DIPP Circular No: 01 of 2013 (05-Apr-13) Consolidated FDI policy w.e.f. 5th April 2013
This is in continuation to this Department's communication No. 5(1)/2013-FC-1 dated 5.4.2013, wherein 'Circular 1 of 2013-Consolidated FDI Policy' was issued.
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In paragraph 3.10.3.1 of abovementioned Circular, phrase 'paragraph 6.2.24' may be read as 'paragraph 6.2.17.8'
Anjali Prasad
Joint Secretary
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Press Information Officer, Press Information Bureau-for giving wide publicity to the above circular.
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BE Section for uploading the updated circular on DIPP's website.
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Department of Economic Affairs, Ministry of Finance, New Delhi
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Reserve Bank of India, Mumbai
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Hindi Section for Hindi Translation
INDEX
DESCRIPTION CHAPTER-1 INTENT AND OBJECTIVE 1.1 Intent And Objective CHAPTER-2 DEFINITIONS 2.1 Definitions CHAPTER-3 GENERAL CONDITIONS ON FDI 3.1 Who can invest in India 3.2. Entities into which FDI can be made 3.3 Types of Instruments 3.4 Issue/Transfer of Shares 3.5 Specific conditions in certain cases 3.6 Entry routes for Investment 3.7 Caps on Investments 3.8 Entry conditions on investment 3.9 Other conditions on Investment besides entry conditions 3.10 Foreign Investment into/Downstream Investment by Indian Companies CHAPTER-4 CALCULATION OF FOREIGN INVESTMENT 4.1 Total Foreign Investment i.e. Direct and Indirect Foreign Investment in Indian Companies CHAPTER-5 FOREIGN INVESTMENT PROMOTION BOARD (FIPB) 5.1 Constitution of FIPB 5.2 Levels of approval for cases under Government Route 5.3 Cases which do not require fresh Approval 5.4 Online filing of applications for FIPB/Government's approval CHAPTER-6 SECTOR SPECIFIC CONDITIONS ON FDI 6.1 PROHIBITED SECTORS 6.2 PERMITTED SECTORS AGRICULTURE 6.2.1 Agriculture & Animal Husbandry 6.2.2 Tea plantation MINING AND PETROLEUM & NATURAL GAS 6.2.3 Mining 6.2.4 Petroleum & Natural Gas MANUFACTURING 6.2.5 Manufacture of items reserved for production in Micro and Small Enterprises (MSEs) 6.2.6 Defence SERVICES SECTOR 6.2.7 Broadcasting 6.2.8 Print Media 6.2.9 Civil Aviation 6.2.10 Courier Services 6.2.11 Construction Development: Townships, Housing, Built-up infrastructure 6.2.12 Industrial Parks new and existing 6.2.13 Satellites - Establishment and operation 6.2.14 Private Security Agencies 6.2.15 Telecom Sector 6.2.16 Trading FINANCIAL SERVICES 6.2.17. FINANCIAL SERVICES 6.2.17.1 Asset Reconstruction Companies 6.2.17.2 Banking -Private sector 6.2.17.3 Banking- Public Sector 6.2.17.4 Commodity Exchanges 6.2.17.5 Credit Information Companies (CIC) 6.2.17.6 Infrastructure Company in the Securities Market 6.2.17.7 Insurance 6.2.17.8 Non-Banking Finance Companies (NBFC) OTHERS 6.2.18 Pharmaceuticals 6.2.19 Power Exchanges CHAPTER-7 REMITTANCE, REPORTING AND VIOLATION 7.1 Remittance and Repatriation 7.2 Reporting of FDI 7.3 Adherence to Guidelines/Orders and Consequences of Violation Penalties Adjudication and Appeals Compounding Proceedings ANNEXURES Annex-1 Form FC-GPR Annex-2 Terms and conditions for transfer of capital instruments from resident to non-resident and vice-versa Annex-3 Documents to be submitted by a person resident in India for transfer of shares to a person resident outside India by way of gift Annex-4 Definition of "relative" as given in Section 6 of Companies Act, 1956 Annex-5 Report by the Indian company receiving amount of consideration for issue of shares/convertible debentures under the FDI scheme Annex-6 Know Your Customer (KYC) Form in respect of the non-resident investor Annex-7 Form Annual Return on Foreign Liabilities and Assets Annex-8 Form FC-TRS Annex-9 Form DR Annex-10 Form DR-Quarterly CHAPTER 1: INTENT AND OBJECTIVE
1.1 INTENT AND OBJECTIVE
1.1.1 It is the intent and objective of the Government of India to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. Foreign Direct Investment, as distinguished from portfolio investment, has the connotation of establishing a 'lasting interest' in an enterprise that is resident in an economy other than that of the investor.
