The Finance Minister in the Union budget has proposed further liberalization measures with respect to Overseas Direct Investment, Foreign Direct Investment and Portfolio Investment.
1) Indian companies wishing to invest abroad may now invest up to US $50 million on an annual basis through the automatic route without being subject to the three year profitability condition.
2) Companies which have issued ADRs/GDRs may henceforth make foreign investments up to 100 per cent of these proceeds; up from the current ceiling of 50 per cent.
3) Companies with proven track record wishing to invest larger amounts may now get a block allocation in advance from the RBI for investments overseas.
4) Indian companies that have issued ADRs/GDRs may acquire shares of foreign companies up to an amount of US $100 million or an amount equivalent to ten times of their exports in a year, whichever is higher.
5) ADRs/GDRs will be provided two-way fungibility. Converted local shares may be reconverted to ADRs/GDRs while being subject to sectoral caps, wherever applicable.
6) Indian companies will now be permitted to list in foreign stock exchanges by sponsoring ADR/GDR issues against block share holding. This facility would have to be offered to all categories of shareholders.
7) Registered Partnership Firms providing professional services will now be permitted to make Overseas Investments.
8) Indian employees will now be given an enhanced limit of investing in ESOPs Overseas to the extent of U.S. $ 20,000 each year, instead of U.S. $ 10,000 in a block of 5 years, at present.
9) Foreign Institutional Investors will be permitted to invest upto 49% of the Share Capital of Companies under the Portfolio Investment Route, as against the present limit of 40% provided the companies pass a Resolution permitting the same.
10) Foreign Direct Investment in NBFCs would be permitted up to 100% under the Automatic Route of RBI without the condition of subsequent domestic divestment, provided the foreign investors bring in a minimum of U.S. $ 50 million.
The Reserve Bank of India will be issuing these guidelines separately.