The Reserve Bank of India (RBI) on 22 August, 2022 has issued a Notification on the Foreign Exchange Management (Overseas Investment) Directions, 2022.
In this direction, a significant step has been taken with operationalisation of a new Overseas Investment regime. The new regime simplifies the existing framework for overseas investment by persons resident in India to cover wider economic activity and significantly reduce 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:
(i) Enhanced clarity with respect to various definitions;
(ii) Introduction of the concept of “strategic sector”;
(iii) 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;
(iv) Introduction of “Late Submission Fee (LSF)” for reporting delays.
The detailed operational instructions in this regard are given in Annex-I of this Notification. The instructions contained in these directions shall supersede the instructions contained in the circulars listed in Annex-II of this Notification.
The revised reporting forms and instructions for filling up the forms under the new regime are being provided on Reserve Bank’s website in Part VIII of the Master Direction no. 18 on ‘Reporting under Foreign Exchange Management Act, 1999’ dated January 01, 2016.