1.1.2 The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No. FEMA 20/2000-RB dated May 3, 2000). These notifications take effect from the date of issue of Press Notes/Press Releases, unless specified otherwise therein. In case of any conflict, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P. Dir. (series) Circulars. The regulatory framework, over a period of time, thus, consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc.
1.1.3 The present consolidation subsumes and supersedes all Press Notes/Press Releases/Clarifications/Circulars issued by DIPP, which were in force as on April 4, 2013 and reflects the FDI Policy as on April 5, 2013. This Circular accordingly will take effect from April 5, 2013. Reference to any statute or legislation made in this Circular shall include modifications, amendments or re-enactments thereof.
1.1.4 Notwithstanding the rescission of earlier Press Notes/Press Releases/Clarifications/Circulars, anything done or any action taken or purported to have been done or taken under the rescinded Press Notes/Press Releases/Clarifications/Circulars prior to April 5, 2013, shall, in so far as it is not inconsistent with those Press Notes/Press Releases/Clarifications/Circulars, be deemed to have been done or taken under the corresponding provisions of this circular and shall be valid and effective.
CHAPTER 2: DEFINITIONS
2.1 DEFINITIONS
2.1.1 'AD Category-I Bank' means a bank (Scheduled Commercial, State or Urban Cooperative) which is authorized under Section 10(1) of FEMA to undertake all current and capital account transactions according to the directions issued by the RBI from time to time. 2.1.2 'Authorized Bank' means a bank including a co-operative bank (other than an authorized dealer) authorized by the Reserve Bank to maintain an account of a person resident outside India 2.1.3 'Authorized Dealer' means a person authorized as an authorized dealer under sub-section (1) of section 10 of FEMA. 2.1.4 'Authorized Person' means an authorized dealer, money changer, offshore banking unit or any other person for the time being authorized under Subsection (a) of Section 10 of FEMA to deal in foreign exchange or foreign securities. 2.1.5 'Capital' means equity shares; fully, compulsorily & mandatorily convertible preference shares; fully, compulsorily & mandatorily convertible debentures. Note: Warrants and partly paid shares can be issued to person/(s) resident outside India only after approval through the Government route1. 2.1.6 'Capital account transaction' means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6 of FEMA. 2.1.7 A company is considered as "Controlled" by resident Indian citizens if the resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens, have the power to appoint a majority of its directors in that company. 2.1.8 'Depository Receipt' (DR) means a negotiable security issued outside India by a Depository bank, on behalf of an Indian company, which represent the local Rupee denominated equity shares of the company held as deposit by a Custodian bank in India. DRs are traded on Stock Exchanges in the US, Footnote:
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Review of FDI policy to include warrants and partly-paid shares is under consideration of the Government.
...Singapore, Luxembourg, etc. DRs listed and traded in the US markets are known as American Depository Receipts (ADRs) and those listed and traded anywhere/elsewhere are known as Global Depository Receipts (GDRs). 2.1.9 'Erstwhile Overseas Corporate Body' (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by non-resident Indian and includes overseas trust in which not less than sixty percent beneficial interest is held by non-resident Indian directly or indirectly but irrevocably and which was in existence on the date of commencement of the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003 (the Regulations) and immediately prior to such commencement was eligible to undertake transactions pursuant to the general permission granted under the Regulations. 2.1.10 'Foreign Currency Convertible Bond' (FCCB) means a bond issued by an Indian company expressed in foreign currency, the principal and interest of which is payable in foreign currency. FCCBs are issued in accordance with the Foreign Currency Convertible Bonds and ordinary shares (through depository receipt mechanism) Scheme 1993 and subscribed by a non-resident entity in foreign currency and convertible into ordinary shares of the issuing company in any manner, either in whole, or in part. 2.1.11 'FDI'
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