Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman had announced the simplification of rules and regulations for foreign direct investment and overseas investment in the Union Budget 2024-25. As an initiative pursuant to this announcement, the Department of Economic Affairs (DEA), Ministry of Finance has amended the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 through a notification dated 16.08.2024.
These amendments aim to simplify cross-border share swaps and provide for issuance or transfer of Indian company equity instruments in exchange for foreign company equity instruments. This will facilitate the global expansion of Indian companies through mergers, acquisitions and other strategic initiatives. This will enable Indian companies to access new markets and increase their presence worldwide. Another significant change brings further clarity on the treatment of downstream investments made on a non-repatriable basis by Non-Resident Indian (OCI) owned entities, thereby aligning it with the treatment of Non-Resident Indian (NRI) owned entities.
Other changes in these amendments include: Standardising the definition of ‘control’ to ensure consistency with other Acts and laws. Enabling Foreign Direct Investment (FDI) in White Label ATMs to promote financial inclusion across the country. Harmonising the definition of ‘startup company’ with the Government of India notification G.S.R. 127(E) dated February 19, 2019 issued by the Department for Promotion of Industry and Internal Trade.
These amendments underscore the Government’s commitment to create a favourable environment for foreign investors. Along with this, continuous measures are being taken to simplify regulations and promote ease of doing business.
