Direct Investment by Residents in Joint Venture (JV)/ Wholly Owned Subsidiary (WOS) Abroad
This Master Circular outlines the guidelines for direct investment by residents in JV/WOS abroad.
Statutory Basis: The investment is governed by the Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.
Prohibitions: Investments in real estate or banking business are prohibited, except for those permitted by the Reserve Bank.
General Permission: Residents are permitted to make overseas investments under the Automatic Route or the Approval Route.
Automatic Route: Investments up to 400% of the net worth of the Indian Party are permitted under the Automatic Route, subject to certain conditions.
Investment through Special Purpose Vehicle (SPV): Investments can be made through an SPV under the Automatic Route, subject to certain conditions.
Method of Funding: Investments can be funded through eligible sources, including proceeds of External Commercial Borrowings (ECBs) and American Depository Receipts (ADRs)/Global Depository Receipts (GDRs).
Capitalisation of Exports and Other Dues: Export proceeds and other dues can be capitalised, subject to certain conditions.
Investments in Financial Services Sector: Investments in the financial services sector are permitted, subject to certain conditions and regulatory approvals.
This Master Circular consolidates the existing instructions on direct investment by residents in JV/WOS abroad and is applicable to all categories of residents, including individuals, companies, and other entities.
Chat with the Master Circular: