In alignment with the Indian Government’s continuing efforts to bolster foreign investment and ease of doing business in India, the Reserve Bank of India (RBI) has issued two important circulars in June 2018 with the aim of simplifying reporting under the Foreign Exchange and Management Act, 1999 (FEMA). The circulars are as follows:

Simplifying reporting under FEMA - RBI Circular

Currently all foreign investment transactions are reported in a complicated, disintegrated manner across various platforms/modes. The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (FEMA 20) provide for exhaustive reporting requirements for any foreign investment in India through 12 different forms[1]. Meeting these requirements had become a cumbersome process for foreign investors as well as Indian entities. 

Continue Reading India Simplifies Foreign Investment Reporting Process

On January 10, 2018, the Indian Cabinet gave its approval to a number of major amendments to the Foreign Direct Investment (FDI) Policy of India, to further liberalise and simplify the same. This is to increase the ease of doing business in the country, and continue to attract much needed foreign capital to fuel India’s growth. In this post, we examine the latest amendments and their impact on the crucial sectors involved therein.

Key Reforms

Single Brand Retail Trading (SBRT)

The latest amendment has brought sweeping changes in FDI norms for SBRT, thereby enticing significant foreign brands into India’s promising retail space.

The current FDI Policy on SBRT allows 49% FDI under the automatic route, and FDI beyond that and up to 100% through the Government approval route. Earlier, a sourcing norm was also attached to such an investment. This meant that investors were required to source 30% of the value of goods purchased for their Indian businesses through local sources. Several investors have had to spend a significant amount of time developing good local suppliers as partners and their inability to procure locally proved a major stumbling block in setting up their business in India.

Continue Reading Cabinet Approves Major Changes in FDI Policy