FEMA Updates - Overseas Investment Related Provisions

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Overseas investments by persons resident in India enhance 
the scale and scope of business operations of Indian entrepreneurs 
by providing global opportunities for growth. 

Such ventures through easier access to technology, research and development, a wider global market and reduced cost of capital along with other benefits 
increase the competitiveness of Indian entities and boost their brand value. 

These overseas investments are also important drivers of foreign trade and technology transfer thus boosting domestic employment, investment and growth through such interlinkages.

In keeping with the spirit of liberalization and 
To promote ease of doing business, 

the Central Government and the Reserve Bank of India have been 

progressively simplifying the procedures and 
rationalizing the rules and regulations under the Foreign Exchange Management Act, 1999 (FEMA, 1999). 

In this direction, a significant step has been taken with operationalization of a new Overseas Investment regime. 

Foreign Exchange Management (Overseas Investment) Rules, 2022 have been notified by the Central Government vide Notification No. G.S.R. 646(E) dated August 22, 2022 and 

Foreign Exchange Management (Overseas Investment) Regulations, 2022 have been notified by the Reserve Bank vide Notification No. FEMA 400/2022-RB dated August 22, 2022 

in supersession of the Notification No. FEMA 120/2004-RB dated July 07, 2004 [Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2004] and Notification No. FEMA 7 (R)/2015-RB dated January 21, 2016 [Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015]. 

The new regime simplifies the existing framework for overseas investment by persons resident in India to cover wider economic activity and significantly reduces the need for seeking specific approvals. This will reduce the compliance burden and associated compliance costs.


Some of the significant changes brought about through the new rules and regulations are summarised below: 

  1. enhanced clarity with respect to various definitions; 
  2. introduction of the concept of "strategic sector"; 
  3. dispensing with the requirement of approval for:
    a. deferred payment of consideration;
    b. investment/disinvestment by persons resident in India under investigation by any investigative agency/regulatory body;
    c. issuance of corporate guarantees to or on behalf of second or subsequent level Step Down Subsidiary (SDS);
    d. write-off on account of disinvestment; 
  4. introduction of "Late Submission Fee (LSF)" for reporting delays.


The new OI Rules, OI Regulations and OI Directions can be viewed at below links:


Overseas Investment Rules, 2022: 

238239.pdf (egazette.nic.in)


Overseas Investment Regulations, 2022: 

FEMA400E3410E8B6F384DF982443E53E6688627.PDF (rbi.org.in)


Overseas Investment Directions, 2022:

NT110B29188F1C4624C75808B53ADE5175A88.PDF (rbi.org.in)


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