the Indian
investee company, then audit of such investee company shall
be carried out as joint audit wherein one of the auditors is not
part of the same network.
TABLE
Sl. No. Sector/Activity Sectoral Entry Route
Cap
(1) (2) (3) (4)
1. Agriculture and Animal
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Husbandry
1.1 (a) Floriculture, Horticulture and 100% Automatic
Cultivation of vegetables and
mushrooms under controlled
conditions;
(b) Development and production of
seeds and planting material;
(c) Animal Husbandry (including
breeding of dogs), Pisciculture,
Aquaculture and Apiculture; and
(d) Services related to agro and
allied sectors.
Note: Other than the above, foreign
investment is not allowed in any
other agricultural sector or activity.
1.2 Other Conditions
The term ‘under controlled conditions’ covers the following:
‘Cultivation under controlled conditions’ for the categories of
Floriculture, Horticulture, Cultivation of vegetables and
mushrooms is the practice of cultivation wherein rainfall,
temperature, solar radiation, air humidity and culture
medium are controlled artificially. Control in these
parameters may be effected through protected cultivation
under green houses, net houses, poly houses or any other
improved infrastructure facilities where micro-climatic
conditions are regulated anthropogenically.
2. Plantation
2.1 (a) Tea sector including tea 100% Automatic
plantations
(b) Coffee plantations
(c) Rubber plantations
(d) Cardamom plantations
(e) Palm oil tree plantations
(f) Olive oil tree plantation
Note: Foreign investment is not
allowed in any plantation
sector/activity other than those
listed above.
2.2 Other Conditions
Prior approval of the State Government concerned is
required in case of any future land use change.
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3. Mining
3.1 Mining and Exploration of metal 100% Automatic
and non-metal ores including
diamond, gold, silver and precious
ores but excluding titanium bearing
minerals and its ores; subject to
the Mines and Minerals
(Development and Regulation) Act,
1957.
3.2 Coal and Lignite
37
[(a) Coal and Lignite mining for 100% Automatic
captive consumption by power
projects, iron and steel and cement
units and other eligible activities
permitted under and subject to the
provisions of the Mines and
Minerals (Development and
Regulation) Act, 1957 (67 of 1957)
and the Coal Mines (Special
Provisions) Act, 2015 (11 of
2015)].
(b) Setting up coal processing
plants like washeries, subject to
the condition that the company
shall not do coal mining and shall
not sell washed coal or sized coal
from its coal processing plants in
the open market and shall supply
the washed or sized coal to those
parties who are supplying raw coal
to coal processing plants for
washing or sizing.
38
[(c) For sale of coal, coal mining
activities including associated
processing infrastructure subject to
the provisions of the Mines and
Minerals (Development and
Regulation) Act, 1957 and the Coal
Mines (Special Provisions) Act,
2015 and as amended from time to
time and other relevant Acts on the
subject.]
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3.3 Mining and mineral separation of titanium bearing minerals

and ores, its value addition and integrated activities
(a) Mining and mineral separation 100% Government
of titanium bearing minerals and
ores, its value addition and
integrated activities subject to
sectoral regulations and the Mines
and Minerals (Development and
Regulation) Act, 1957.
3.4 Other Conditions
39
[(a) Associated Processing Infrastructure" as contained in
3.2(c) includes coal washery, crushing, coal handling, and
separation (magnetic and non-magnetic);]
40
[(b)] Foreign investment for separation of titanium
bearing minerals and ores shall be subject to the following
conditions:
(i) Value addition facilities are set up within India along
with transfer of technology;
(ii) Disposal of tailings during the mineral separation
shall be carried out in accordance with regulations
framed by the Atomic Energy Regulatory Board such
as Atomic Energy (Radiation Protection) Rules, 2004
and the Atomic Energy (Safe Disposal of Radioactive
Wastes) Rules, 1987.
41
[(c)] Foreign investment will not be allowed in mining of
“prescribed substances” listed in the Notification No. S.O.
61(E), dated 18-1-2006, issued by the Department of
Atomic Energy.
Clarification:
(i) For titanium bearing ores such as Ilmenite, Leucoxene
and Rutile, manufacture of titanium dioxide pigment
and titanium sponge constitutes value addition.
Ilmenite can be processed to produce Synthetic Rutile
or Titanium Slag as an intermediate value added
product.
(ii) The objective is to ensure that the raw material
available in the country is utilized for setting up
downstream industries and the technology available
internationally is also made available for setting up
such industries within the country. Thus, if with the
technology transfer, the objective of this Rules can be
achieved, the conditions prescribed at (a)(i) above
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shall be deemed to be fulfilled.

4. Petroleum and Natural Gas
4.1 Exploration activities of oil and 100% Automatic
natural gas fields, infrastructure
related to marketing of petroleum
products and natural gas,
marketing of natural gas and
petroleum products, petroleum
product pipelines, natural
gas/pipelines, LNG Regasification
infrastructure, market study and
formulation and Petroleum refining
in the private sector, subject to the
existing sectoral policy and
regulatory framework in the oil
marketing sector and the policy of
the Government on private
participation in exploration of oil
and the discovered fields of
national oil companies.
4.2 Petroleum refining by the Public 49% Automatic
Sector Undertakings (PSUs),
without any disinvestment or
dilution of domestic equity in the
existing PSUs.
42
[4.3 Notwithstanding anything contained at Sl. No. 4.2 above,
foreign investment up to 100% under the automatic route is
allowed in case an ‘in-principle’ approval for strategic
disinvestment of a PSU has been granted by the
Government.]
5. Manufacturing 100% Automatic
5.1 43
[Manufacturing activities may be either self manufacturing
by the investee entity or contract manufacturing in India
through a legally tenable contract, whether on Principal to
Principal or Principal to Agent basis. Further, a manufacturer
is permitted to sell his products manufactured in India
through wholesale and/or retail, including through e-
commerce, without Government approval.]
Notwithstanding the provisions of these rules on trading
sector, 100 per cent foreign investment under the
government approval route is allowed for trading, including
through e-commerce, in respect of food products
manufactured and/or produced in India. Applications for
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foreign investment in food products retail trading shall be

processed in the Department of Industrial Policy and
Promotion before being considered by the Government for
approval.
44
[6. Defence

6.1 Defence Industry subject to 100% Automatic

Industrial license under the up to 74%
Industries (Development and Government
Regulation) Act, 1951 and route beyond
Manufacturing of small arms and 74%
ammunition under the Arms Act, wherever it
1959 is likely to
result in
access to
modern
technology
or for other
reasons to
be recorded
6.2 Other Conditions
a) FDI up to 74% under automatic route shall be permitted
for companies seeking new industrial licenses.
b) Infusion of fresh foreign investment up to 49%, in a
company not seeking industrial license or which already has
Government approval for FDI in Defence, shall submit a
declaration with the Ministry of Defence in cases of change
in equity/shareholding pattern or transfer of stake by
existing investor to new foreign investor, for FDI up to 49%,
within a period of thirty days of such change and any
proposal for raising FDI beyond 49% from such companies
shall require Government approval.
c) License applications will be considered by the
Department for Promotion of Industry and Internal Trade,
Ministry of Commerce and Industry, in consultation with
Ministry of Defence and Ministry of External Affairs.
d) Foreign investment in the sector shall be subject to
security clearance by the Ministry of Home Affairs and as
per guidelines of the Ministry of Defence.
e) Investee company shall be structured to be self-sufficient
in the areas of product design and development and the
investee or joint venture company along with the
manufacturing facility, shall also have maintenance and life
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cycle support facility of the product being manufactured in

India.
f) Foreign investments in the Defence sector shall be
subject to scrutiny on grounds of national security and
Government reserves the right to review any foreign
investment in the Defence sector that affects or may affect
national security.]
7. Broadcasting
7.1 Broadcasting Carriage Services
7.1.1 (a) Teleports (setting up of up- 100% Automatic
linking HUBs/Teleports);
(b) Direct to Home (DTH);
(c) Cable Networks (Multi System
Operators (MSOs) operating at
National or State or District level
and undertaking up-gradation of
networks towards digitalization and
addressability);
(d) Mobile TV;
(e) Head-end-in-the Sky
Broadcasting Service (HITS)
7.1.2 Cable Networks (Other MSOs not 100% Automatic
undertaking up-gradation of
networks towards digitalization and
addressability and Local Cable
Operators (LCOs)).
7.1.3 Note: Infusion of fresh foreign investment for sectors
specified in 7.1.1 and 7.1.2 above, beyond 49 per cent in a
company not seeking license/permission from sectoral
Ministry, resulting in change in the ownership pattern or
transfer of stake by existing investor to new foreign
investor, will require Government approval
7.2 Broadcasting Content Services
7.2.1 Terrestrial Broadcasting FM (FM 49% Government
Radio), subject to such terms and
conditions, as specified from time
to time, by Ministry of Information
and Broadcasting, for grant of
permission for setting up of FM
Radio stations.
7.2.2 Up-Linking of ‘News & Current 49% Government
Affairs’ TV Channels
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45
[7.2.3 Uploading/Streaming of News and 26% Government]
Current Affairs through Digital
Media
46 Up-linking of Non-'News & Current 100% Automatic
[7.2.4] Affairs' TV Channels/Downlinking of
TV Channels
7.3 Other Conditions
(a) Foreign investment in companies engaged in all the
afore-stated services shall be subject to relevant regulations
and such terms and conditions, as may be specified from
time to time, by the Ministry of Information and
Broadcasting.
(b) Foreign investment in the afore-stated broadcasting
carriage services shall be subject to the terms and
conditions as may be specified by the Ministry of
Information and Broadcasting, from time to time, in this
regard.
(c) Licensee shall ensure that broadcasting service
installation carried out by it shall not become a safety
hazard and is not in contravention of any statute, rule or
regulations and public policy.
(d) In the 1 and B sector where the sectoral cap is up to 49
per cent, the company should be owned and controlled by
resident Indian citizens or Indian companies which are
owned and controlled by resident Indian citizens.
(i) For this purpose, the equity held by the largest Indian
shareholder shall be at least 51 per cent of the total equity,
excluding the equity held by Public Sector Banks and Public
Financial Institutions, as defined in Section 4-A of the
Companies Act, 1956 or Section 2(72) of the Companies
Act, 2013, as the case may be and the term ‘largest Indian
shareholder’ used in this clause, shall include any or a
combination of the following, namely:—
(1) In the case of an individual shareholder,
(aa) The individual shareholder,
(bb) A relative of the shareholder within the meaning
of Section 2(77) of Companies Act, 2013.
(cc) A company or group of companies in which the
individual shareholder or Hindu Undivided Family to
which he belongs has management and controlling
interest.
(2) In the case of an Indian company,
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(aa) The Indian company

(bb) A group of Indian companies under the same
management and ownership control.
(3) For this purpose, “Indian company” shall be a
company which must have a resident Indian or a
relative as defined under Section 2(77) of Companies
Act, 2013/HUF, either singly or in combination holding
at least 51per cent of the shares.
(4) Provided that, in case of a combination of all or any of
the entities mentioned in sub-clauses (d)(i) above,
each of the parties shall have entered into a legally
binding agreement to act as a single unit in managing
the matters of the applicant company.
8. Print Media
8.1 Publishing of newspaper and 26% Government
periodicals dealing with news and
current affairs
8.2 Publication of Indian editions of 26% Government
foreign magazines dealing with
news and current affairs
8.2.1 Other conditions
(a) ‘Magazine’, for the purpose of these guidelines, shall be
defined as a periodical publication, brought out on non-daily
basis, containing public news or comments on public news.
(b) Foreign investment shall also be subject to the
Guidelines for Publication of Indian editions of foreign
magazines dealing with news and current affairs issued by
the Ministry of Information and Broadcasting on 4-12-2008.
8.3 Publishing or printing of Scientific 100% Government
and Technical Magazine or specialty
journals or periodicals, subject to
compliance with the legal
framework as applicable and
guidelines issued in this regard
from time to time by Ministry of
Information and Broadcasting.
8.4 Publication of facsimile edition of 100% Government
foreign newspapers
8.4.1 Other conditions:
(a) Foreign investment shall be made by the owner of the
original foreign newspapers whose facsimile edition is
proposed to be brought out in India.
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(b) Publication of facsimile edition of foreign newspapers

can be undertaken only by an entity incorporated or
registered in India under the provisions of the Companies
Act, 2013.
(c) Publication of facsimile edition of foreign newspaper
shall also be subject to the Guidelines for publication of
newspapers and periodicals dealing with news and current
affairs and publication of facsimile edition of foreign
newspapers issued by Ministry of Information and
Broadcasting on 31-3-2006.
9. Civil Aviation
9.1 The Civil Aviation sector includes Airports, Scheduled and
Non-Scheduled domestic passenger airlines, Helicopter
services or Seaplane services, Ground Handling Services,
Maintenance and Repair organizations, Flying training
institutes, and Technical training institutions.
For the purposes of the Civil Aviation sector:
(a) “Airport” means a landing and taking off area for
aircrafts, usually with runways and aircraft
maintenance and passenger facilities and includes
aerodrome as defined in clause (2) of Section 2 of the
Aircraft Act, 1934;
(b) “Aerodrome” means any definite or limited ground or
water area intended to be used, either wholly or in
part, for the landing or departure of aircraft, and
includes all buildings, sheds, vessels, piers and other
structures thereon or pertaining thereto;
(c) “Air transport service” means a service for the
transport by air of persons, mails or any other thing,
animate or inanimate, for any kind of remuneration
whatsoever, whether such service consists of a single
flight or series of flights;
(d) “Air Transport Undertaking” means an undertaking
whose business includes the carriage by air of
passengers or cargo for hire or reward;
(e) “Aircraft component” means any part, the soundness
and correct functioning of which, when fitted to an
aircraft, is essential to the continued airworthiness or
safety of the aircraft and includes any item of
equipment;
(f) “Helicopter” means a heavier than air aircraft
supported in flight by the reactions of the air on one or
more power driven rotors on substantially vertical
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axis;
(g) “Scheduled air transport service” means an air
transport service undertaken between the same two or
more places and operated according to a published
time table or with flights so regular or frequent that
they constitute a recognizably systematic series, each
flight being open to use by members of the public;
(h) “Non-Scheduled air transport service” means any
service which is not a scheduled air transport service
and will include Cargo airlines;
(i) “Cargo airlines” would mean such airlines which meet
the conditions as given in the Civil Aviation
Requirements issued by the Ministry of Civil Aviation;
(j) “Seaplane” means an aeroplane capable normally of
taking off from and alighting solely on water;
(k) “Ground Handling” means
(i) ramp handling,
(ii) traffic handling both of which shall include the
activities as specified by the Ministry of Civil
Aviation through the Aeronautical Information
Circulars from time to time, and
(iii) any other activity specified by the Central
Government to be a part of either ramp handling or
traffic handling.
9.2 Airports
(a) Greenfield projects 100% Automatic
(b) Existing projects 100% Automatic
47
[9.3 Air Transport Services

