Dissecting New FEMA Regulations for Overseas Investments!

Episode Duration:
94 minutes

Episode Background: 

India has not yet achieved full capital convertibility as on date and hence there are rules and restrictions on making overseas investments from India. The erstwhile overseas investment framework was formulated in the year 2004 and was in force hitherto with amendments made from time to time. After nearly two decades, the overseas investment framework of India has now undergone a complete overhaul, whereby it has been modernised to correspond to the current business realities and complement the aspirations of the present-day industry.

In this context, the new framework was issued on 22nd August 2022 (consisting of various notifications and circulars issued by FinMin & RBI), wherein it prescribes and regulates the different avenues of making overseas investments by Indian entities, resident individuals and other legal persons which are residents of India. Thereunder, it contains numerous provisions for – (i) classifying the type of overseas investments by nature of instruments and nature of foreign entity, (ii) spelling out prohibitions for investment in certain sectors, (iii) laying out terms and conditions for sale of overseas investments, (iv) liberalising investments in IFSC, etc. The overseas investment framework has provided for relaxation on many counts from the erstwhile overseas investment framework as well as plugged regulatory gaps at the same time.

What shall the episode cover?

Against this backdrop, Taxsutra presents an episode on the subject of “Dissecting New FEMA Regulations for Overseas Investments” [Friday, September 2 from 4:30 PM to 6:00 PM]. In this episode, Cross-border Transaction Expert – Mr. Harshal Bhuta [CA, ADIT, LLM in Intl. Tax Law] has taken participants through the structure and provisions of the overseas investment framework in detail.

The discussion has covered the several questions given below:

1. What is the difference between ODI & OPI?

2. Is round tripping now permitted?

3. Can resident individuals make portfolio investments abroad under LRS?

4. Can an Indian company sell its overseas company at a loss?

5. Can an Indian LLP invest in a start-up abroad?

6. Can an Indian company make payments in installments for purchase of shares of an overseas entity?

7. Is investment in a foreign LLC permitted?

8. Can a person resident in India make an investment in debentures of an overseas company?

9. Can a foreign entity having investment from India buy and lease immovable property as part of its business activity?

10. Can a foreign entity having investment from India trade in crypto-currencies?

11. Can AIFs make investments in overseas start-ups?

12. What are the valuation rules for making investment / disinvestment?

13. Can pre-incorporation expenses be capitalised? 

14. Can resident individuals set-up a step down subsidiary structure abroad?