- FEMA Overview
- Inbound Investment- FDI in India
- FDI in Limited Liability Partnerships (LLP)
- Outbound Investment- Overseas Direct Investment
- Remittance facilities for Resident Individuals under the Liberalised Remittance (LRS) Scheme
- Compounding of Contraventions under FEMA
- Representing FEMA contraventions before Enforcement Directorate (ED)
- External Commercial Borrowings
- Investments by Non Resident Indians (NRIs)
- FEMA Audit
India is still not fully convertible on capital account transactions and is regulated for the Capital and some Current Account transactions through the Foreign Exchange Management Act (FEMA) and the Regulations notified there under. FEMA comes into play in any inbound and outbound investment / transaction and also has implications on expat coming to India or Indians going out of India for employment or business. FEMA regulates the transactions by Indian Residents (individuals or other entities) outside India and by Non Residents (individuals or other entities) in India.
Though for Foreign Direct Investment (FDI), most of the sectors do not require any prior approval, the Non Resident has to comply with pricing guidelines and documentation requirements and that’s where The Firm assist the Non resident investor as well as the Indian investee Company in effective transaction structuring as well as compliance.
Transfer of shares between Resident and Non Resident or vice-versa are under automatic route, requiring no prior RBI approval however, requiring compliances for pricing and other documentation through Authorized Dealer (Banker). Transfer between NRI to Non Resident (viz., foreign national or foreign company/entity) is also under automatic route, requiring no compliance under FEMA, however, if original FDI was under Government approval route then subsequent transfer between two Non Residents would also require prior Government approval. Such transfer between two Non Residents will however have tax implications in the form of capital gains taxation.
External Commercial Borrowing (ECB) or foreign currency borrowing can be one of the attractive sources of funding for Indian corporates. Even Non Residents holding equity of 25% or more can lend in foreign currency. The Company assists in complying with procedures to enable Indian company raise ECB. ECB can be in Indian Rupees also. In case of Rupee ECB the foreign exchange risk is borne by Non Resident lender. The compliance requires obtaining Loan Registration Number and filing of monthly returns.
Outbound investment being in the nature of capital account transaction is a regulated transaction. Apart from ‘Real Estate Trading’ all other sectors/activities are eligible for outbound investment. Few sectors require additional compliances such as financial services and banking sector. Remittances towards equity or debt in overseas company are to be routed through designated authorized dealer (banker) and are subject to certain reporting requirements.
We assist clients in complying with various provisions of the FEMA and obtaining approvals of the Reserve Bank of India (RBI) or the Government (DIPP), as the case may be. Further, in case of delay or pending compliances, we assist clients in regularising the same and even assist them in filing Compounding Applications with RBI.
As FEMA consultants we have almost two decades of experience in dealing with legal aspects as well as with procedures.