(1)(a) Scheduled Air Transport 100% Automatic

Service/Domestic Scheduled up to 49%
Passenger Airline (Automatic
(b) Regional Air Transport Service up to 100%
for NRIs)
Government
route beyond
49%
(2) Non-Scheduled Air Transport 100% Automatic
Services
(3) Helicopter services/seaplane 100% Automatic
services requiring Directorate
General of Civil Aviation (DGCA)
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approval
Note: As per Schedule XI of the Aircraft Rules, 1937, Air Operator
Certificate to operate Scheduled Air Transport Services (including
Domestic Scheduled Passenger Airline or Regional Air Transport
Service) is granted to such company or a body corporate,—
(a) which is registered and has its principal place of business
within India;
(b) whose Chairman and at least two-thirds of its Directors are
citizens of India; and
(c) whose substantial ownership and effective control is vested in
Indian nationals.]
9.4 Other Services under Civil Aviation
sector
(a) Ground Handling Services 100% Automatic
subject to sectoral regulations and
security clearance
(b) Maintenance and Repair 100% Automatic
organizations; flying training
institutes and technical training
institutions
48
[9.5 Other Conditions

(a) Air Transport Services shall include Domestic Scheduled

Passenger Airlines, Non-Scheduled Air Transport Services,
helicopter and seaplane services.
(b) Foreign airlines are allowed to participate in the equity
of companies operating Cargo airlines, helicopter and
seaplane services, as per the limits and entry routes
mentioned above.
(c) Foreign airlines are allowed to invest in the capital of
Indian companies, operating scheduled and non-scheduled
air transport services, up to the limit of 49 per cent of their
paid-up capital, subject to the following conditions,
namely—
(i) it is made under the Government approval route,
(ii) the 49 per cent limit will subsume FDI and FII/FPI
investment,
(iii) the investments so made would need to comply with
the relevant regulations of the Securities and
Exchange Board of India (SEBI), such as the Issue of
Capital and Disclosure Requirements (ICDR)
Regulations/Substantial Acquisition of Shares and
Takeovers (SAST) Regulations, as well as other
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applicable rules and regulations,

(iv) all foreign nationals likely to be associated with
Indian scheduled and non-scheduled air transport
services, as a result of such investment shall be
cleared from security view point before deployment,
and
(v) all technical equipment that might be imported into
India as a result of such investment shall require
clearance from the relevant authority in the Ministry of
Civil Aviation.
(d) In addition to the above conditions, foreign investment
in M/s Air India Limited shall be subject to the following
conditions, namely—
(i) foreign investments in M/s Air India Limited, including
that of foreign airlines shall not exceed 49 per cent
either directly or indirectly except in case of those
NRIs, who are Indian Nationals, where foreign
investments is permitted up to 100 per cent under
automatic route.
(ii) substantial ownership and effective control of M/s Air
India Limited shall continue to be vested in Indian
Nationals as stipulated in Aircraft Rules, 1937.
(e) FDI in Civil Aviation shall be subject to provisions of the
Aircraft Rules, 1937, as amended from time to time.
Note:
(i) The FDI limits or entry routes mentioned at serial
numbers 9.2 and 9.3 above, are applicable in the
situation where there is no investment by foreign
airline.
(ii) Any investment by foreign airlines in companies
operating in Air Transport Services, including in M/s
Air India Limited, shall be subject to entries (b) and
(c) above.
(iii) The dispensation for those NRIs, who are Indian
Nationals, regarding FDI up to 100 per cent will
continue in respect of the investment regime specified
at entries (c) (ii) and (d) above.]
10. Construction Development:
Townships, Housing, Built-up
infrastructure
10.1 Construction-development projects 100% Automatic
(which shall include development
of townships, construction of
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residentia1/commercial premises,
roads or bridges, hotels, resorts,
hospitals, educational institutions,
recreational facilities, city and
regional level infrastructure,
townships)
10.2 Other Conditions
10.2 (a) Each phase of the construction development project
shall be considered as a separate project.
(b) The investor shall be permitted to exit on completion of
the project or after development of trunk infrastructure i.e.
roads, water supply, street lighting, drainage and sewerage.
(c) Notwithstanding anything contained at (b) above, a
person resident outside India shall be permitted to exit and
repatriate foreign investment before the completion of
project under automatic route, provided that a lock-in-
period of three years, calculated with reference to each
tranche of foreign investment has been completed. Further,
transfer of stake from a person resident outside India to
another person resident outside India, without repatriation
of foreign investment will neither be subject to any lock-in
period nor to any government approval.
(d) The project shall conform to the norms and standards,
including land use requirements and provision of
community amenities and common facilities, as laid down in
the applicable building control regulations, bye laws, rules,
and other regulations of the State Government or Municipal
or Local Body concerned.
(e) The Indian investee company shall be permitted to sell
only developed plots. For the purposes of this policy
“developed plots” shall mean plots where trunk
infrastructure i.e. roads, water supply, street lighting,
drainage and sewerage, have been made available.
(f) The Indian investee company shall be responsible for
obtaining all necessary approvals, including those of the
building or layout plans, developing internal and peripheral
areas and other infrastructure facilities, payment of
development, external development and other charges and
complying with all other requirements as prescribed under
applicable rules/bye-Laws/regulations of the State
Government or Municipal or Local Body concerned.
(g) The State Government or Municipal or Local Body
concerned, which approves the building or development
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plans, shall monitor compliance of the above conditions by

the developer.
Note:
(1) Foreign investment is not permitted in an entity which
is engaged or proposes to engage in real estate business,
construction of farm houses and trading in transferable
development rights (TDRs).
(2) Condition of lock-in period shall not apply to Hotels and
Tourist Resorts, Hospitals, Special Economic Zones (SEZs),
Educational Institutions, Old Age Homes and investment by
NRIs or OCIs.
(3) Completion of the project shall be determined as per the
local bye-laws/rules and other regulations of State
Governments.
(4) Foreign investment up to 100 per cent under automatic
route is permitted in completed projects for operating and
managing townships, malls/shopping complexes and
business centres. Consequent to such foreign investment,
transfer of ownership and/or control of the investee
company from persons resident in India to persons resident
outside India is also permitted, however, there shall be a
lock-in-period of three years, calculated with reference to
each tranche of foreign investment and transfer of
immovable property or part thereof is not permitted during
this period.
(5) “Transfer”, in relation to this sector, includes,—
(a) the sale, exchange or relinquishment of the asset; or
(b) the extinguishment of any rights therein; or
(c) the compulsory acquisition thereof under any law; or
(d) any transaction involving the allowing of the
possession of any immovable property to be taken or
retained in part performance of a contract of the
nature referred to in Section 53-A of the Transfer of
Property Act, 1882 (4 of 1882); or
(e) any transaction, by acquiring capital instruments in a
company or by way of any agreement or any
arrangement or in any other manner whatsoever,
which has the effect of transferring, or enabling the
enjoyment of, any immovable property.
(6) Real estate business means dealing in land and
immovable property with a view to earning profit therefrom
and does not include development of townships,
construction of residentia1/commercial premises, roads or
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bridges, educational institutions, recreational facilities, city

and regional level infrastructure, townships;
Explanation: —
(a) Investment in units of Real Estate Investment Trusts
(REITs) registered and regulated under the Securities
and Exchange Board of India (REITs) Regulations
2014 shall also be excluded from the definition of “real
estate business”.
(b) Earning of rent income on lease of the property, not
amounting to transfer, shall not amount to real estate
business.
(c) Transfer in relation to real estate includes,
(i) the sale, exchange or relinquishment of the asset;
or
(ii) the extinguishment of any rights therein; or
(iii) the compulsory acquisition thereof under any law;
or
(iv) any transaction involving the allowing of the
possession of any immovable property to be taken
or retained in part performance of a contract of the
nature referred to in Section 53-A of the Transfer of
Property Act, 1882 (4 of 1882); or
(v) any transaction, by acquiring capital instruments
in a company or by way of any agreement or any
arrangement or in any other manner whatsoever,
which has the effect of transferring, or enabling the
enjoyment of, any immovable property.
(7) Real estate broking services shall be excluded from the
definition of “real estate business” and 100% foreign
investment is allowed in real estate broking services under
automatic route.
11. Industrial Parks 100% Automatic
11.1 For the purpose of this sector:
(a) “Industrial Park” is a project in which quality
infrastructure in the form of plots of developed land or
built up space or a combination with common
facilities, is developed and made available to all the
allottee units for the purposes of industrial activity.
(b) “Infrastructure” refers to facilities required for
functioning of units located in the Industrial Park and
includes roads (including approach roads), railway
line/sidings including electrified railway lines and
connectivity to the main railway line, water supply and
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sewerage, common effluent treatment facility, telecom

network, generation and distribution of power, air
conditioning.
(c) “Common Facilities” refer to the facilities available for
all the units located in the industrial park, and include
facilities of power, roads (including approach roads),
railway line/sidings including electrified railway lines
and connectivity to the main railway line, water supply
and sewerage, common effluent treatment, common
testing, telecom services, air conditioning, common
facility buildings, industrial canteens,
convention/conference halls, parking, travel desks,
security service, first aid centre, ambulance and other
safety services, training facilities and such other
facilities meant for common use of the units located in
the Industrial Park.
(d) “Allocable area” in the Industrial Park means—
(i) in the case of plots of developed land - the net site
area available for allocation to the units, excluding
the area for common facilities.
(ii) in the case of built up space - the floor area and
built-up space utilized for providing common
facilities.
(iii) in the case of a combination of developed land
and built-up space - the net site and floor area
available for allocation to the units excluding the
site area and built-up space utilized for providing
common facilities.
(e) “Industrial Activity” means manufacturing;
electricity; gas and water supply; post and
telecommunications; software publishing, consultancy
and supply; data processing, database activities and
distribution of electronic content; other computer
related activities; basic and applied research and
development on bio-technology, pharmaceutical
sciences or life sciences, natural sciences and
engineering; business and management consultancy
activities; and architectural, engineering and other
technical activities.
11.2 Foreign investment in Industrial Parks shall not be subject
to the conditionalities applicable for construction
development projects etc. spelt out in para 10 above,
provided the Industrial Parks meet with the
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undermentioned conditions:
(a) it shall comprise of a minimum of 10 units and no
single unit shall occupy more than 50 per cent of the
allocable area;
(b) the minimum per centage of the area to be allocated
for industrial activity shall not be less than 66 per cent
of the total allocable area.
49
[12. Space Sector

