Direct Investment with Repatriation benefits |
NRIs can make investments in new issues of
shares/convertible debentures of Indian companies under direct investment schemes such as
24% scheme/40% scheme/100% scheme. They can also invest in the schemes of domestic Mutual
Funds floated by public/private sector institutions/companies and bonds issued by public
sector undertakings, Non-resident investors are not required to apply for permission to
invest but the company concerned will have to obtain permission from Reserve Bank.
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Under the 24% scheme, Indian companies engaged or
proposing to engage in any activity including finance, hire purchase, leasing, trading or
other services, establishment of schools/colleges. etc.(except agricultural/plantation
activities) are allowed by Reserve Bank to issue shares/debentures to NRIs with
repatriation benefits to the extent of 24% of the new issue.
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Under the 40% Scheme, Indian companies engaged or proposing to engage in the following activities are allowed by Reserve Bank to issue shares/debentures to NRIs with repatriation benefits to the extent of 40% of the new issue.
Yes. There is no ceiling or restriction on the amount of
remittable dividend. Remittance of interest/dividend to NRI investors will be allowed by
authorized dealers under the posers delegated to them.
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Ans.V
Under 100% Scheme, NRIs are permitted to invest in high
priority industries listed in Annexure III to the Statement on Industrial Policy dated
24th July 1991 of the Government of India up to 100% of the new issue.
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Ans.VI
Dividend/interest can be remitted freely except in the
case of consumer goods industries where the outflow on account of dividend is required to
be balanced by export earnings of the company either in the year of declaration of
dividend or in the years prior to the declaration of dividend, This requirement is
enforced for a period of seven years from the commencement of commercial production.
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The NRI investor need not apply to Reserve Bank.
Application for necessary permission under the schemes should be made by the Indian
company/firm to the Central Office of Reserve Bank in Mumbai in form ISD/ISD(R).
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Yes. NRIs are permitted to undertake revival of sick
industrial units by making bulk investment in them to the extent of 100 per cent either by
way of purchase of existing equity shares or in the form of subscription to new equity
issues.
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Ans.IX
Application for necessary permission should be made by
the Indian company to the Central Office of Reserve Bank in Mumbai in form RSU.
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Yes.
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Yes. Investment upto 100% in the new issue of equity
shares/convertible debentures of Indian companies engaged in the followed areas is
allowed-
i) Development of serviced plots and construction of built up residential premises;
ii) Real estate covering construction of residential and commercial premises including
business centers and offices;
iii) Development of township;
iv) City and region level urban infrastructure facilities including roads and bridges;
v) Manufacture of building material;
vi) Financing of housing development.
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Applications for the purpose should be made by the
concerned Indian company to the Central Office of Reserve Bank in Mumbai in form ISD(R).
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Yes. Repatriation of original investment will be
permitted after a lock-in period of three years from the date of issue of the equity
shares/convertible debentures. In addition, OCBs will be permitted to repatriate net
profit (upto 16 per cent) arising from the sale of such investment after the lick-in
period of three year. Annual dividend/interest on equity shares/debentures can, however,
be freely remitted subject to payment of tax.
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Yes. Investments upto 100% equity participation for
carrying on Air Taxi operations are permitted in terms of the guidelines issued by the
Director General of Civil Aviation for Air Taxi operations. Applications for the purpose
should be made to Reserve Bank (Central Office) in form ISD(R) by the concerned Indian
company.
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No. However, repatriation of the investment and /or
remittance of dividend will be permitted only after the expiry of five years of operation
and only out of accumulated net foreign exchange earnings.
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Yes. Applications for necessary permission should be made
to Reserve Bank (Central Office) by the concerned Indian company in form ISD.
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The concerned Fund/Public Sector Undertaking should
obtain necessary permission from Reserve Bank for issue of units/bonds to NRIs.
Applications for the purpose are required to be made to the Central Office of Reserve Bank
in form ISD(R).
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Yes. NRIs will be permitted to invest up to 100% in 100%
Export Oriented Units subject to obtaining approval from the Government of India ,Ministry
of Industries (SIA) for setting up the EOU. In the case of units located in Export
Processing Zones, approval from the Development Commissioner of the concerned zone is
required to be obtained. Thereafter an application should be made to the concerned
regional office of Reserve Bank in form ISD alongwith copy of Government approval for
necessary clearance under FERA 1973.
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Yes. Reserve Bank has granted general permission to NRIs
to acquire shares of PSEs on their bids being successful provided the holding of a single
NRI investor does not exceed one per cent of the paid up capital of the PSE concerned the
purchase consideration / bid money is paid by way of remittance from abroad or by debit to
his NRE/FCNR accounts.
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Ans.XXI
The concerned company should approach Reserve Bank for
issue of rights entitlement to NRIs in the prescribed form if on repatriation basis.
However, rights entitlement on non-repatriation basis would be covered by the general
permission (Please see Answer to Question No. 52 and 53).
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Ans.XXII
NRIs can make an application to Reserve Bank by a letter
detailing therein the folio number of the shares held and the manner in which the rights
are being sold.
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The concerned Indian company should approach Reserve Bank
for issue of bonus shares to NRIs if the original investment is on repatriation basis.
Issue of bonus shares in respect of investment on non-repatriation basis is covered by
general permission (Please also see Answer to Question No. 52).
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Ans.XXIV
Yes. Authorized dealer have been permitted to grant
loans/overdrafts abroad to NRIs through their overseas branches and correspondents against
collateral of the shares/debentures of Indian companies held by them, provided the
concerned shares/debentures were acquired on repatriation basis.
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Ans.XXV
Yes, subject to payment of Income tax, Capital Gains tax etc. payable, if any.