The Indian companies receiving Foreign Direct Invests (FDI) are subject to Regulations framed under FEMA Act 1999. FDI in India can be made through two routes 1.Automatic route where no prioror approval required from authorities. 2.Approval route where the company receiving FDI requires prior approval of the Foreign Investment Promotion Board (FIPB).
Pursuant to the amendment to FEMA 1999 introduced to the Finance Act, 2015, a section of the press reprted that the amendment will do away the need for the RBI’s approval for FDI. In this regard the Reserve Bank of India Clarified as under.
“It is clarified that in terms of the Regulations framed under FEMA, 1999, an Indian company receiving FDI does not require any prior approval of the Reserve Bank of India at any stage. It is only required to report the capital inflow and subsequently the issue of shares to the Reserve Bank in prescribed formats”.
Hence, it may be noted that inflow of capital under both the routes shall be reported to RBI as per laid down conditions in the relevant Regulations framed under FEMA .
