Foreign Investments

Foreign Direct Investment

Direct Foreign Investment means investment through capital instruments (equity shares, debentures, preference shares and share warrants) by a person resident outside India (PROI) in an unlisted Indian company or in 10% or more of the post issue paid-up capital on a fully diluted basis of a Listed Indian Company. In India FDI is regulated by the Foreign Exchange Management Act, 1999 (FEMA) and the master circular/ directions issued by the Reserve Bank of India (RBI) from time to time.

• Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment.
  FDI under automatic route does not require any prior approval, but to allow credit of fund the Company has to submit FDI Declaration with purpose and organisation structure to the authorized dealer bank.
  We assist in providing relevant documents and declarations to the authorized dealer bank and facilitate credit of funds in the bank account of the entity.
• Government Route: Under the Government Route, the foreign investor or the Indian company should obtain prior approval of the Government of India, Ministry of Finance, Foreign Investment Promotion Board (FIPB) for the investment.

Investments can be made by person resident outside India in the capital of a resident entity only to the extent of the percentage of the total capital as specified in the FDI policy.

Few business / sectors in India still require a Prior Approval of Govt of India i.e. FIPB (Foreign Investment Promotion Board) which has foreign investments (in full or part) which can be classified as:

• Sectors which requires Prior approval on cases-to-case basis for any FDI
• Sectors where maximum cap is defined for FDI (including 100%) but with prior approval
• Downstream Investment

The process of FIPB approval is based on merits with a view of many ministries co-ordinated at FIPB. The process of approval is Prior and hence any new business OR existing business proposes for any Foreign Direct Investment need to consider FDI policies to comply requirements including prior approvals.

Documents required for government approval are:

1. Board of Director’s Resolution
2. Shareholder’s Resolution, if any
3. Declaration by Director/ Authorized Representative.
4. KYC documents of authorized representative
5. Chartered documents of the entity
6. Pre and post transaction shareholding pattern
7. Any other document as may be required

Taxcellent have experienced CA Services team to advise and assist for FIPB approvals for projects within India as per prescribed guidelines.