Attention of Authorised Dealers is invited to the
Foreign Exchange Management (Transfer or issue of any Foreign Security)
Regulation, 2000 notified by the Reserve Bank vide Notification No. FEMA
19/RB-2000 dated May 3, 2000 as amended from time to time.
a. Liberalisation
- Removal of Monetary Ceiling for Overseas Investment - Under the existing FEMA Regulations, resident
corporates are allowed to invest overseas upto 100 per cent of their net worth
or USD 100 million in an overseas Joint Venture (JV) or Wholly Owned Subsidiary
(WOS) (USD 10 million) in the case of registered partnership firms.
As a part of the ongoing liberalisation process, it
has been decided to allow resident corporates and registered partnership firms
to invest upto 100 per cent of their net worth in overseas JV/WOS without any
separate monetary ceiling, subject to reporting in form ODR.
b. Liberalisation
- Investment in Agriculture - At
present resident corportes and registered partnership firms are permitted to
invest in agricultural activity overseas including purchase of land incidental
to this activity only through a Joint Venture (JV)/Wholly Owned Subsidiary
(WOS) abroad. In order to enable the Indian companies to take advantage of
global opportunities and also to acquire technological and other skills for
adoption in India, it has now been decided to allow resident corporates and
registered partnership firms to undertake agricultural activities overseas
including purchase of land incidental to this activity either directly or through
their overseas offices (i.e. other than through JV/WOS) within the
overall limit available for investment overseas under the Automatic Route viz.
upto 100 per cent of their net worth, subject to reporting in form ODR.
2. Necessary amendments to
the Foreign Exchange Management (Transfer or issue of any Foreign Security)
Regulations, 2000 are being issued separately.
3. Authorised Dealers may
bring the contents of this circular to the notice of their constituents
concerned.
4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).