With an estimated USD 35 billion worth FDI in its kitty during 2014, the government is eyeing a quantum jump in the foreign capital hitting Indian shores in the new year. With the ambitious ‘Make in India’ programme, launched by Prime Minister Narendra Modi in 2014, the government expects the foreign investors to bring billions worth dollars of FDI into the country. Showing its commitment to fast-track the reform process, the government has recently brought a lot of changes in the FEMA rules, regulations and guidelines.
The government, on Friday, notified the new rules for foreign direct investment in the insurance sector, allowing 49% FDI in the cash-strapped sector from 26% allowed earlier. The new rules have been notified just ahead of the Budget session, when the Modi government will try to convert the insurance ordinance and a host of other executive decrees into law.
Also, the government, in order to increase the ease of doing business in India and bring down its ranking top 50 from the current 142nd position, has introduced the e-Biz project for single clearance window. Under the aegis of the e-Biz project, on 12th February, 2015, the government has enabled the filing of Advance Remittance Form (“ARF”) and FCGPR Form online.
This article will provide you with a detailed view on the above changes made in FDI.

In the past few months, a lot of changes have been brought about in the Foreign Direct Investment (“FDI”) Policy, including mapping of the Sector Specific FDI Policy with the NIC -2008 Code, changes in pharmaceutical sector, defence sector and railway sector. This article summarizes all these recent changes in FDI Policy.

RBI has, through circular AP (DIR Series) Circular No. 55 dated 1st January, 2015, decided that now the AD Category-I banks may allow creation of charge on immovable assets, movable assets, financial securities and issue of corporate and / or personal guarantees in favour of overseas lender / security trustee, to secure the External Commercial Borrowings (“ECB”) to be raised / raised by the borrower. This change has been brought with a view to liberalizing, expanding the options of securities and consolidating various provisions related to creation of charge over securities for ECB at one place. Under the earlier ECB Guidelines, the choice of security to be provided to the overseas lender/ supplier for securing ECB was left to the borrower. These changes are effective with immediate effect subject to certain conditions. This article will provide a brief about the changes effected through the above mentioned circular and conditions subject to which the changes will be applicable.

With a view to grant greater flexibility to Indian Companies, RBI vide Notification No. FEMA.322/RB-2014 dated 14th October 2014 amended the FEMA (Transfer or Issue of any Foreign Security) Regulations, 2000 (“Regulations”) and the amendment became effective from the date of publication in the official gazette i.e. 3rd December, 2014. RBI thereafter issued RBI/2014-15/371 A.P. (DIR Series) Circular No.54 dated 29th December, 2014 (“Circular”) to clarify the above amendments. This article will discuss the changes brought about in the Regulations by the notification and by the Circular thereafter.

The investment in construction and real estate sector has a multiplier effect on the economy by way of infrastructure creation and employment generation. Between April 2000 and August 2014, the construction sector received FDI worth USD 23.75 billion or 10 per cent of the total FDI attracted by India during the period. FDI in Construction Sector has seen a fall in the last couple of years. In view of depleting FDI inflow in construction and real estate sector, the Cabinet decided to relax the conditions for investment in Construction Development Sector. Hence it approved amendments in the FDI Policy in construction development sector on 29th October, 2014. The amendments were notified through Press Note no. 10 (2014 Series) dated 03rd December, 2014. These amendments are in line with new Government’s vision to establish 100 new cities to reduce the burden on metro cities.