Recent Developments on FDI in India

1. Recent Developments on FDI in India April 14, 2012 Vijay Gupta ACMA, FCS, FCA VKGN & Associates Chartered Accountants Mobile: 9810083373 E-mail: vijay.gupta@vkgnassociates.com

2. Agenda • Foreign Investment in India- Schematic Representation • FDI Policy & options for Foreign Entity/Person in India • Prohibited Sectors • Sector/Activity: % of FDI Cap/Equity: Automatic Route / Approval Route • Recent Changes/Developments: • FIIs & NRIs • FVCI • Qualified Foreign Investor (QFI) • Limited Liability Partnerships (LLPs) • Delegation of Compounding Powers • Import of capital goods; Pre-operative/pre-incorporation expenses • Credit of sale proceeds to NRE / FCNR(B) accounts • FIIs in Commodity Exchanges • Operating lease outside Non Banking Finance Companies (NBFC) • Single Brand Retail • Pharmaceutical Sector • Liaison / Branch Office in India • Transfer of capital instruments – RBI approval not required • Escrow Account • Pledge of shares of company incorporated in India • e-filing for FIPB approval

3. Foreign Investment in India- Schematic Representation Foreign Investments Foreign Direct Investments Foreign Portfolio Investments Foreign Venture Capital Investments Other Investments (G-Sec, NCDs, etc) Investments on non-repatriable basis Automatic Route Govt. Route/FIPB/ CCEA FIIs NRIs, PIOs SEBI Regd. FVCIs FIIs/QFIs NRIs, PIO NRIs, PIO Persons Resident Outside India VCF, IVCUs

4. FEM (Transfer or Issue of Security by a Person resident Outside India) Regulations, 2000: ‘FEMA 20’

5. FDI Policy • ‘FDI’ means investment by non-resident entity/person resident outside India in the capital of the Indian company under Schedule 1 of FEMA 20 • Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India (DIPP) issues Circular on Consolidated FDI Policy which was last updated on April 10, 2012 • Master Circular on Foreign Investments in India Dated July 01, 2011 • Master Circular on Updated as on January 20, 2012 • Compounding of Contraventions, & • External Commercial Borrowings and Trade Credits In case of any conflict between FDI Circular and FEMA Regulations, the relevant FEMA Notification will prevail. The procedural instructions are issued by the Reserve Bank of India vide A.P.Dir. (Series) circulars

6. Who can invest under FDI?

7. Options For Foreign Entity/Person for business activities in India

8. Prohibited Sectors • FDI is prohibited in: (a) Retail Trading (except single brand product retailing) (b) Lottery Business including Government /private lottery, online lotteries, etc. (c) Gambling and Betting including casinos etc. (d) Chit funds (e) Nidhi company (f) Trading in Transferable Development Rights (TDRs) (g) Real Estate Business or Construction of Farm Houses (other than Construction Development: Townships, Housing, Built-up infrastructure) (h) Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes (i) Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems)   • Agriculture sector other than Floriculture, Horticulture, Apiculture, Cultivation of vegetables & Mushrooms; Development & production of seeds & planting material; Services related to agro & allied sectors • Plantation sector other than Tea sector including tea plantation. • Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also completely prohibited for Lottery Business and Gambling and Betting activities