12.1 (a) Satellites-Manufacturing and 100% Automatic

Operation up to 74%
(b) Satellite Data Products Government
(c) Ground Segment and User route beyond
Segment 74%
12.2 (a) Launch Vehicles and associated 100% Automatic
systems or sub-systems up to 49%
(b) Creation of Spaceports for Government
launching and receiving Spacecraft route beyond
49%
12.3 Manufacturing of components and 100% Automatic
systems or sub-systems for
satellites, Ground Segment and
User Segment
12.4 The investee entity shall be subject to sectoral guidelines as
issued by the Department of Space from time to time
12.5 Definitions:
(a) “Satellites - Manufacturing and Operation”: End-to-end
manufacturing and supply of satellite or payload,
establishing the satellite systems including control of in-
orbit operations of the satellite and payloads;
(b) “Satellite Data Products”: Reception, generation or
dissemination of earth observation or remote sensing
satellite data and data products including Application
Interfaces (API);
(c) “Ground Segment” and “User Segment”:
(i) “Ground Segment”: Supply of satellite transmit or
receive earth stations including earth observation data
receive station, gateway, teleports, satellite Telemetry,
Tracking and Command (TTC) station, and Satellite
Control Centre (SCC) etc.;
(ii) “User Segment”: Supply of user ground terminals for
communicating with the satellite, which are not
covered under the ground segment;
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(d) “Launch Vehicles and Associated Systems or Sub-

systems”: A vehicle and its stages or components that is
designed to operate in or place spacecraft with payloads or
persons, in a sub-orbital trajectory, or earth orbit or outer
space;
(e) “Creation of Spaceports for launching and receiving
Spacecraft”: A spaceport (also referred as launch site) may
be regarded as the base from which spacecraft are
launched, and consists of facilities involving devices for
transportation to, from and via outer space;
(f) “Manufacturing of components and systems or sub-
systems for satellites Ground Segment and User Segment”:
Comprises the manufacturing and supply of the electrical,
electronic and mechanical components systems or sub-
systems for satellites, Ground Segment and User Segment.]
13. Private Security Agencies 49% Government
14. Telecom services
(including Telecom
Infrastructure Providers
Category-l)
14.1 50
[All telecom services including 100% 51

Telecom Infrastructure Providers [Automatic]

Category I, viz. Basic, Cellular,
United Access Services, Unified
license (Access services), Unified
License, National/International
Long Distance, Commercial V-Sat,
Public Mobile Radio Trunked
Services (PMRTS), Global Mobile
Personal Communications Services
(GMPCS), all types of ISP licenses,
Voice Mail/Audiotex/UMS, Resale of
IPLC, Mobile Number Portability
services, Infrastructure Provider
Category I (providing dark fibre,
right of way, duct space, tower),
Other Service Providers and such
other services as may be permitted
by the Department of
Telecommunications (DoT).]
14.2 Other Conditions
52
[The licensing, security and any other terms and
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conditions as notified by Department of Telecommunications

(DoT) from time to time, shall be observed by
licensee/entities providing services as referred in serial
number 14.1 above as well as investors.]
15. Trading
15.1 Cash and Carry Wholesale 100% Automatic
Trading/Wholesale Trading
(including sourcing from MSEs)
15.1.1 Definition:
(a) Cash and Carry Wholesale trading (WT)/Wholesale
trading, shall mean sale of goods or merchandise to
retailers, industrial, commercial, institutional or other
professional business users or to other wholesalers and
related subordinated service providers.
(b) Wholesale trading shall, accordingly, imply sales for
the purpose of trade, business and profession, as
opposed to sales for the purpose of personal
consumption. The yardstick to determine whether the
sale is wholesale or not shall be the type of customers
to whom the sale is made and not the size and volume
of sales. Wholesale trading shall include resale,
processing and thereafter sale, bulk imports with
export/ex-bonded warehouse business sales and B2B
e-Commerce.
15.1.2 Other Conditions
(a) For undertaking ‘WT’, requisite
licenses/registration/permits, as specified under the
relevant Acts or Regulations or Rules or Orders of the State
Government or Government Body or Government Authority
or Local Self-Government Body under that State
Government shall be obtained.
(b) Except in cases of sales to Government, sales made by
the wholesaler shall be considered as ‘cash and carry
wholesale trading/wholesale trading’ with valid business
customers, only when WT is made to the following entities:
(i) Entities holding sales tax or VAT registration or service
tax or excise duty or Goods and Services Tax (GST)
registration; or
(ii) Entities holding trade licenses i.e. a license or
registration certificate or membership certificate or
registration under Shops and Establishment Act,
issued by a Government Authority or Government
Body/Local Self-Government Authority, reflecting that
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the entity or person holding the license or registration

certificate or membership certificate, as the case may
be, is itself or himself or herself engaged in a business
involving commercial activity; or
(iii) Entities holding permits or license etc. for
undertaking retail trade (like tehbazari and similar
license for hawkers) from Government Authorities or
Local Self Government Bodies; or
(iv) Institutions having certificate of incorporation or
registration as a society or registration as public trust
for their self-consumption.
Note: An Entity, to whom WT is made, may fulfil any one of
the 4 conditions at (b)(i) to (iv) above.
(c) Full records indicating all the details of such sales like
name of entity, kind of entity, registration/license/permit
etc. number, amount of sale etc. shall be maintained on a
day to day basis.
(d) WT of goods shall be permitted among companies of the
same group. However, such WT to group companies taken
together shall not exceed 25 per cent of the total turnover
of the wholesale venture.
(e) WT can be undertaken as per normal business practice,
including extending credit facilities subject to applicable
regulations.
(f) A wholesale or cash and carry trader can undertake
single brand retail trading, subject to the conditions
mentioned in para 15.3. An entity undertaking
wholesale/cash and carry as well as retail business shall be
mandated to maintain separate books of accounts for these
two arms of the business and duly audited by the statutory
auditors. Conditions under these rules for wholesale or cash
and carry business and for retail business have to be
separately complied with by the respective business arms.
15.2 E-Commerce
15.2.1 B2B E-commerce activities 100% Automatic
Such companies would engage only in Business to Business
(B2B) e-commerce and not in retail trading, inter alia
implying that existing restrictions on FDI in domestic
trading would be applicable to e-commerce as well.
15.2.2 Market place model of e-commerce 100 % Automatic
15.2.3 Other Conditions:
(a) E-commerce' means buying and selling of goods and
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services including digital products over digital & electronic

network;
(b) ‘E-commerce entity’ means a company incorporated
under Companies Act 1956 or the Companies Act, 2013
(c) ‘Inventory based model of e-commerce’ means an e-
commerce activity where inventory of goods and services is
owned by e-commerce entity and is sold to the consumers
directly;
(d) ‘Market place model of e-commerce’ means providing of
an information technology platform by an e-commerce
entity on a digital and electronic network to act as a
facilitator between buyer and seller.
(e) Digital and electronic network shall include network of
computers, television channels and any other internet
application used in automated manner such as web pages,
extranets, mobiles etc.
(f) Marketplace e-commerce entity shall be permitted to
enter into transactions with sellers registered on its platform
on B2B basis.
(g) E-commerce marketplace may provide support services
to sellers in respect of warehousing, logistics, order
fulfilment, call centre, payment collection and other
services.
(h) E-commerce entity providing a marketplace shall not
exercise ownership over the inventory i.e. goods purported
to be sold.
Explanation: Inventory of a vendor shall be deemed to be
controlled by e-commerce marketplace entity if more than
25% of purchases of such vendor are from the marketplace
entity or its group companies which shall render the
business into inventory based model.
(i) An entity having equity participation by e-commerce
marketplace entity or its group companies or having control
on its inventory by e-commerce marketplace entity or its
group companies, shall not be permitted to sell its products
on the platform run by such marketplace entity.
(j) Goods/services made available for sale electronically on
website shall clearly provide name, address and other
contact details of the seller. Post sales, delivery of goods to
the customers and customer satisfaction shall be
responsibility of the seller.
(k) Payments for sale may be facilitated by the e-commerce
entity in conformity with the guidelines issued by the
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Reserve Bank in this regard.

(l) Any warranty or guarantee of goods and services sold
shall be the responsibility of the seller.
(m) E-commerce entities providing marketplace shall not
directly or indirectly influence the sale price of goods or
services and shall maintain level playing field. Services
should be provided by e-commerce marketplace entity or
other entities in which e-commerce marketplace entity has
direct or indirect equity participation or common control, to
vendors on the platform at arm's length and in a fair and
non-discriminatory manner.
Explanation: Such services shall include but not limited to
fulfilment, logistics, warehousing, advertisement or
marketing, payments, financing etc. Cash back provided by
group companies of marketplace entity to buyers shall be
fair and non-discriminatory. For the purposes of this clause,
provision of services to any vendor on such terms which are
not made available to other vendors in similar
circumstances will be deemed unfair and discriminatory.
(n) Guidelines on cash and carry wholesale trading as given
in Sl. No. 15.1.2 above shall apply to B2B e-commerce
activities.
(o) No e-commerce marketplace entity shall mandate any
seller to sell any of their product exclusively on its platform.
53
[(p) e-commerce marketplace entity with FDI shall have
to obtain and maintain a report of statutory auditor by 30th
of September every year for the preceding financial year
confirming compliance of the e-commerce guidelines.]
Note: Foreign investment is not permitted in inventory
based model of e-commerce.
15.2.4 Sale of services through e-commerce shall be under
automatic route subject to the sector specific conditions,
applicable laws/regulations, security and other
conditionalities.
15.3 Single Brand Product Retail Trading 100% 54

Foreign investment in Single Brand [Automatic];

Product Retail Trading (SBRT) is Government
aimed at attracting investments in route beyond
production and marketing, 49%
improving the availability of such
goods for the consumer,
encouraging increased sourcing of
goods from India and enhancing
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competitiveness of Indian
enterprises through access to
global designs, technologies and
management practices.
15.3.1 Other conditions
(a) Products to be sold should be of a ‘Single Brand’ only.
(b) Products should be sold under the same brand
internationally i.e. products shall be sold under the same
brand in one or more countries other than India.
(c) ‘Single Brand’ product-retail trading shall cover only
products which are branded during manufacturing.
(d) A person resident outside India, whether owner of the
brand or otherwise, shall be permitted to undertake ‘single
brand’ product retail trading in the country for the specific
brand, either directly by the brand owner or through a
legally tenable agreement executed between the Indian
entity undertaking single brand retail trading and the brand
owner.
55
[(e) In respect of proposals involving foreign investment
beyond 51 per cent, sourcing of 30 per cent of the value of
goods procured, shall be done from India, preferably from
MSMEs, village and cottage industries, artisans and
craftsmen, in all sectors. The quantum of domestic sourcing
shall be self-certified by the company, to be subsequently
checked, by statutory auditors, from the duly certified
accounts which the company shall be required to maintain.
The procurement requirement is to be met in the first
instance as an average of five years total value of goods
procured beginning 1st April of the year of the
commencement of SBRT business (i.e. opening of first store
or start of online retail, whichever is earlier). Thereafter,
SBRT entity shall be required to meet the 30 per cent local
sourcing norms on an annual basis. For the purpose of
ascertaining the sourcing requirement, the relevant entity
would be the company incorporated in India, which is the
recipient of foreign investment for the purpose of carrying
out single brand product retail trading.]
56
[(f) For the purpose of meeting local sourcing requirement
laid down at entry (e), all procurements made from India by
the SBRT entity for that single brand shall be counted
towards local sourcing, irrespective of whether the goods
procured are sold in India or exported. SBRT entity is also
permitted to set off sourcing of goods from India for global
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operations against the mandatory sourcing requirement of

30 per cent. For this, purpose, ‘sourcing of goods from India
for global operations’ shall mean value of goods sourced
from India for global operations for that single brand (in
INR terms) in a particular financial year directly by the
entity undertaking SBRT or its group companies (resident or
non-resident), or indirectly by them through a third party
under a legally tenable agreement.]
57
[(g) A SBRT entity operating through brick and mortar
stores, can also undertake retail trading through e-
commerce. However, retail trading through e-commerce can
also be undertaken prior to opening of brick and mortar
stores, subject to the condition that the entity opens brick
and mortar stores within two years from date of start of
online retail.]
Note:
(1) Conditions mentioned at (b) and (d) above shall not
be applicable for undertaking SBRT of Indian brands.
(2) Indian brands should be owned and controlled by
resident Indian citizens and/or companies which are
owned and controlled by resident Indian citizens.
(3) Sourcing norms shall not be applicable up to three
years from commencement of the business i.e.
opening of the first store 58[or start of online retail,
whichever is earlier] for entities undertaking single
brand retail trading of products having ‘state-of-art’
and ‘cutting-edge’ technology and where local
sourcing is not possible. Thereafter, condition
mentioned at 15.3.1(e) above shall be applicable. A
Committee under the Chairmanship of Secretary,
DPIIT, with representatives from NITI Aayog,
concerned Administrative Ministry and independent
technical expert(s) on the subject shall examine the
claim of applicants on the issue of the products being
in the nature of ‘state-of-art’ and ‘cutting-edge’
technology where local sourcing is not possible and
give recommendations for such relaxation.
15.4 Multi Brand Retail Trading 51% Government
(MBRT)
15.4.1 Other Conditions
(a) Fresh agricultural produce, including fruits, vegetables,
flowers, grains, pulses, fresh poultry, fishery and meat
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products, can be unbranded.

