FEMA Transfer of Security by Non Residents Regulations
Amended to Allow NRIs to Invest in Air Transport Service in Air India
[Notification No. FEMA.20(R)(1)/2018-RB dated 26th March 2018]
Sub:
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) (Amendment) Regulations, 2018
In
exercise of the powers conferred by clause (b) of sub-section (3) of Section 6
and Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the
Reserve Bank of India hereby makes the following amendments to the Foreign
Exchange Management (Transfer or issue of Security by a Person Resident outside
India) Regulations, 2017 (Notification No. FEMA. 20 (R)/2017-RB dated November
07, 2017) (hereinafter referred to as 'the Principal Regulations'), namely:-
1.
Short Title & Commencement
(i) These Regulations may be called the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India)
(Amendment) Regulations, 2018.
(ii)
They shall come into force from the date of their publication in the Official
Gazette.
2.
Amendment to Regulation 16.B
In
Regulation 16.B,
(i) The existing sub-regulation 5, shall be substituted by
the following namely:
“(5)
(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, will require prior Government approval.
Note:
Compliance to these Regulations 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.
(b)
Foreign investment in investing companies registered as Non-Banking Financial
Companies (NBFCs) with the Reserve Bank, will be under 100% automatic route.
(ii)
After the existing sub-regulation 7, the following shall be inserted namely,
“(8)
Wherever the person resident outside India who has made foreign investment
specifies a particular auditor/ 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.”
(iii)
The existing SL. No 9.3(a) shall be substituted by the following, namely:
|
(a) (i)
Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline (ii) Regional Air Transport Service |
100% |
Automatic up to 49% Government route
beyond 49% (Automatic up to 100% for NRIs and OCIs) |
“(d)
In addition to the above conditions, foreign investment in M/s Air India
Limited shall be subject to the following conditions:
(i) Foreign investment in M/s Air India Ltd., including
that of foreign airline(s), shall not exceed 49% either directly or
indirectly.
(ii)
Substantial ownership and effective control of M/s Air India Ltd. shall
continue to be vested in Indian Nationals.”
(v)
In SL.No 9.5, Note (3) shall be deleted.
(vi)
In SL. No 10.2, after Note 6, a new Note 7 shall be
inserted, namely:
“(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.”
(vii)
In SL.No 15.3, under the column Entry route, the
words, “Automatic up to 49%; Government route beyond 49%” shall be substituted
by the words “Automatic”.
(viii)
In SL.No 15.3.1, the existing clause (d) shall be
substituted by the following, namely:
“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.”
(ix)
In SL.No 15.3.1, clause (g) and clause (h) shall be
deleted.
(x)
In SL.No 15.3.1, after the omitted clause (h), the
following shall be inserted, namely
“(i) 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.”
(xi)
In SL.No 15.3.1, Note 2 and Note 3 shall be deleted.
(xii)
In SL.No 15.3.1, the existing Note 5 shall be
substituted by the following, namely:
“Sourcing
norms will not be applicable up to three years from commencement of the
business i.e. opening of the first store 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 will be applicable. A Committee under the Chairmanship of
Secretary, DIPP, with representatives from NITI Aayog,
concerned Administrative Ministry and independent technical expert(s) on the
subject will 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.”
(xiii)
In SL.No 16.3, in Note 2, in clause (a), in sub-clause
(ab), the existing word “handicap” shall be substituted by the word,
“disability”.
(xiv)
In SL.No 16.3, in Note 2, clause (c) shall be
substituted by the following, namely:
“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 the human bodies or animals.”
(xv)
In SL.No 16.3, the existing Note 3 shall be deleted.
(xvi)
In SL.No F.6.1, the existing clause (a) shall be
deleted.
3.
Amendment to Schedule 1
In
Schedule 1,
(i) The existing Para 1 (4), shall be substituted by the
following namely:
(4)
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, capital instruments to a person resident outside India, if the Indian
investee company is engaged in an automatic route sector, against:
(a)
Swap of capital instruments; or
(b)
Import of capital goods/ machinery/ equipment (excluding second-hand
machinery); or
(c)
Pre-operative/ pre-incorporation expenses (including payments of rent etc.).
Provided
Government approval shall be obtained if the Indian investee company is
engaged in a sector under Government route. The applications for approval
shall be made in the manner prescribed by the Central Government from time to
time.
(ii)
The existing Para 1 (6), shall be deleted: