27 Aug 2024
The Indian government has relaxed foreign investment rules allowing cross border share swaps and foreign direct investment in White Label ATM operations, mandating the procurement of government approval for transfer of equity instruments between persons resident outside India, and harmonising the definitions of ‘control’ and ‘start-up’, among others.
The central government has recently amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) to create a more favourable environment for foreign investors in India through the notification of the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2024 (Amendment Rules) on 16 August 2024.
Key highlights of the Amendment Rules are set out below.
The Amendment Rules now permit the transfer of equity instruments of an Indian company between a person resident in India (R) and a person resident outside India (NR) by way of swap of:
in compliance with the rules and regulations prescribed by the central government and the Reserve Bank of India (RBI).
Such swaps are also permitted in cases where government approval is applicable provided such prior government approval is obtained.
This amendment aims to simplify cross-border share swaps and permits the issuance or transfer of equity instruments of an Indian company in exchange for equity instruments of a foreign company. This will facilitate the expansion of Indian companies through mergers, acquisitions, and other strategic initiatives, enabling them to reach new markets and grow their international presence.
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