(b) Minimum amount to be brought in as foreign investment
would be USD 100 million.
(c) At least 50 per cent of the total foreign investment
brought in the first tranche of USD 100 million, shall be
invested in ‘back-end infrastructure’ within three years,
where ‘back-end infrastructure’ shall include capital
expenditure on all activities, excluding that on front-end
units; for instance, back-end infrastructure shall include
investment made towards processing, manufacturing,
distribution, design improvement, quality control,
packaging, logistics, storage, warehouse, agriculture market
produce infrastructure etc. Expenditure on land cost and
rentals, if any, shall not be counted for purposes of back-
end infrastructure. Subsequent investment in the back-end
infrastructure would be made by the MBRT retailer as
needed, depending upon its business requirements.
(d) At least 30 per cent of the value of procurement of
manufactured or processed products purchased shall be
sourced from Indian micro, small and medium industries,
which have a total investment in plant and machinery not
exceeding USD2 million. This valuation refers to the value at
the time of installation, without providing for depreciation.
The ‘small industry’ status shall be reckoned only at the
time of first engagement with the retailer and such industry
shall continue to qualify as a ‘small industry’ for this
purpose, even if it outgrows the said investment of USD2
million during the course of its relationship with the said
retailer. Sourcing from agricultural co-operatives and
farmers co-operatives shall also be considered in this
category. The procurement requirement shall have to be
met, in the first instance, as an average of five years total
value of the manufactured/processed products purchased,
beginning 1st April of the year during which the first
tranche of foreign investment is received. Thereafter, it shall
have to be met on an annual basis.
(e) Self-certification is required by the company, to ensure
compliance of the conditions at serial nos. (b), (c) and (d)
above, which could be cross-checked, as and when required.
Accordingly, the investors shall maintain accounts, duly
certified by statutory auditors.
(f) Retail sales outlets may be set up only in cities with a
population of more than 10 lakh as per the 2011 Census or
any other cities as per the decision of the respective State
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Governments, and may also cover an area of 10 kms.

Around the municipal or urban agglomeration limits of such
cities; retail locations shall be restricted to conforming areas
as per the Master or Zonal Plans of the concerned cities and
provision shall be made for requisite facilities such as
transport connectivity and parking.
(g) Government shall have the first right to procure
agricultural products.
(h) The above policy is an enabling policy only and the
State Governments or Union Territories shall be free to take
their own decisions in regard to implementation of the
policy. Therefore, retail sales outlets may be set up in those
States or Union Territories which have agreed, or agree in
future, to allow foreign investment in MBRT under this
policy. The States or Union Territories which have conveyed
their agreement are mentioned at 15.4.2. Such agreement,
in future, to permit establishment of retail outlets under this
policy, would be conveyed to the Government of India
through the Department of Industrial Policy and Promotion
and additions shall be made to the said list. The
establishment of the retail sales outlets shall be in
compliance of applicable State/Union Territory laws or
regulations, such as the Shops and Establishments Act etc.
(i) Retail trading, in any form, by means of e-commerce,
shall not be permissible, for companies with foreign
investment engaged in multi-brand retail trading.
(j) Applications shall be processed in the Department of
Industrial Policy and Promotion, to determine whether the
proposed investment satisfies the notified guidelines, before
being considered for Government approval.
15.4.2 States or Union territories are Andhra Pradesh, Assam,
Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir,
Karnataka, Maharashtra, Manipur, Rajasthan, Uttarakhand,
Daman and Diu and Dadra and Nagar Haveli (Union
territories)
15.5 Duty Free Shops 100% Automatic
15.5.1 Other Conditions:
(a) Duty Free Shops would mean shops set up in custom
bonded area at International Airports or International
Seaports and Land Custom Stations where there is transit of
international passengers.
(b) Foreign investment in Duty Free Shops is subject to
compliance of conditions stipulated under the Customs Act,
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1962 and other laws, rules and regulations.

(c) Duty Free Shop entity shall not engage into any retail
trading activity in the Domestic Tariff Area of the country.
16. Pharmaceuticals
16.1 Greenfield 100% Automatic
16.2 Brownfield 100% Automatic
up to 74%;
Government
route beyond
74%
16.3 Other Conditions
(a) ‘Non-compete’ clause shall not be allowed except in
special circumstances with the Government approval.
(b) The prospective investor and the prospective investee
are required to provide a certificate given at 16.4 along with
the application submitted for Government approval.
(c) Government approval may incorporate appropriate
conditions for foreign investment in brown field cases.
(d) Foreign investment in brown field pharmaceuticals,
irrespective of entry route, is further subject to the following
conditions:
(i) The production level of National List of Essential
Medicines (NLEM) drugs and/or consumables and their
supply to the domestic market at the time of induction
of foreign investment, being maintained over the next
five years at an absolute quantitative level. The
benchmark for this level would be decided with
reference to the level of production of NLEM drugs
and/or consumables in the three financial years,
immediately preceding the year of induction of foreign
investment. Of these, the highest level of production
in any of these three years shall be taken as the level.
(ii) Research and Development (R&D) expenses being
maintained in value terms for 5 years at an absolute
quantitative level at the time of induction of foreign
investment. The benchmark for this level would be
decided with reference to the highest level of R&D
expenses which has been incurred in any of the three
financial years immediately preceding the year of
induction of foreign investment.
(iii) The administrative Ministry shall be provided
complete information pertaining to the transfer of
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technology, if any, along with induction of foreign

investment into the investee company.
(iv) The administrative Ministry (s) i.e. Ministry of Health
and Family Welfare, Department of Pharmaceuticals or
any other regulatory Agency/Development as notified
by Central Government from time to time, shall
monitor the compliance of conditionalities.
Note:
(1) Foreign investment up to 100% under the automatic
route is permitted for manufacturing of medical
devices. The abovementioned conditions shall,
therefore, not be applicable to greenfield as well as
brownfield projects of this industry.
(2) Medical device means:—
(a) Any instrument, apparatus, appliance, implant,
material or other article, whether used alone or in
combination, including the software, intended by its
manufacturer to be used specially for human beings
or animals for one or more of the specific purposes
of:—
(aa) Diagnosis, prevention, monitoring, treatment or
alleviation of any disease or disorder;
(ab) diagnosis, monitoring, treatment, alleviation of,
or assistance for, any injury or disability;
(ac) investigation, replacement or modification or
support of the anatomy or of a physiological
process;
(ad) supporting or sustaining life;
(ae) disinfection of medical devices;
(af) control of conception;
and which does not achieve its primary intended action in or
on the human body or animals by any pharmacological or
immunological or metabolic means, but which may be
assisted in its intended function by such means;
(b) an accessory to such an instrument, apparatus,
appliance, material or other article;
(c) “in-vitro diagnostic device which is a reagent,
reagent product, calibrator, control material, kit,
instrument, apparatus, equipment or system,
whether used alone or in combination thereof
intended to be used for examination and providing
information for medical or diagnostic purposes by
means of examination of specimens derived from
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the human bodies or animals.

16.4 Certificate to be furnished by the Prospective Investor as
well as the Prospective Recipient Entity
It is certified that the following is the complete list of all
inter-se agreements, including the shareholders agreement,
entered into between foreign investor(s) and investee
brownfield pharmaceutical entity
1. ………………
2. ……………….
3. ……………….
(copies of all agreements to be enclosed)
It is also certified that none of the inter-se agreements,
including the shareholders agreement, entered into between
foreign investor(s) and investee brownfield pharmaceutical
entity contain any non-compete clause in any form
whatsoever.
It is further certified that there are no other
contracts/agreements between the foreign investor(s) and
investee brownfield pharma entity other than those listed
above.
The foreign investor(s) and investee brownfield pharma
entity undertake to submit to the FIPB any inter-se
agreements that may be entered into between them
subsequent to the submission and consideration of this
application.
17. Railway Infrastructure
17.1 Construction, operation and 100% Automatic
maintenance of the following:
(i) Suburban corridor projects
through PPP, (ii) high-speed train
projects, (iii) Dedicated freight
lines, (iv) Rolling stock including
train sets, and locomotives/coaches
manufacturing and maintenance
facilities, (v) Railway Electrification,
(vi) Signalling systems, (vii)
Freight terminals, (viii) Passenger
terminals, (ix) Infrastructure in
industrial park pertaining to railway
line/sidings including electrified
railway lines and connectivity to
main railway line and (x) Mass
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Rapid Transport Systems.

17.2 Other Conditions
(a) Foreign investment in this sector open to private-sector
participation is subject to sectoral guidelines of Ministry of
Railways.
(b) Proposals involving foreign investment beyond 49 per
cent sensitive areas from security point of view, will be
brought by the Ministry of Railways before the Cabinet
Committee on Security (CCS) for consideration on a case to
case basis.
F FINANCIAL SERVICES
Investment in financial services, other than those indicated
below, would require prior Government approval.
F.1 Asset Reconstruction 100% Automatic
Companies
F.1.1 Other Conditions
(a) Investment limit of a sponsor in the shareholding of an
ARC shall be governed by the provisions of Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002. Similarly, investment by
institutional or non-institutional investors shall also be
governed by the said Act.
(b) FPIs can invest in the Security Receipts (SRs) issued by
ARCs. FPIs may be allowed to invest up to 100 per cent of
each tranche in SRs issued by ARCs, subject to
directions/guidelines of Reserve Bank. Such investment
shall be within the relevant regulatory cap as applicable.
(c) All investments shall be subject to provisions of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002.
F.2 Banking - Private sector 74% Automatic
up to 49%
Government
route beyond
49% and up
to 74%
F.2.1 Other conditions:
(a) At all times, at least 26 per cent of the paid up capital
shall have to be held by residents, except in regard to a
wholly-owned subsidiary of a foreign bank.
(b) In case of NRIs individual holdings is restricted to 5 per
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cent of the total paid up capital both on repatriation and

non-repatriation basis and aggregate limit cannot exceed 10
per cent of the total paid up capital both on repatriation and
non-repatriation basis. However, NRI holdings shall be
allowed up to 24 per cent of the total paid up capital both
on repatriation and non-repatriation basis subject to a
special resolution to this effect passed by the banking
company's general body.
59
[(c) Applications for foreign direct investment in private
banks having joint venture or subsidiary in insurance sector
may be addressed to the Reserve Bank for consideration in
consultation with the Insurance Regulatory and
Development Authority of India, in order to ensure that the
limit of foreign investment applicable for the insurance
sector as specified in serial number F. 8.1 and F. 8.2 is not
breached.]
(d) Transfer of shares under FDI from residents to non-
residents shall require approval of the Reserve Bank and/or
the Government, wherever applicable.
(e) The policies and procedures prescribed by RBI and other
institutions such as Securities and Exchange Board of India,
Ministry of Corporate Affairs and IRDAI on these matters
shall apply.
(f) RBI guidelines relating to acquisition by purchase or
otherwise of capital instruments of a private bank, if such
acquisition results in any person owning or controlling 5 per
cent or more of the paid up capital of the private bank shall
apply to foreign investment as well.
(g) Setting up of a subsidiary by foreign banks:
(i) Foreign banks shall be permitted to either have
branches or subsidiaries but not both.
(ii) Foreign banks regulated by banking supervisory
authority in the home country and meeting Reserve
Bank's licensing criteria shall be allowed to hold 100
per cent paid-up capital to enable them to set up a
wholly-owned subsidiary in India.
(iii) A foreign bank may operate in India through only
one of the three channels viz., (i) branches (ii) a
wholly-owned subsidiary (iii) a subsidiary with
aggregate foreign investment up to a maximum of 74
per cent in a private bank.
(iv) A foreign bank shall be permitted to establish a
wholly-owned subsidiary either through conversion of
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existing branches into a subsidiary or through a fresh

banking license. A foreign bank shall be permitted to
establish a subsidiary through acquisition of shares of
an existing private sector bank provided at least 26
per cent of the paid-up capital of the private sector
bank is held by residents at all times consistent with
para (c) above.
(v) A subsidiary of a foreign bank shall be subject to the
licensing requirements and conditions broadly
consistent with those for new private sector banks.
(vi) Guidelines for setting up a wholly-owned subsidiary
of a foreign bank shall be issued separately by RBI.
(vii) All applications by a foreign bank for setting up a
subsidiary or for conversion of their existing branches
to subsidiary in India shall have to be made to the
RBI.
(h) The present limit of 10 per cent on voting rights in
respect banking companies may be noted by the potential
investor.
(i) All investments shall be subject to the guidelines
prescribed for the banking sector under the Banking
Regulation Act, 1949 and the Reserve Bank of India Act,
1934.
F.3 Banking - Public Sector
F.3.1 Banking - Public Sector subject to 20% Government
Banking Companies (Acquisition &
Transfer of Undertakings) Acts,
1970/80. This ceiling is also
applicable to the State Bank of
India.
F.4 Infrastructure Companies in the
Securities Market
F.4.1 Infrastructure companies in 49% Automatic
Securities Markets, namely, stock
exchanges, commodity derivative
exchanges, depositories and
clearing corporations, in
compliance with Securities and
Exchange Board of India
Regulations.
F.4.2 Other conditions:
(a) Foreign investment, including investment by FPIs, shall
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be subject to the Guidelines or Rules or Regulations issued