9. Sector/Activity: % of FDI Cap/Equity Automatic Route • Agriculture & Animal Husbandry – Floriculture, Horticulture, Apiculture, Cultivation of vegetables & Mushrooms; Development & production of seeds & planting material; Services related to agro & allied sectors: (100% - Automatic) • Mining and Exploration of metal & non-metal ores: (100% - Automatic) • Coal and Lignite: (100% - Automatic) • Petroleum & Natural Gas Sector: (100% - Automatic) • Manufacturing: (100% - Automatic) • Pharmaceuticals: Greenfield: 100% - Automatic • Airports:Greenfield projects: (100% - Automatic) • Air Transport Services:Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline: (49% FDI; 100% for NRIs – Automatic) • Helicopter services/ seaplane services requiring DGCA approval: (100% - Automatic) • Maintenance and Repair organizations; flying training institutes; and technical training institutions: (100% - Automatic) • Construction Development: Townships, Housing, Built-up infrastructure: (100% - Automatic) • Industrial Parks – new and existing: (100% - Automatic) • Cash & Carry trading Wholesale Trading/ Wholesale Trading (including sourcing from MSEs): (100% - Automatic) • E-commerce activities; (100% - Automatic) • Insurance: (26% - Automatic) • Non-Banking Finance Companies (NBFC): 18 specified activities (100% - Automatic):(i) Merchant Banking; (ii) Under Writing; (iii) Portfolio Management Services; (iv) Investment Advisory Services; (v) Financial Consultancy; (vi) Stock Broking; (vii) Asset Management; (viii) Venture Capital; (ix) Custodian Services; (x) Factoring (xi) Credit Rating Agencies; (xii) Leasing & Finance; (xiii) Housing Finance; (xiv) Forex Broking; (xv) Credit Card Business; (xvi) Money Changing Business; (xvii) Micro Credit; (xviii) Rural Credit

10. Sector/Activity: % of FDI Cap/Equity Approval Route • Tea Plantation: (100% - Government) • Manufacture of items reserved for production in Micro and Small Enterprises (MSEs as defined under Micro, Small And Medium Enterprises Development Act, 2006): Any industrial undertaking which is not a MSE, but manufactures items reserved for the MSE sector where foreign investment is more than 24% in the capital • Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities: (100% - Government) • Defence: (26% - Government) • Pharmaceuticals: Existing companies: 100% - Government • Terrestrial Broadcasting FM (FM Radio): (20% -FDI, NRI & PIO Investment and portfolio investment – Government) • Cable Network subject to Cable Television Network Rules, 1994: (49% - FDI, NRI & PIO investment and portfolio investment – Government) • Direct–to-Home: (49% - FDI, NRI & PIO investment and portfolio investment - Within this limit, FDI component not to exceed 20% - Government) • Setting up hardware facilities such as up-linking, HUB etc. (1) Setting up of Up-linking HUB/ Teleports: (49% (FDI & FII) – Government) (2) Up-linking a Non-News & Current Affairs TV Channel: (100% - Government) (3) Up-linking a News & Current Affairs TV Channel: (26% (FDI & FII) – Government) • Print Media: Publishing of Newspaper and periodicals dealing with news and current affairs: (26% (FDI and investment by NRIs/PIOs/FII) – Government) Publication of Indian editions of foreign magazines dealing with news and current affairs: (26% (FDI and investment by NRIs/PIOs/FII) – Government)

11. Sector/Activity: % of FDI Cap/Equity Approval Route • Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals: (100% - Government) • Publication of facsimile edition of foreign newspapers: (100% - Government) • Courier service: (100% - Government) • Satellites – Establishment and operation: (74% - Government) • Private Security Agencies: (49% - Government) • Test marketing: (100% - Government) • Single Brand product trading: (51% to 100% - Government) • Financial Services: Foreign investment in other financial services, other than specified activities, would require prior approval of the Government e.g. payment and authorization system for on-line payment related services (on line gateway system), Cash ATM Network, Primary Dealer in India • Asset Reconstruction Company (ARC): (49% of paid-up capital of ARC – Government) • Commodity Exchanges: (49% (FDI & FII) [Investment by Registered FII under Portfolio Investment Scheme (PIS) will be limited to 23% and Investment under FDI Scheme limited to 26%] - Government only for FDI; FIIs under Automatic Route) • Infrastructure companies in Securities Markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations: (49% (FDI & FII) [FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital] - Government only for FDI; FIIs under Automatic Route) • Credit Information Companies: (49% (FDI & FII) – Government) • Banking- Public Sector subject to Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks: (20% - FDI and Portfolio Investment – Government)

