Another Step towards simplification – Overseas investment rules and regulations notified - MMJC

Overseas investment rules and regulations are notified in line with the amendment in the Foreign Exchange Management Act, 1999. Outward Investments Rules have been framed by the Government of India in consultation with the Reserve Bank. Extant regulations pertaining to Overseas Investments and Acquisition and Transfer of Immovable Property Outside India have been subsumed within these rules and regulations. This move is to simplify these regulations significantly enhancing the ease of doing business.

The latest rules and regulations have been made effective from August 22, 2022.

The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics.

Clarity on Overseas Direct Investment and Overseas Portfolio Investment has been brought in and various overseas investment-related transactions that were earlier under approval route are now under automatic route for enhancing Ease of doing business.

The major highlights of this regime are as follows:

Enhanced clarity with respect to various definitions.

Introduction of the concept of “Strategic Sector” – “Strategic sector” shall include energy and natural resources sectors such as Oil, Gas, Coal, Mineral Ores, submarine cable system and start-ups and any other sector or sub-sector as deemed fit by the Central Government.

The requirement of approval has been waived off for the below-mentioned activities:

1. Deferred payment of consideration.
2. Investment/disinvestment by persons resident in India under investigation by any investigative agency/regulatory body.
3. Issuance of corporate guarantees to or on behalf of second or subsequent level step down subsidiary (SDS).
4. Write-off on account of disinvestment.

Introduction of “Late Submission Fee (LSF)” for reporting delays: – Delay in submission will attract late submission fees. The rates and the manner will be as per the direction of the Reserve Bank, from time to time.