by the Central Government, Securities and Exchange Board
of India and the Reserve Bank from time to time.
(b) Words and expressions used herein and not defined in
these rules but defined in the Companies Act, 2013 (18 of
2013) or the Securities Contracts (Regulation) Act, 1956
(42 of 1956) or the Securities and Exchange Board of India
Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of
1996) or in the concerned Regulations issued by Securities
and Exchange Board of India shall have the same meanings
respectively assigned to them in those Acts or Regulations.
F.5 Commodities Spot Exchange 49% Automatic
F.5.1 Investment shall be subject to guidelines prescribed by the
Central or State Government.
F.6 Power Exchanges
Power Exchanges under the Central 49% Automatic
Electricity Regulatory Commission
(Power Market) Regulations, 2010.
F.6.1 Other conditions
(a) A person resident outside India including persons acting
in concert should not hold more than 5 per cent.
(b) The investment shall be in compliance with Securities
and Exchange Board of India Regulations, other applicable
laws/rules/regulations, security and other conditionalities.
F.7 Credit Information Companies 100% Automatic
F.7.1 Other conditions
(a) Foreign investment in Credit Information Companies is
subject to the Credit Information Companies (Regulation)
Act, 2005 and regulatory clearance from the Reserve Bank.
(b) FPI investment shall be permitted subject to the
following conditions:
(i) A single entity shall directly or indirectly hold below
10 per cent equity;
(ii) Any acquisition in excess of 1 per cent shall have to
be reported to Reserve Bank as a mandatory
requirement; and
(iii) FPIs investing in Credit Information Companies shall
not seek a representation on the Board of Directors
based upon their shareholding.
F.8 Insurance
F.8.1 60
[Insurance Company] 61 Automatic
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[74%]
62 Life Insurance Corporation of India 20% Automatic]
[F.8.1A
63
[F.8.2 Intermediaries or Insurance 100% Automatic]
Intermediaries including insurance
brokers, re-insurance brokers,
insurance consultants, corporate
agents, third party administrator,
Surveyors and Loss Assessors and
such other entities, as may be
notified by the Insurance
Regulatory and Development
Authority of India from time to
time.
64 Other conditions applicable to
[F.8.3.1 Indian insurance companies and
intermediaries or insurance
intermediaries]
(a) No Indian Insurance company shall allow the aggregate
holdings by way of total foreign investment in its equity
shares by foreign investors, including portfolio investors, to
65
exceed [seventy-four] per cent of the paid up equity
capital of such Indian Insurance Company.
66
(b) The foreign investment up to [seventy-four] per cent
of the total paid-up equity of the Indian Insurance Company
shall be allowed on the automatic route subject to approval
or verification by the Insurance Regulatory and
Development Authority of India.
(c) Foreign investment in this sector shall be subject to
compliance with the provisions of the Insurance Act, 1938
and the condition that Companies receiving FDI shall obtain
necessary license or approval from the Insurance Regulatory
and Development Authority of India for undertaking
insurance and related activities.
67
[(d)(I) In an Indian Insurance Company having foreign
investment,—
(i) a majority of its directors;
(ii) a majority of its Key Management Persons; and
(iii) at least one among the Chairperson of its Board, its
Managing Director and its Chief Executive Officer,
shall be Resident Indian Citizens.
Explanation: For the above purposes, the expression— “Key
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Management Person” shall have the same meaning as

assigned to it in guidelines made by the Insurance
Regulatory and Development Authority of India on corporate
governance for insurers in India.
(II) An Indian Insurance company having foreign
investment shall comply with the provisions under the
Indian Insurance Companies (Foreign Investment) Rules,
2015, as amended from time to time and applicable rules
and regulations notified by the Department of Financial
Services or the Insurance Regulatory and Development
Authority of India from time to time.]
(e) Foreign portfolio investment in an Indian Insurance
company shall be governed by the provisions contained in
Chapter-IV, Rule 10 and Rule 11 read with Schedule-II of
these rules and provisions of the Securities and Exchange
68
Board of India (Foreign Portfolio Investors) Regulations,
[2019].
(f) Any increase in foreign investment in an Indian
Insurance company shall be in accordance with the pricing
guidelines specified in these rules.
(g) The foreign equity investment cap of 100 per cent shall
apply on the same terms as above to insurance brokers, re-
insurance brokers, insurance consultants, corporate agents,
third party administrator, Surveyors and Loss Assessors and
such other entities, as may be notified by the Insurance
Regulatory and Development Authority of India from time to
69
time. However, [the composition of the Board of Directors
and key management persons of Intermediaries or
Insurance Intermediaries] shall be as specified by the
concerned regulators from time to time.
(h) The foreign direct investment proposals shall be allowed
under the automatic route subject to verification by the
Authority and the foreign investment in intermediaries or
insurance intermediaries shall be governed by the same
terms as provided under Rules 7 and 8 of the Indian
Insurance Companies (Foreign Investment) Rules, 2015, as
amended from time to time:
Provided that where an entity like a Bank, whose primary
business is outside the insurance area, is allowed by the
Authority to function as an insurance intermediary, the
foreign equity investment caps applicable in that sector
shall continue to apply, subject to the condition that the
revenues of such entities from the primary (non-insurance
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related) business must remain above 50 per cent of their

total revenues in any financial year.
(i) The insurance intermediary that has majority
shareholding of foreign investors shall undertake the
following:
(i) be incorporated as a limited company under the
provisions of the Companies Act, 2013;
(ii) at least one from among the Chairman of the Board of
Directors or the Chief Executive Officer or Principal
Officer or Managing Director of the insurance
intermediary shall be a resident Indian citizen;
(iii) shall take prior permission of the Authority for
repatriating dividend;
(iv) shall bring in the latest technological, managerial
and other skills;
(v) shall not make payments to the foreign group or
promoter or subsidiary or interconnected or associate
entities beyond what is necessary or permitted by the
Authority;
(vi) shall make disclosures in the formats to be specified
by the Authority of all payments made to its group or
promoter or subsidiary or interconnected or associate
entities;
(vii) composition of the Board of Directors and key
management persons shall be as specified by the
concerned regulators;
(j) The other condition under the heading ‘Banking-Private
Sector’ specified against serial number F.2.1 shall be
applicable in respect of bank promoted insurance
companies.
70
[(k) Terms “Equity Share Capital”, “Foreign Direct
Investment” (FDI), “Foreign Investors”, “Foreign Portfolio
Investment”, “Indian Insurance Company”, “Indian
Company”, “Non-resident Entity”, “Public Financial
Institution”, “Resident Indian Citizen” and “Total Foreign
Investment” shall have the same meaning as specified in
the rules under the Insurance Act, 1938 or in the
regulations issued by Insurance Regulatory and
Development Authority of India from time to time, in
respect of foreign investment in Indian Insurance
Companies and intermediaries or insurance intermediaries.]
71 Other conditions applicable to the
[F.8.3.2 Life Insurance Corporation of India
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(LIC)
(a) Foreign investment in LIC shall be subject to the
provisions of the Life Insurance Corporation Act, 1956, (LIC
Act) as amended from time to time (LIC Act) and such
provisions of the Insurance Act, 1938, as amended from
time to time, as are applicable to LIC.
(b) Provisions of clauses (e) and (f) under Sl. No. F.8.3.1,
shall also apply to LIC, as if reference therein to an Indian
Insurance Company is a reference to LIC.
(c) The terms referred to in clause (k) under Sl. No. F.8.3.1
shall have the same meaning as referred to therein.
Explanation: For the purposes of this Sl. No., any reference
to Indian insurance company or company referred to in
clause (k) under Sl. No. F.8.3.1, shall be construed as a
reference to LIC.]
F.9 Pension Sector 49% Automatic
F.9.1 Other conditions
(a) Foreign investment in this sector shall be in accordance
with the Pension Fund Regulatory and Development
Authority (PFRDA) Act, 2013.
(b) Foreign investment in Pension Funds shall be subject to
the condition that entities investing in capital instruments
issued by an Indian Pension Fund as per Section 24 of the
PFRDA Act, 2013 shall obtain necessary registration from
the PFRDA and comply with other requirements as per the
PFRDA Act, 2013 and Rules and Regulations framed under it
for so participating in Pension Fund Management activities
in India.
(c) An Indian pension fund shall ensure that its ownership
and control remains at all times with resident Indian
entities as determined by the Government of India/PFRDA
as per the rules or regulation issued by them.
F.10 Other Financial Services 100% Automatic
F.10.1 Other Conditions
(a) Other Financial Services shall mean financial services
activities regulated by financial sector regulators, viz.,
Reserve Bank, Securities and Exchange Board of India,
Insurance Regulatory and Development Authority, Pension
Fund Regulatory and Development Authority, National
Housing Bank or any other financial sector regulator as may
be notified by the Government of India.
(b) Foreign investment in ‘Other Financial Services’
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activities shall be subject to conditionalities, including

minimum capitalization norms, as specified by the
concerned Regulator/Government Agency
(c) ‘Other Financial Services’ activities need to be regulated
by one of the Financial Sector Regulators. In all such
financial services activity which are not regulated by any
Financial Sector Regulator or where only part of the financial
services activity is regulated or where there is doubt
regarding the regulatory oversight, foreign investment up to
100 per cent will be allowed under Government approval
route subject to conditions including minimum capitalization
requirement, as may be decided by the Government.
(d) Any activity which is specifically regulated by an Act,
the foreign investment limits shall be restricted to those
levels/limit that may be specified in that Act, if so
mentioned.
(e) Downstream investments by any of these entities
engaged in “Other Financial Services” that is treated as
indirect foreign investment for the investee entity shall be
subject to these rules.
72
[F.11 White Label ATM Operations 100% Automatic
(WLAO)
F.11.1 Other Conditions
(a) Any non-bank entity intending to set up White Label
ATMs (WLAs) should have a minimum net worth of one
hundred crore rupees as per the latest financial year's
audited balance sheet, to be maintained at all times.
(b) In case the entity is also engaged in any ‘Other
Financial Services’ referred to in Sl. No. F.10 above, then
the foreign investment in the company setting up WLA shall
also comply with the minimum capitalisation norms, if any,
for foreign investments in such ‘Other Financial Services’.
(c) FDI in the WLAO will be subject to the specific criteria
and guidelines issued by the Reserve Bank under the
Payment and Settlement Systems Act, 2007 (51 of 2007).]

SCHEDULE II
[See Rule 10(1)]
Investments by Foreign Portfolio Investors
(1) Purchase or sale of equity instruments by Foreign Portfolio
Investors
(a) Purchase and sale of equity instruments.—
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A FPI may purchase or sell equity instruments of an Indian company

listed or to be listed on a recognised stock exchange in India subject to
the following conditions, namely:—
(i) The total holding by each FPI or an investor group, shall be less
than 10 per cent of the total paid-up equity capital on a fully
diluted basis or less than 10 per cent of the paid-up value of each
series of debentures or preference shares or share warrants issued
by an Indian company 73[by FPIs] and the total holdings of all
FPIs put together, including any other direct and indirect foreign
investments in the Indian company permitted under these rules,
shall not exceed 24 per cent of paid-up equity capital on a fully
diluted basis or paid up value of each series of debentures or
preference shares or share warrants. The said limit of 10 per cent
and 24 per cent shall be called the individual and aggregate limit,
respectively:
74
[Provided the aggregate limit of 24 per cent may be increased by the
Indian company concerned up to the sectoral cap/statutory ceiling, as
applicable, with the approval of its Board of Directors and its General
Body through a resolution and a special resolution, respectively.]
(ii) With effect from the 1st April, 2020, the aggregate limit shall be
the sectoral caps applicable to the Indian company as laid out in
sub-paragraph (b) of paragraph 3of Schedule I of these rules,
with respect to its paid-up equity capital on a fully diluted basis or
such same sectoral cap per centage of paid up value of each
series of debentures or preference shares or share warrants:
Provided that the aggregate limit as provided above may be decreased
by the Indian company concerned to a lower threshold limit of 24% or
49% or 74% as deemed fit, with the approval of its Board of Directors
and its General Body through a resolution and a special resolution,
respectively before 31st March, 2020:
Provided further, that the Indian company which has decreased its
aggregate limit to 24% or 49% or 74%, may increase such aggregate
limit to 49% or 74% or the sectoral cap or statutory ceiling respectively
as deemed fit, with the approval of its Board of Directors and its
General Body through a resolution and a special resolution,
respectively:
Provided also that once the aggregate limit has been increased to a
higher threshold, the Indian company cannot reduce the same to a
lower threshold:
Provided also that the aggregate limit with respect to an Indian
company in a sector where FDI is prohibited shall be 24 per cent.
75
[Explanation.—In case two or more FPI's including foreign
Governments or their related entities are having common ownership,
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directly or indirectly, of more than fifty percent or common control, all

such FPI's shall be treated as forming part of an investor group.]
(iii) 76[The FPIs investing in breach of the prescribed limit shall have
the option of divesting their holdings within five trading days from
the date of settlement of the trades causing the breach. In case
the FPI chooses not to divest, then the entire investment in the
company by such FPI and its investor group shall be considered
as investment under Foreign Direct Investment (FDI) and the FPI
and its investor group shall not make further portfolio investment
in the company concerned. The FPI, through its designated
custodian, shall bring the same to the notice of the depositories
as well as the concerned company for effecting necessary changes
in their records, within -seven trading days from the date of
settlement of the trades causing the breach. The divestment of
holdings by the FPI and the reclassification of FPI investment as
FDI shall be subject to further conditions, if any, specified by
Securities and Exchange Board of India and the Reserve Bank in
this regard. The breach of the said aggregate or sectoral limit on
account of such acquisition for the period between the acquisition
and sale or conversion to FDI within the prescribed time, shall not
be reckoned as a contravention under these rules.]
(iv) The investment by foreign Government agencies shall be
clubbed with the investment by the foreign Government or its
related entities for the purpose of calculation of 10 per cent limit
for FPI investments in a single company, if they form part of an
investor group. However, certain foreign Government agencies
and its related entities may be exempt from such clubbing
requirements and other investment conditions either by way of an
agreement or treaty with other sovereign governments or by an
order of the Central Government.
(v) A FPI may purchase equity instruments of an Indian company
through public offer or private placement, subject to the
individual and aggregate limits specified under this Schedule:
Provided that—
(A) in case of public offer, the price of the shares to be issued is
not less than the price at which shares are issued to residents,
and
(B) in case of issue by private placement, the price is not less
than—(a) the price arrived in terms of guidelines issued by the
Securities and Exchange Board of India, or (b) the fair price
worked out as per any internationally accepted pricing
methodology for valuation of shares on arm's length basis, duly
certified by a Merchant Banker or Chartered Accountant or a
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practicing Cost Accountant, as applicable registered with the