12. Sector/Activity: % of FDI Cap/Equity Automatic + Approval Route • FDI limit in Headend-in-the-Sky (HITS) Broadcasting Service: (74% - total direct and indirect foreign investment including portfolio and FDI - Automatic up to 49%; Government route beyond 49% and up to 74%) • Airports:Existing projects: (100% - Automatic up to 74%; Government route beyond 74%) • Air Transport Services:Non-Scheduled Air Transport Service: (74% FDI; 100% for NRIs - Automatic up to 49%; Government route beyond 49% and upto 74%) • Ground Handling Services subject to sectoral regulations and security clearance: (74% FDI; 100% for NRIs - Automatic up to 49%; Government route beyond 49% and up to 74%) • Telecom services: (74% - Automatic up to 49%; Government route beyond 49% and up to 74%) • ISP with gateways; (b) ISP’s not providing gateways i.e. without gate-ways (both for satellite and marine cables); (c) Radio paging; and (d) End-to-End bandwidth: (74% - Automatic up to 49%; Government route beyond 49% and up to 74%) • (a) Infrastructure provider providing dark fibre, right of way, duct space, tower (IP Category I); (b)Electronic Mail; (c)Voice Mail; (100% - Automatic up to 49%; Government route beyond 49%) • Banking –Private sector: (74 % including investment by FIIs - Automatic up to 49%; Government route beyond 49% and up to 74%)

13. Recent Changes/DevelopmentsFIIs & NRIs FIIs • Individual holding: 10% of the capital and aggregate limit for FIIs 24% • Aggregate limit: 24% can be increased to the sectoral cap/statutory ceiling by Special Resolution of Shareholders and prior intimation to RBI along with Certificate from the Company Secretary stating compliance of FEMA, and FDI Policy • Aggregate under FDI and Portfolio Investment Scheme should be within the above caps • Permitted through IPOs and private placement NRIs • NRIs Through designated Ads up to 5 % of the paid- up capital • Aggregate: Up to 10 % which can be raised to 24 per cent by Special Resolution of Shareholders and prior intimation to RBI along with Certificate from the Company Secretary stating compliance of FEMA, and FDI Policy • Shares purchased under Portfolio Investment Schemecannot be transferred by way of sale under private arrangement (except NRIs can transfer shares acquired under PIS to close relatives)

14. FVCI • SEBI registered FVCIs are allowed to: • Invest upto 100% by way of private arrangement or purchase from a third party in eligible securities of: • Indian Venture Capital Undertaking (IVCU) and may also set up a domestic asset management company to manage the fund • Domestic Venture Capital Fund registered under the SEBI (Venture Capital Fund) Regulations, 1996 • Invest in securities on a recognised stock exchange subject to provisions of SEBI (FVCI) Regulations, 2000 • Invest under the FDI Scheme subject to FDI Policy & FEMA Regulations

15. Qualified Foreign Investor (QFI) • QFI shall mean a person resident in a country that is compliant with Financial Action Task Force (FATF) standards and that is a signatory to International Organization of Securities Commission's (IOSCO's) Multilateral Memorandum of Understanding, • Such person is not resident in India, • Such person is not registered with SEBI as Foreign Institutional Investor or Sub-account, and FVCI • Explanation- For the purposes of this clause: • the term ‘Person’ shall carry the same meaning under Section 2(31) of the Income Tax Act, 1961 • the phrase ‘resident in India’ shall carry the same meaning as in the Income Tax Act, 1961 • ‘resident’ in a country, other than India, shall mean resident as per the direct tax laws of that country.

16. QFIs are permitted to invest through SEBI registered Depository Participants (DPs) in: • equity shares of listed Indian companies through recognized brokers on recognized stock exchanges in India • equity shares of Indian companies which are offered to public in India in terms of the relevant and applicable SEBI guidelines/regulations • Acquire right shares or bonus shares • equity shares on account of stock split / consolidation / amalgamation / demerger / such corporate actions subject to the prescribed investment limits QFI’s investment in equity shares

17. Conditions to be met by QFIs • The entities having opaque structure(s) such that the details of ultimate/end beneficiary are not accessible or where the beneficial owners are ring fenced from each other or where the beneficial owners are ring fenced with regard to enforcement shall not be allowed to open demat account as QFI • The DP shall ensure that equity shares held by QFI are free from all encumbrances including pledge or lien etc. at all times • QFIs to submit combined PAN-cum-KYC form as notified by CBDT

