Overview and Background
Foreign investment in India is primarily governed by the FDI policy formulated by the secretariat for industrial assistance (SIA), Department for Promotion of Industry and Internal Trade (DPIIT), the foreign investment promotion board (FIPB) and foreign exchange regulations, which are governed by the Reserve Bank of India. Under the present policies and regulations, foreign investment in India is possible through the following ways:
Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).
Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the government. There is a specific procedure for applying for Government approval through online forms.
Capital Instruments permitted for recieving Foreign Investment in an Indian Company?
These are following instrument which are permitted:
- Equity Shares - Equity shares are those issued in accordance with the provisions of the Companies Act, 2013 and will include partly paid equity shares issued on or after July 8, 2014.
- Debentures - Debentures means fully, compulsorily and mandatorily convertible debentures.
- Preference Shares - Preference shares means fully, compulsorily and mandatorily convertible preference shares.
- Share Warrants - Share warrants issued on or after July 8, 2014
Foreign Investment, Foreign Direct Investment and Foreign Portfolio Investment
- Foreign Investment - Any investment made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP.
- Foreign Direct Investment (FDI) -The investment through capital instruments by a person resident outside India
- In an unlisted Indian company; or
- In 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.
- Foreign Portfolio Investment- is any investment made by a person resident outside India in capital instruments where such investment is
- less than 10 percent of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company or;
- less than 10 percent of the paid up value of each series of capital instruments of a listed Indian company.
We as a firm provide assistance to foreign companies for investment in India and assisting them through Government regulations and procedures for setting up their operations in India by investing or by setting up a subsidiary company or liaison office in India. We assist our clients in complying with the provisions of Foreign Investment Management Act (FEMA) for FDI in India. Our lawyers have in depth knowledge of international markets and FEMA and have comprehensive experience in cross border transactions. We provide FDI consulting services to our clients from various countries.
We draft various agreements such as joint venture agreement, shareholders agreements, share purchase agreements, memorandum and articles of association of joint venture companies as per requirement of our client.