Securities and Exchange Board of India
(vi) A FPI may, undertake short selling as well as lending and
borrowing of securities subject to such conditions as may be
stipulated by the Reserve Bank and the Securities and Exchange
Board of India from time to time.
(vii) Investments made under this Schedule shall be subject to the
limits and margin requirements specified by the Reserve Bank or
the Securities and Exchange Board of India as well as the
stipulations regarding collateral securities as specified by the
Reserve Bank from time to time.
(b) Purchase or sale of securities other than equity
instruments by FPIs.—
(i) A FPI may purchase units of domestic mutual funds or Category
III Alternative Investment Fund or offshore fund for which no
objection is issued in accordance with the SEBI (Mutual Fund)
Regulations, 1996, which in turn invest more than 50 per cent in
equity instruments on repatriation basis subject to the terms and
conditions specified by the Securities and Exchange Board of
India and the Reserve Bank.
(ii) An FPI may purchase units of REITs and InVITs on repatriation
basis subject to the terms and conditions specified by the
Securities and Exchange Board of India.
(2) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
SCHEDULE III
[See Rule 12(1)]
Investments by Non-Resident Indian (NRI) or Overseas Citizen of India
(OCI) on repatriation basis
(1) Purchase or sale of equity instruments of a listed Indian
company
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI)
may purchase or sell equity instruments of a listed Indian company on
repatriation basis, on a recognized stock exchange in India, subject to
the following conditions, namely:—
(a) NRIs or OCIs may purchase and sell equity instruments through
a branch designated by an Authorized Dealer for the purpose;
(b) The total holding by any individual NRI or OCI shall not exceed 5
per cent of the total paid-up equity capital on a fully diluted basis
or shall not exceed 5 per cent of the paid-up value of each series
of debentures or preference shares or share warrants issued by an
Indian company and the total holdings of all NRIs and OCIs put
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together shall not exceed ten per cent of the total paid-up equity
capital on a fully diluted basis or shall not exceed ten per cent of
the paid-up value of each series of debentures or preference
shares or share warrants:
Provided that the aggregate ceiling of 10 per cent may be raised to 24
per cent if a special resolution to that effect is passed by the General
Body of the Indian company.
(2) Purchase or sale of units of domestic mutual funds
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI)
may without limit purchase or sell units of domestic mutual funds
which invest more than 50 per cent in equity.
(3) Purchase or sale of shares in public sector enterprises
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI)
may, without limit purchase or sell shares in public sector enterprises
being disinvested by the Central Government, provided the purchase is
in accordance with the terms and conditions stipulated in the notice
inviting bids.
(4) Subscription to National Pension System—
A NRI or an OCI may subscribe to the National Pension System
governed and administered by Pension Fund Regulatory and
Development Authority (PFRDA), provided such person is eligible to
invest as per the provisions of the Pension Fund Regulatory and
Development Authority Act. The annuity/accumulated saving will be
repatriable:
Provided that NRIs or OCIs may offer such instruments as permitted
by the Reserve Bank from time to time as collateral to the recognised
Stock Exchanges in India for their transactions in exchange traded
derivative contracts as prescribed in sub-clause (2) of Clause 12 of
these Rules.
(5) The mode of payment and attendant conditions for remittance of
sale or maturity proceeds shall be specified by the Reserve Bank.
SCHEDULE IV
[See Rule 12(2)]
Investment by NRI or OCI on non-repatriation basis
A. Purchase or sale of equity instruments of an Indian
company or units or contribution to the capital of a LLP by Non-
Resident Indian (NRI) or Overseas Citizen of India (OCI) on Non-
repatriation basis.
(1) Purchase or sale of equity instruments or convertible
notes or units or contribution to the capital of a LLP.
(a) A Non-resident Indian (NRI) or an Overseas Citizen of India
(OCI), including a company, a trust and a partnership firm
incorporated outside India and owned and controlled by NRIs or
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OCIs, may purchase or contribute, as the case may be, on non-

repatriation basis the following, namely:—
(i) a equity instrument issued by a company without any limit
either on the stock exchange or outside it;
(ii) units issued by an investment vehicle without any limit, either
on the stock exchange or outside it;
(iii) The capital of a Limited Liability Partnership without any limit;
(iv) convertible notes issued by a startup company in accordance
with these rules.
(b) The investment detailed at sub-paragraph (a) of paragraph (1)
above shall be deemed to be domestic investment at par with the
investment made by residents.
(2) Purchase or sale of units of domestic mutual funds.
A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI)
may without limit purchase or sell units of domestic mutual funds on
non-repatriation basis which invest more than 50% in equity.
(3) Prohibition on purchase of equity instruments of certain
companies.
Notwithstanding anything contained in paragraph 1, a NRI or an OCI
including a company, a trust and a partnership firm incorporated
outside India and owned and controlled by NRIs or OCIs, shall not
make any investment, under this Schedule, in equity instruments or
units of a Nidhi company or a company engaged in agricultural or
plantation activities or real estate business or construction of farm
houses or dealing in transfer of development rights.
Explanation: Real estate business shall have the same meaning as
specified in sub-paragraph (b) of paragraph (3) of Schedule 1.
(4) The mode of payment and attendant conditions for remittance of
sale or maturity proceeds shall be specified by the Reserve Bank.
B. Investment in a firm or a proprietary concern.
(1) Contribution to capital of a firm or a proprietary concern.
A NRI or an OCI may invest on a non-repatriation basis, by way of
contribution to the capital of a firm or a proprietary concern in India
provided such firm or proprietary concern is not engaged in any
agricultural or plantation activity or print media or real estate business.
Explanation: Real estate business shall have the same meaning as
specified in sub paragraph (b) of paragraph (3) of Schedule I.
(2) The mode of payment and attendant conditions for remittance of
sale or maturity proceeds shall be specified by the Reserve Bank.
SCHEDULE V
[See Rule (14)]
Investment by other non-resident investors
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Permission to other non-resident investors for purchase of

securities
(1) Long term investors like Sovereign Wealth Funds (SWFs),
Multilateral Agencies, Endowment Funds, Insurance Funds, Pension
Funds and Foreign Central Banks may purchase securities subject to
such terms and conditions as may be specified by the Reserve Bank
and the Securities and Exchange Board of India.
(2) “Eligible Foreign Entity (EEE)” as defined in SEBI circular dated
the 9th October 2018 and having actual exposure to Indian physical
commodity market may participate in domestic commodity derivative
markets in accordance with framework specified by the Securities and
Exchange Board of India.
(3) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
SCHEDULE VI
[See Rule 6(b)]
Investment in a Limited Liability Partnership (LLP)
(a) A person resident outside India (other than a citizen of Pakistan
or Bangladesh)or an entity incorporated outside India (other than
an entity incorporated in Pakistan or Bangladesh), not being a
Foreign Portfolio Investor (FPI) or a Foreign Venture Capital
Investor (FVCI), may contribute to the capital of an LLP operating
in sectors or activities where foreign investment up to 100 per
cent is permitted under automatic route and there are no FDI
linked performance conditions.
(b) Investment by way of “profit share” shall fall under the category
of reinvestment of earnings.
(c) Investment in a LLP is subject to the compliance of the
conditions of Limited Liability Partnership Act, 2008.
(d) A company having foreign investment, engaged in a sector
where foreign investment up to 100 per cent is permitted under
the automatic route and there are no FDI linked performance
conditions, may be converted into a LLP under the automatic
route.
(e) A LLP having foreign investment, engaged in a sector where
foreign investment up to 100 per cent is permitted under the
automatic route and there are no FDI linked performance
conditions, may be converted into a company under the automatic
route.
(f) Investment in a LLP either by way of capital contribution or by
way of acquisition or transfer of profit shares, should not be less
than the fair price worked out as per any valuation norm which is
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internationally accepted or adopted as per market practice

(hereinafter referred to as “fair price of capital contribution or
profit share of a LLP”) and a valuation certificate to that effect
shall be issued by the Chartered Accountant or by a practising
Cost Accountant or by an approved valuer from the panel
maintained by the Central Government.
(g) In case of transfer of capital contribution or profit share from a
person resident in India to a person resident outside India, the
transfer shall be for a consideration not less than the fair price of
capital contribution or profit share of a LLP. Further, in case of
transfer of capital contribution or profit share from a person
resident outside India to a person resident in India, the transfer
shall be for a consideration which is not more than the fair price of
the capital contribution or profit share of an LLP.
(h) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
SCHEDULE VII
[See Rule 16]
Investment by a Foreign Venture Capital Investor (FVCI)
(1) Subject to the terms and conditions as may be laid down by the
Central Government, a Foreign Venture Capital Investor (FVCI) may
purchase,—
(i) securities, issued by an Indian company engaged in any sector
mentioned in paragraph (4) of this Schedule and whose securities
are not listed on a recognised stock exchange at the time of issue
of the said securities;
(ii) units of a Venture Capital Fund (VCF) or of a Category I
Alternative Investment Fund (Cat-I AIF) or units of a scheme or
of a fund set up by a VCF or by a Cat-I AIF.
77
[(iii) equity or equity linked instrument or debt instrument issued
by an Indian startup company irrespective of the sector in which
the startup company is engaged:
Provided that if the investment is in equity instruments, then the
sectoral caps, entry routes and attendant conditions shall apply.]
(2) A FVCI may purchase the securities or instruments mentioned
above either from the issuer of these securities/instruments or from any
person holding these securities or instruments. The FVCI may invest in
securities on a recognised stock exchange subject to the provisions of
the Securities and Exchange Board of India (FVCI) Regulations, 2000.
(3) The FVCI may acquire, by purchase or otherwise, from, or
transfer, by sale or otherwise, to, any person resident in or outside
India, any security or instrument it is allowed to invest in, at a price
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that is mutually acceptable to the buyer and the seller/issuer. The FVCI
may also receive the proceeds of the liquidation of VCFs or of Cat-I
AIFs or of schemes or funds set up by the VCFs or Cat-I AIFs.
(4) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank of India
(5) List of sectors in which a Foreign Venture Capital Investor is
allowed to invest is as follows:—
(a) biotechnology;
(b) IT related to hardware and software development;
(c) nanotechnology;
(d) seed research and development;
(e) research and development of new chemical entities in
pharmaceutical sector.
(f) dairy industry;
(g) poultry industry;
(h) production of bio-fuels;
(i) hotel-cum-convention centres with seating capacity of more than
three thousand;
(j) Infrastructure sector. The term “Infrastructure Sector” has the
same meaning as given in the Harmonised Master List of
Infrastructure sub-sectors approved by Government of India vide
notification F. No. 13/06/2009-INF, dated the March 27, 2012 as
amended or updated.
SCHEDULE VIII
[See Rule 6(c)]
Investment by a person resident outside India in an Investment
Vehicle
(1) A person resident outside India (other than a citizen of Pakistan
or Bangladesh)or an entity incorporated outside India (other than an
entity incorporated in Pakistan or Bangladesh) may invest in units of
Investment Vehicles.
(2) A person resident outside India who has acquired or purchased
units in accordance with this Schedule may sell or transfer in any
manner or redeem the units as per regulations framed by the Securities
and Exchange Board of India or directions issued by the Reserve Bank.
(3) An Investment vehicle may issue its units to a person resident
outside India against swap of equity instruments of a Special Purpose
Vehicle (SPV) proposed to be acquired by such Investment Vehicle.
(4) Investment made by an Investment Vehicle into an Indian entity
shall be reckoned as indirect foreign investment for the investee Indian
entity if the Sponsor or the Manager or the Investment Manager (i) is
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not owned and not controlled by resident Indian citizens or (ii) is