18. Sale of equity shares by QFIs • QFIs are also permitted to sell the equity shares so acquired subject to the relevant SEBI guidelines • QFIs are allowed to tender equity shares in open offer in accordance with • SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; • SEBI (Delisting of Equity Shares) Regulations, 2009; and • in case of buy-back by listed companies in accordance with SEBI (Buyback of Securities) Regulations, 1998

19. Investment Limits for QFIs • The individual and aggregate investment limits for the QFIs shall be 5% and 10% respectively of the paid up capital of an Indian company • These limits shall be over and above the FII and NRI investment ceilings prescribed under the Portfolio Investment Scheme for foreign investment in India • In case there are composite sectoral caps under the extant FDI policy, these limits for QFI investment in equity shares shall also be within such overall FDI sectoral caps • The onus of monitoring and compliance of these limits shall remain jointly and severally with the respective QFIs, DPs and the respective Indian companies (receiving such investment)

20. Treatment of dividend on equity shares held by QFIs • Dividend payments on equity shares held by QFIs can either be: • directly remitted to the designated overseas bank accounts of QFIs or • credited to the single rupee pool bank account • In case dividend payments are credited to the single rupee pool bank account, they shall be remitted to the designated overseas bank accounts of the QFIs within five working days (including the day of credit of such funds to the single rupee pool bank account) • Within these five working days, the dividend payments can be also utilized for fresh purchases of equity shares under this scheme, if so instructed by the QFI

21. Limited Liability Partnerships (LLPs) • FDI in LLPs: • Prior approval from FIPB • Sectors/activities where 100% FDI allowed • No FDI-linked performance related conditions (such as ‘Non Banking Finance Companies’ or ‘Development of Townships, Housing, Built-up infrastructure and Construction-development projects’ etc.) • Only by way of cash consideration • Indian company having FDI, permitted to make downstream investment in LLP only if both the company as well as the LLP is operating in sectors where 100% FDI allowed, through automatic route • Restrictions to LLPs with FDI: • Not in agricultural/plantation activity, print media or real estate business • Not eligible to make any downstream investment • Not permitted to avail ECBs • FIIs and FVCIs not permitted to invest in LLPs • Conversion of a company with FDI, into an LLP, allowed only if above stipulations are met and with the prior approval of FIPB

22. Reporting of FDI Inflow Reporting of Issue of Fresh Shares /Bonus /Right Shares /ESOP/ Convertible Debentures / Convertible Preference Shares /Conversion of ECB / Royalty / Lumpsum Technical Know-how Fee / Import of Capital Goods by SEZs /Pre-operative/Pre-incorporation Expenses

23. Time frame for issue of shares • Capital instruments should be issued within 180 days from the date of receipt of the inward remittance or by debit to the NRE/FCNR (B) account • Else refunded to non-resident investor • Transfer of Shares (From Resident to a Non-resident and viceversa) • File form FC-TRS with RBI through authorised dealer within 60 days of receipt of consideration • Onus on transferor / transferee, resident in India

24. Annual return on Foreign Liabilities and Assets along with audited balance sheet • Discontinuation of the Part B of Form FC-GPR • Capture the statistics relating to Foreign Direct Investment (FDI), both inward and outward • Submitted by July 15 of every yearto the Director, Balance of Payment Statistics Division, Department of Statistics and Information Management (DSIM), Reserve Bank of India, Mumbai • To be submitted by all Indian companies which have received FDI and/or made FDI abroad in the previous year(s) including the current year • If Balance sheet not audited: Submit information based on un-audited figures. The balance sheet may be forwarded in due course • The Annex –II to A.P. (DIR Series) Circular No.45 dated 15th March, 2011 gives the concepts and definitions useful in filling the Annual Return on Foreign Liabilities and Assets.