owned or controlled by persons resident outside India.
Provided that for sponsors or managers or investment managers
organised in a form other than companies or LLPs, Securities and
Exchange Board of India shall determine whether the sponsor or
manager or investment manager is foreign owned and controlled.
Explanation: “Control” of the AIF should be in the hands of
“sponsors” and “managers or investment managers”, with the general
exclusion to others. In case the “sponsors” and “managers or
investment managers” of the AIF are individuals, for the treatment of
down-stream investment by such AIF as domestic, “sponsors” and
“manager or investment managers” should be resident Indian citizens.
(5) An Alternative Investment Fund Category III which has received
any foreign investment shall make portfolio investment in only those
securities or instruments in which a FPI is allowed to invest under the
Act or rules or regulations made thereunder.
(6) The mode of payment and other attendant conditions for
remittance of sale or maturity proceeds shall be specified by the
Reserve Bank.
SCHEDULE IX
[See Rule 6(d)]
Investment in Depository Receipts by a person resident outside India
(1) Issue or transfer of eligible instruments to a foreign
depository for the purpose of issuance of depository receipts by
eligible person(s),—
(a) Any security or unit in which a person resident outside India is
allowed to invest under these rules shall be eligible instruments
for issue of Depository Receipts in terms of Depository Receipts
Scheme, 2014 (DR Scheme,2014).
(b) A person shall be eligible to issue or transfer eligible instruments
to a foreign depository for the purpose of issuance of depository
receipts in accordance with the DR Scheme, 2014 and guidelines
issued by the Central Government in this regard.
(c) A domestic custodian may purchase eligible instruments on
behalf of a person resident outside India, for the purpose of
converting the instruments so purchased into depository receipts
in terms of DR Scheme, 2014.
(d) The aggregate of eligible instruments which may be issued or
transferred to foreign depositories, along with eligible instruments
already held by persons resident outside India, shall not exceed
the limit on foreign holding of such eligible instruments under the
Act, rules or regulations framed thereunder.
(e) The eligible instruments shall not be issued or transferred to a
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foreign depository for the purpose of issuing depository receipts at

a price less than the price applicable to a corresponding mode of
issue or transfer of such instruments to domestic investors under
the applicable laws.
(2) Saving.—
Depository Receipts issued under the Issue of Foreign Currency
Convertible Bonds and Ordinary Shares (Through Depository Receipt
Mechanism) Scheme, 1993 shall be deemed to have been issued under
the corresponding provisions of DR Scheme 2014 and have to comply
with the provisions specified in this Schedule.
SCHEDULE X
[See Rule 10(2)]
Issue of Indian Depository Receipts
(1) Issue of IDRs.—Companies incorporated outside India may
issue IDRs through a Domestic Depository, to persons resident in India
and outside India, subject to the following conditions:
(a) the issue of IDRs is in compliance with the Companies
(Registration of Foreign Companies) Rules, 2014 and the
Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009;
(b) any issue of IDRs by financial or banking companies having
presence in India, either through a branch or subsidiary, shall
require prior approval of the sectoral regulator(s);
(c) IDRs shall be denominated in Indian rupee only;
(d) the proceeds of the issue of IDRs shall be immediately
repatriated outside India by the companies issuing such IDRs.
(2) Purchase or sale of IDRs.—
A FPI or a NRI or an OCI may purchase, hold, or sell IDRs, subject to
the following terms and conditions, namely:—
(a) the mode of payment and attendant conditions for remittance of
sale or maturity proceeds shall be as specified by the Reserve
Bank;
(b) limited two way fungibility of IDRs shall be permissible subject
to the terms and conditions stipulated by the Reserve Bank in this
regard;
(c) IDR shall not be redeemable into underlying equity shares before
the expiry of one year from the date of issue;
(d) Redemption or conversion of IDRs into underlying equity shares
of the issuing company shall be in compliance with the Foreign
Exchange Management (Transfer or Issue of any Foreign Security)
Regulations, 2004.
78
[SCHEDULE XI
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[See Rule 34]

Direct Listing of Equity Shares of Companies Incorporated in India on
International Exchanges Scheme
1. Issue and Listing on International Exchanges.—A public
Indian company may issue equity shares or offer equity shares of
existing shareholders, subject to the following conditions, namely—
(i) such issue or offer of equity shares of existing shareholders shall
be permitted and such shares shall be listed on any of the
specified International Exchange.
(ii) such issue or offer of equity shares of existing shareholders shall
be subject to prohibited activities, and sectoral caps prescribed in
Paragraph 2 and 3 of Schedule I to these rules;
(iii) such equity shares to be issued by the public Indian company or
offered by its existing shareholders on an International Exchange
shall be in dematerialised form and rank pari passu with equity
shares listed on a recognised stock exchange in India:
Provided that the prior Government approval, wherever applicable,
shall be obtained.
2. Permissible holder.—(a) permissible holder means a holder of
equity shares of the Company which are listed on International
Exchange, including its beneficial owner:
Provided that such a holder who is a citizen of a country which
shares land border with India, or an entity incorporated in such a
country, or an entity whose beneficial owner is from such a country,
shall hold equity shares of such public Indian company only with the
approval of the Central Government.
Explanation 1.—For the purposes of this clause, permissible holder is
not a person resident in India.
Explanation 2.—The permissible holder, including its beneficial
owner, shall be responsible for ensuring compliance with this
requirement. The public Indian company, in its offer document, by
whatever name called in the permissible jurisdiction, shall make a
disclosure to this effect.
(b) a permissible holder may purchase or sell equity shares of an
Indian company listed on an international exchange subject to limit
specified for foreign portfolio investment under these rules.
3. Eligibility.—(1)(I) a public Indian company may issue equity
shares on International Exchange; or
(II) the existing shareholders may offer equity shares in such
exchange,
subject to compliance with the following conditions and other
requirements as laid down in this Scheme:
(i) a public Indian company shall be eligible to issue equity shares in
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permissible jurisdiction, if—

(a) the public Indian company, any of its promoters, promoter
group or directors or selling shareholders are not debarred from
accessing the capital market by the appropriate regulator;
(b) none of the promoters or directors of the public Indian
company is a promoter or director of any other Indian company
which is debarred from accessing the capital market by the
appropriate regulator;
(c) the public Indian company or any of its promoters or directors
is not a wilful defaulter;
(d) the public Indian company is not under inspection or
investigation under the provisions of the Companies Act, 2013
(18 of 2013);
(e) none of its promoters or directors is a fugitive economic
offender.
(ii) Existing holders of the public Indian company shall be eligible to
offer shares, if—
(a) the public Indian company or the holder offering equity shares
are not debarred from accessing the capital market by the
appropriate regulator;
(b) none of the promoters or directors of the public Indian
company is a promoter or director of any other Indian
company, listed or otherwise, which is debarred from accessing
the capital market by the appropriate regulator;
(c) the public Indian company or the holder offering equity shares
is not a wilful defaulter;
(d) the public Indian company is not under inspection or
investigation under the provisions of the Companies Act, 2013
(18 of 2013);
(e) none of the promoters or directors of the public Indian
company or the holder offering equity shares is a fugitive
economic offender.
(2)(I) a listed Indian company may issue equity shares on
International Exchange; or
(II) the existing share holders may offer equity shares in such
exchange,
subject to compliance with the conditions and other requirements as
per the norms notified by the Securities and Exchange Board of India
from time to time.
(3)(I) a public unlisted Indian company may issue equity shares on
International Exchange; or
(II) the existing share holders may offer equity shares in such
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exchange,
subject to compliance with the conditions and other requirements as
per the norms notified by the Ministry of Corporate Affairs from time to
time.
Explanation.—The restrictions mentioned at items (a) and (b) of sub
-clause (i) of clauses (I) and (II) of sub-paragraph (1) of Paragraph 3
and items (a) and (b) of sub-clause (ii) of clauses (I) and (II) of sub-
paragraph (1) of Paragraph 3 shall not apply to the persons or entities
mentioned therein, who were debarred in the past by the Government
or the appropriate regulator and the period of debarment is already
over as on the date of listing of its equity shares on the International
Exchange(s).
4. Obligations of companies.—(1) The public Indian company
shall ensure compliance with extant laws relating to issuance of equity
shares, including requirements prescribed in this Scheme, the
Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities
and Exchange Board of India Act, 1992 (15 of 1992), the Depositories
Act, 1996 (22 of 1996), the Foreign Exchange Management Act, 1999
(42 of 1999), the Prevention of Money-laundering Act, 2002 (15 of
2003) or the Companies Act, 2013 (18 of 2013) and rules and
regulations made thereunder, as applicable. For this purpose, the said
public Indian company may also enter into necessary arrangements
with Indian Depository and Foreign Depository.
(2) The public Indian company shall ensure that the aggregate of
equity shares which may be issued or offered in a permissible
jurisdiction, along with equity shares already held in India by persons
resident outside India, shall not exceed the limit on foreign holding
under the Schedule I to these rules.
5. Voting rights.—The public Indian companies having their equity
shares listed on International Exchange shall ensure that the voting
rights on such equity shares shall be exercised directly by the
permissible holder or through their custodian pursuant to voting
instruction only from such permissible holder.
6. Pricing.—(1) Where equity shares are issued by a listed company
or offered by the existing shareholders of equity shares listed on
Recognised Stock Exchange in India, the same shall be issued at a
price, not less than the price applicable to a corresponding mode of
issuance of such equity shares to domestic investors under the
applicable laws.
(2) In case of initial listing of equity shares by a public unlisted
Indian company on the International Exchange, the price of issue or
transfer of equity shares shall be determined by a book- building
process as permitted by the said International Exchange and shall not
be less than the fair market value under applicable rules or regulations
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under the Foreign Exchange Management Act, 1999 (42 of 1999):

Provided that subsequent issuance or transfer of shares for the
purpose of listing additional shares post initial listing would be based
on applicable pricing norms of the International Exchange and the
permissible jurisdiction.
Explanation.—For the purposes of this Scheme—
(a) “appropriate regulator” means any financial sector regulator or
Government Ministry or Department administering Acts applicable
to the company, listed or unlisted;
(b) “beneficial owner” shall have the same meaning as provided in
proviso to sub-rule (1) of Rule 9 of the Prevention of Money-
laundering (Maintenance of Records) Rules, 2005;
(c) “foreign depository” means a corporate entity registered and
regulated in a permissible jurisdiction for the purpose of—
(i) holding securities and maintaining securities accounts for
beneficial owners in an electronic manner; and
(ii) managing rights or interests in securities resulting from the
credit of securities to a securities account.
Explanation.—For the purposes of this clause “foreign depository”
includes Central Securities Depositories and International Central
Securities Depositories.
(d) “fugitive economic offender” shall have the same meaning as
assigned to it under clause (f) of sub-section (1) of Section 2 of
the Fugitive Economic Offenders Act, 2018 (17 of 2018);
(e) “Indian depository” means a depository as defined in clause (e)
of sub-section (1) of Section 2 of the Depositories Act, 1996 (22
of 1996);
(f) “offer by existing holders of equity shares” means offer of existing
equity shares of the company pursuant to formal agreement
among the company, the Indian Depository and the Foreign
epository;
(g) “offer document” means a prospectus, red herring prospectus, or
shelf prospectus, as applicable, as referred to in clause (70) of
Section 2 of the Companies Act, 2013 (18 of 2013), in case of a
public issue, and a letter of offer in case of a rights issue;
(h) “wilful defaulter” means a person who is categorised as a wilful
defaulter by any bank or financial institution or consortium
thereof, in accordance with the guidelines on wilful defaulters
issued by the Reserve Bank of India.
ANNEXURE
List of International Exchanges
1. International Financial Services Centre in India— India
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International Exchange, NSE International Exchange.]

———
1.
Vide Notification No. S.O. 3732(E), dated 17-10-2019, published in the Gazette of India,
Extra., Part II, S. 3(ii), No. 3392, dated 17-10-2019.

2.
Ins. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024).

3.
Subs. for “five years” by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

4.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
‘(i) Equity shares issued in accordance with the provisions of the Companies Act, 2013
shall include equity shares that have been partly paid. “Convertible debentures” means
fully, compulsorily and mandatorily convertible debentures. “Preference shares” means
fully, compulsorily and mandatorily convertible preference shares. Share Warrants are
those issued by an Indian company in accordance with the regulations by the Securities
and Exchange Board of India. Equity instruments can contain an optionality clause subject
to a minimum lock-in period of one year or as prescribed for the specific sector,
whichever is higher, but without any option or right to exit at an assured price.’

5.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
“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;”

6.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
‘(y) “Indian company” means a company incorporated in India;’

7.
Ins. by S.O. 332(E), dated 24-1-2024 (w.e.f. 24-1-2024).

8.
The words, brackets and figures “and (iv) mutual funds which invest more than fifty per
cent in equity governed by the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996” omitted by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019).

9.
Subs. by S.O. 332(E), dated 24-1-2024 (w.e.f. 24-1-2024). Prior to substitution it read as:
‘(ag) “listed Indian company” means an Indian company which has any of its equity
instruments or debt instruments listed on a recognised stock exchange in India and the
expression “unlisted Indian company” shall be construed accordingly;’

10.
Ins. by S.O. 332(E), dated 24-1-2024 (w.e.f. 24-1-2024).

11.
The words “and debt” omitted by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019).

12.
Ins. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).
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13.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
‘(an) “startup company” means a private company incorporated under the Companies
Act, 2013 and identified under G.S.R. 180(E), dated the 17th February, 2016 issued by
the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry;’

14.
Ins. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

15.
Ins. by S.O. 1361(E), dated 14-3-2024 (w.e.f. 14-3-2024).

16.
Ins. by S.O. 2442(E), dated 27-7-2020 (w.e.f. 27-7-2020).

17.
The words “and in consultation with the Central Government” omitted by S.O. 2442(E),
dated 27-7-2020 (w.e.f. 27-7-2020).

18.
The words “and in consultation with the Central Government” omitted by S.O. 2442(E),
dated 27-7-2020 (w.e.f. 27-7-2020).