25. Reporting of issue/transfer of ‘participating interest/right’ in oil fields to a non-resident as an FDI transaction • Issue/transfer of ‘participating interest/rights’ in oil fields to a non-resident shall be treated as Foreign Direct Investment (FDI) transaction under the extant FDI policy & FEMA Regulations • Transfer of ‘participating interest/rights’ will be reported as ‘other’ category under Para 7 of revised Form FC-TRS • Issuance of ‘participating interest/rights’ will be reported as ‘other’ category of instruments under Para 4 of Form FC-GPR

26. Delegation of Compounding Powers under FEMA by RBI to its Regional Offices

27. Details required in application form for Compounding • An undertaking for not under investigation of any agency such as DOE, CBI, etc., • Copy of the Memorandum and Articles of Association • Latest audited balance sheet • Contravention relating to Foreign Direct Investment in India Name of the applicant; Date of incorporation; Nature of activities under taken; Brief particulars about the foreign investor; Details of foreign inward remittances received by Applicant Company from date of incorporation till date ; Copies of Balance Sheet during the period of receipt of share application money and allotment of shares; Nature of contravention and reasons for the contravention • Contravention relating to External Commercial Borrowing Name of the applicant; Date of incorporation; Nature of activities under taken; Brief particulars about the foreign lender; Is the applicant an eligible borrower?; Is the lender eligible lender?; Is the lender an equity holder?; What is the level of his holding at the time of loan agreement?; Details of ECB: Date of Loan agreement; Amount in Foreign Currency and Indian Rupee; Rate of interest; Period of loan; Repayment particulars; Details of draw down; Amount in Foreign Currency; Details of Utilization of ECB in Foreign Currency and Indian Rupee; Nature of contravention and reasons for the contravention • Contravention relating to Overseas Investment Name of the applicant; Date of incorporation; Nature of activities under taken; Name of Overseas entity; Date of incorporation of overseas entity; Nature of activities under taken by overseas entity; Nature of entity- WOS/JV; Details of remittance sent- Date of remittance; Amount in FCY and in INR; Details of other financial Commitment; Details of UIN applied and received; Date of receipt of share certificate; Approval of other regulators if required; Details of APRs submitted: For the period ended; date of submission; Nature of contravention and reasons for the contravention; All supporting documents may be submitted. • Contravention relating to Branch/Liaison Office in India Name of the applicant; Date of incorporation; Date of approval for opening of Liaison Office/ Branch Office; Validity period of the approval; Nature of activities under taken; income and expenditure of the LO/BO; Dates of submission of Annual activity Certificates; Nature of contravention and reasons for the contravention; All supporting documents may be submitted.

29. Conversion of shares other than cash • Import of capital goods/machinery/equipment (excluding second hand): • Import in accordance with Exim Policy • Independent valuation by third party entity, preferably by an independent valuer from the country of import along with documents/certificates issued by the customs authorities towards assessment of the fair-value of such imports • Beneficial ownership and identity of the Importer Company as well as overseas entity • Conversions into FDI being done within 180 days from date of shipment of goods • Second-hand machinery has now been excluded from the purview of this provision • Pre-operative/pre-incorporation expenses (including payments of rent etc.): • FIRC for remittance for expenditure incurred • Verification and certification by statutory auditor • Payments made directly to company. Payments made through third parties citing the absence of a bank account or similar such reasons not allowed • Capitalization within 180 days • Under the Government/FIPB route, Special resolution of the company; and subject to pricing guidelines and appropriate tax clearance.

30. Credit of sale proceeds of Foreign Direct Investments in Indiato NRE / FCNR(B) accounts Sale proceeds of Foreign Investments in India were treated as eligible credit to NRE / FCNR(B) accounts, where purchase consideration was paid by NRIs/PIOs out of inward remittance or funds held in their NRE/FCNR(B) accounts. Credit of sale proceeds of Foreign Direct Investments in Indiato NRE / FCNR(B) accounts permitted.

31. Other recent changes

32. Construction development “At least 50% of each such project must be developed within a period of five years from the date of obtaining all statutory clearances”. • It has been clarified that the condition of 50% development of a project, within a period of 5 years, is applicable to each project; in line with ‘Minimum area to be developed under each project’.

33. Single Brand Retail • FDI up to 51% under Approval Route: • ‘Single Brand’ only. • Sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India. • Products which are branded during manufacturing. • Foreign investor should be the owner of the brand. • Additional condition for FDI beyond 51% & up to 100% under Approval Route : • Mandatory sourcing of at least 30% of the value of products sold • From Indian‘small industries/ village and cottage industries, artisans and craftsmen’. • 'Small industries': total investment in plant & machinery not exceeding US $ 1.00 million. • At the time of installation, without providing for depreciation. • If at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry'. • Compliance ensured through self-certification by the company, • To be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.