19.
Subs. by S.O. 1278(E), dated 22-4-2020 (w.e.f. 22-4-2020). Prior to substitution it read
as:
“Provided that a person who is a citizen of Bangladesh or Pakistan or is an entity
incorporated in Bangladesh or Pakistan cannot purchase equity instruments without the
prior government approval:
Provided further that a citizen of Pakistan or an entity incorporated in Pakistan cannot
invest in defence, space, atomic energy and sectors or activities prohibited for foreign
investment even through the government route.”

20.
Ins. by S.O. 4441(E), dated 8-12-2020 (w.e.f. 8-12-2020).

21.
Omitted by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020). Prior to omission it read
as:
“Explanation: The above conditions shall also be applicable in case a person resident
outside India makes investment in equity instruments (other than share warrants) issued
by an Indian company as a rights issue that are renounced by the person to whom it was
offered.”

22.
Ins. by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020).

23.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
‘8. Issue of Employees Stock Options and sweat equity shares to persons resident
outside India.—An Indian company may issue “employees' stock option” and/or “sweat
equity shares” to its employees or directors or employees or directors of its holding
company or joint venture or wholly owned overseas subsidiary or subsidiaries who are
resident outside India:
Provided that—
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(a) the scheme has been drawn either in terms of regulations issued under the Securities
and Exchange Board of India Act, 1992 or the Companies (Share Capital and
Debentures) Rules, 2014, as the case may be;

(b) the “employee's stock option” or “sweat equity shares” so issued under the rules or
regulations are in compliance with the sectoral cap applicable to the said company;

(c ) the issue of “employee's stock option” or “sweat equity shares” in a company where
investment by a person resident outside India is under the approval route shall require
prior government approval and issue of “employee's stock option” or “sweat equity
shares” to a citizen of Bangladesh or Pakistan shall require prior government approval:
Provided further that an individual who is a person resident outside India exercising an
option which was issued when he or she was a person resident in India shall hold the
shares so acquired on exercising the option on a non-repatriation basis.’

24.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“(i) prior government approval shall be obtained for any transfer in case the company is
engaged in a sector which requires government approval;”

25.
The words “on a non-repatriation basis” omitted by S.O. 4355(E), dated 5-12-2019
(w.r.e.f. 17-10-2019).

26.
Ins. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024).

27.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019). Prior to substitution it
read as:
“11. Transfer of equity instruments of an Indian company by FPI.—A FPI holding equity
instruments of an Indian company or units in accordance with these rules, may transfer
such equity instruments or units so held by him in compliance with the conditions, if any,
prescribed in the respective Schedules of these rules and subject to the terms and
conditions prescribed hereunder and as specified by the Securities and Exchange Board of
India;
(1) A FPI may transfer by way of sale or gift the equity instruments of an Indian
company or units held by him to any person resident outside India;
Explanation: For the purposes of this rule transfer shall also include transfer of equity
instruments of an Indian company pursuant to liquidation, merger, de-merger and
amalgamation of entities or companies incorporated or registered outside India.
Provided that.—
(i) prior Government approval shall be obtained for any transfer in case the company is
engaged in a sector which requires the Government approval.
(ii) where the acquisition of equity instruments by FPI made under Schedule II of these
rules has resulted in a breach of the applicable aggregate FPI limits or sectoral limits, the
provisions of sub-paragraph a (iii) of paragraph (1) of Schedule II shall apply.”

28.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
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“(1) Where a scheme of merger or amalgamation of two or more Indian companies or a

reconstruction by way of demerger or otherwise of an Indian company, has been
approved by the National Company Law Tribunal (NCLT) or competent authority, the
transferee company or the new company, as the case may be, may issue equity
instruments to the existing holders of the transferor company resident outside India,
subject to the following conditions, namely:—

(a) the transfer or issue is in compliance with the entry routes, sectoral caps or
investment limits, as the case may be, and the attendant conditionalities of
investment by a person resident outside India:

Provided that where the per centage is likely to breach the sectoral caps or the
attendant conditionalities, the transferor company or the transferee or new company
may obtain necessary approval from the Central Government.

(b) the transferor company or the transferee company or the new company shall not
engage in any sector prohibited for investment by a person resident outside India.”

29.
Ins. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

30.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019).

31.
Omitted by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to omission it read
as:
‘(d) “control” shall mean the right to appoint majority of the directors or to control the
management or policy decisions including by virtue of their shareholding or management
rights or shareholders agreement or voting agreement and for the purpose of LLP,
“control” shall mean the right to appoint majority of the designated partners, where such
designated partners, with specific exclusion to others, have control over all the policies of
an LLP;’

32.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“Explanation: An investment made by an Indian entity which is owned and controlled by
NRI(s), on a non-repatriation basis, shall not be considered for calculation of indirect
foreign investment.”

33.
Ins. by S.O. 332(E), dated 24-1-2024 (w.e.f. 24-1-2024).

34.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“(d) An Indian company may issue, subject to compliance with the conditions prescribed
by the Central Government and/or the Reserve Bank from time to time, equity instruments
to a person resident outside India, if the Indian investee company is engaged in an
automatic route sector, against,—

(i) swap of equity instruments; or

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(ii) import of capital goods or machinery or equipment (excluding second-hand

machinery); or

(iii) pre-operative or pre-incorporation expenses (including payments of rent etc.)

Provided that the Government approval shall be obtained if the Indian investee company
is engaged in a sector under Government route and the applications for approval shall be
made in the manner prescribed by the Central Government from time to time.”

35.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022). Prior to substitution it read
as:
“Explanation: For the purpose of this rule, ‘real estate business shall not include
development of townships, construction of residential or commercial premises, roads or
bridges and Real Estate Investment Trusts (REITs) registered and regulated under the
SEBI (REITs) Regulations, 2014.”

36.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“(iii) Aggregate foreign portfolio investment up to forty-nine per cent of the paid-up
capital on a fully diluted basis or the sectoral or statutory cap, whichever is lower, shall
not require Government approval or compliance of sectoral conditions as the case may
be, if such investment does not result in transfer of ownership and control of the resident
Indian company from resident Indian citizens or transfer of ownership or control to
persons resident outside India and other investments by a person resident outside India
shall be subject to the conditions of Government approval and compliance of sectoral
conditions as laid down in these rules.”

37.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019). Prior to substitution it read
as:
“(a) Coal and Lignite mining for captive consumption by power projects, iron and steel
and cement units and other eligible activities permitted under and subject to the
provisions of Coal Mines (Nationalization) Act, 1973”

38.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

39.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

40.
Relettered by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

41.
Relettered by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

42.
Ins. by S.O. 4091(E), dated 5-10-2021 (w.e.f. 5-10-2021).

43.
Subs. for “A manufacturer is permitted to sell its products manufactured in India through
wholesale and/or retail, including through e-commerce without Government approval.” by
S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

44.
Subs. by S.O. 4441(E), dated 8-12-2020 (w.e.f. 8-12-2020).
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45.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

46.
Renumbered by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019).

47.
Subs. by S.O. 2442(E), dated 27-7-2020 (w.e.f. 27-7-2020).

48.
Subs. by S.O. 2442(E), dated 27-7-2020 (w.e.f. 27-7-2020).

49.
Subs. by S.O. 1722(E), dated 16-4-2024 (w.e.f. 16-4-2024). Prior to substitution it read
as:

“12. Satellites - Establishment and operation

Satellites Establishment and operation, subject to 100% Government”

the sectoral guidelines of Department of
Space/ISRO

50.
Subs. by S.O. 4242(E), dated 12-10-2021 (w.e.f. 12-10-2021).

51.
Subs. by S.O. 4242(E), dated 12-10-2021 (w.e.f. 12-10-2021).

52.
Subs. by S.O. 4242(E), dated 12-10-2021 (w.e.f. 12-10-2021).

53.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019). Prior to substitution it read
as:
“(p) All existing investments shall have to be in compliance with the above conditions
from the date of issue of this Notification.”

54.
The words and figures “Automatic up to 49%” omitted by S.O. 4355(E), dated 5-12-2019
(w.r.e.f. 17-10-2019).

55.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019). Prior to substitution it read
as:
“(e) In respect of proposals involving foreign investment beyond 51 per cent, sourcing
of 30 per cent of the value of goods purchased, shall be done from India, preferably from
MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The
quantum of domestic sourcing shall be self-certified by the company, to be subsequently
checked, by statutory auditors, from the duly certified accounts which the company shall
be required to maintain. The procurement requirement is to be met in the first instance as
an average of five years total value of goods purchased beginning 1st April of the year of
the commencement of the business. Thereafter it shall be met on an annual basis. For the
purpose of ascertaining the sourcing requirement, the relevant entity would be the
company, incorporated in India, which is the recipient of foreign investment for the
purpose of carrying out single brand product retail trading.”

56.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019). Prior to substitution it read
as:
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“(f) Subject to the conditions mentioned in this Para, a single brand retail trading entity
operating through brick and mortar stores, is permitted to undertake retail trading through
e-commerce.”

57.
Subs. by S.O. 4355(E), dated 5-12-2019 (w.e.f. 5-12-2019). Prior to substitution it read
as:
“(g) Single brand retail trading entity shall be permitted to set off its incremental
sourcing of goods from India for global operations during initial 5 years, beginning 1st April
of the year of the opening of first store, against the mandatory sourcing requirement of
30% of purchases from India. For this purpose, incremental sourcing shall mean the
increase in terms of value of such global sourcing from India for that single brand (in INR
terms) in a particular financial year from India over the preceding financial year, by the
non-resident entities undertaking single brand retail trading, either directly or through
their group companies. After completion of this 5 years period, the SBRT entity shall be
required to meet the 30% sourcing norms directly towards its India's operation, on an
annual basis.”

58.
Ins. by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020).

59.
Subs. by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021). Prior to substitution it read
as:
“(c ) Applications for foreign investment in private banks having joint venture or
subsidiary in insurance sector may be addressed to the Reserve Bank for consideration in
consultation with the Insurance Regulatory and Development Authority of India (IRDAI) in
order to ensure that the 49 per cent limit of investment applicable for the insurance
sector is not breached.”

60.
Subs. by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020).

61.
Subs. for “49%” by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021).

62.
Ins. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

63.
Subs. by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020).

64.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

65.
Subs. for “forty-nine” by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021).

66.
Subs. for “forty-nine” by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021).

67.
Subs. by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021). Prior to substitution it read
as:
“(d) An Indian Insurance company shall ensure that its ownership and control remains at
all times in the hands of resident Indian entities as determined by Department of Financial
Services or Insurance Regulatory and Development Authority of India as per the rules or
regulation issued by them from time to time.”
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68.
Subs. for “2014” by S.O. 3411(E), dated 19-8-2021 (w.e.f. 19-8-2021).

69.
Subs. for “the condition of Indian owned and controlled, as specified in clause (d) above,
shall not be applicable to Intermediaries and Insurance Intermediaries and composition of the
Board of Directors and key management persons” by S.O. 3411(E), dated 19-8-2021 (w.e.f.
19-8-2021).

70.
Subs. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

71.
Ins. by S.O. 1802(E), dated 12-4-2022 (w.e.f. 12-4-2022).

72.
Ins. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024).

73.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019).

74.
Ins. by S.O. 4355(E), dated 5-12-2019 (w.r.e.f. 17-10-2019).

75.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“Explanation: In case, two or more FPI's including foreign Governments/their related
entities are having common ownership, directly or indirectly, of more than fifty per cent or
common control, all such FPI's shall be treated as forming part of an investor group.
Control includes the right to appoint majority of the directors or to control the
management or policy decisions exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of shareholding or management rights or
shareholders agreements or voting agreements or in any other manner.”

76.
Subs. by S.O. 1374(E), dated 27-4-2020 (w.e.f. 27-4-2020). Prior to substitution it read
as:
“(iii) The FPIs investing in breach of the prescribed limit shall have the option of
divesting their holdings within 5 trading days from the date of settlement of the trades
causing the breach. In case the FPI chooses not to divest, then the entire investment in
the company by such FPI and its investor group shall be considered as investment under
Foreign Direct Investment (FDI) and the FPI and its investor group shall not make further
portfolio investment in the company concerned. The FPI, through its designated
custodian, shall bring the same to the notice of the depositories as well as the concerned
company for effecting necessary changes in their records, within 7 trading days from the
date of settlement of the trades causing the breach. The breach of the said aggregate or
sectoral limit on account of such acquisition for the period between the acquisition and
sale or conversion to FDI within the prescribed time, shall not be reckoned as a
contravention under these Rules.”

77.
Subs. by S.O. 3492(E), dated 16-8-2024 (w.e.f. 16-8-2024). Prior to substitution it read
as:
“(iii) equity or equity linked instrument or debt instrument issued by an Indian ‘start-up’
irrespective of the sector in which the start-up is engaged. The definition of ‘start-up’
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shall be as per Department for Promotion of Industry and Internal Trade's Notification No.
G.S.R. 364(E), dated the 11th April, 2018:
Provided that if the investment is in equity instruments, then the sectoral caps, entry
routes and attendant conditions shall apply.”

78.
Ins. by S.O. 332(E), dated 24-1-2024 (w.e.f. 24-1-2024).

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