34. Single Brand Retail Procedure for approval • Application to Secretariat for Industrial Assistance (SIA), DIPP, Ministry of Industry • Specifically indicate the product/ product categories • Any addition to the product/ product categories would require a fresh approval of the Government • Processed in DIPP, before being considered by the FIPB for approval

35. FDI Policy in Pharmaceutical Sector

36. Liaison / Branch Office in India • Transfer of assets of Liaison / Branch Office to subsidiaries or other LO / BO or any other entity is permitted only with specific approval of Central Office of RBI. • Person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, with the prior permission of RBI. • Foreign Non-Government Organisations (NGOs) / Non-Profit Organisations (NPOs) / Government bodies / Departments continuing to function in India, without the approval of RBI, after FEMA came into force from June 1, 2000, should approach the RBI for regularization of establishment of such offices in India. • CBDT vide notification dated 06 Feb 2012 has notified Form 49C (filing of annual information) to be furnished by LO, within sixty days from the end of the financial year, duly verified by the Chartered Accountant or the person authorised in this behalf by the non-resident person, who shall be known as the Authorised Signatory.

37. Prior approval of RBI is not required anymore for transfer of capital instruments • Transfer of shares from a Non Resident to Resident under the FDI scheme where the pricing guidelines under FEMA, 1999 are not met provided that :- • Pricing is compliant with the specific/explicit, extant and relevant SEBI regulations / guidelines (such as IPO, Book building, block deals, delisting, exit, open offer/ substantial acquisition / SEBI SAST, buy back) • Transfer of shares from Resident to Non Resident: i) where the transfer of shares requires the prior approval of the FIPB which has been obtained; and adheres to pricing guidelines. ii) where SEBI (SAST) guidelines are attracted subject to the adherence with the pricing guidelines and documentation requirements as specified by Reserve Bank of India from time to time. iii) where the pricing guidelines under the Foreign Exchange Management Act (FEMA), 1999 are not met provided that:- Pricing is compliant with the specific/explicit, extant and relevant SEBI regulations / guidelines (such as IPO, Book building, block deals, delisting, exit, open offer/ substantial acquisition / SEBI SAST) iv) where the investee company is in the financial sector provided that : NOCs are obtained from respective financial sector regulators/ regulators of the investee company as well as transferor and transferee entities and such NOCs are filed along with the form FC-TRS

38. Escrow Account • AD Category – I banks can open Escrow account and Special account of non-resident corporate for open offers / exit offers and delisting of shares. • Permitted to open and maintain, without prior approval of RBI, non-interest bearing Escrow accounts in Indian Rupees in India on behalf of residents and/or non-residents, towards payment of share purchase consideration and/or provide Escrow facilities for keeping securities to facilitate FDI transactions. • No fund or non-fund based facilities would be permitted. • SEBI authorised Depository Participants to open and maintain, without approval of RBI, Escrow accounts for securities. • Applicable for both issue of fresh shares to the non-residents as well as transfer of shares from/to the non-residents. • The Escrow account shall remain operational for a maximum period of six months. • The terms of the Escrow account shall be laid down strictly in the Escrow agreement, Share purchase agreement, conditions of issue of shares.

39. Pledge of shares of company incorporated in India • Any person being a promoter of a company registered in India (borrowing company), which has raised external commercial borrowing, may pledge the shares of the borrowing company or that of its associate resident companies for the purpose of securing the external commercial borrowing (ECB) raised by the borrowing company • Shares of an Indian company held by the non-resident investor can be pledged in favour of an Indian bank in Indiato secure the credit facilities being extended to the resident investee company for bona fide business purposes • Shares of the Indian company held by the non-resident investor can be pledged in favour of an overseas bankto secure the credit facilities being extended to the non-resident investor / non-resident promoter of the Indian company or its overseas group company

41. Instructions before you proceed with e-filing • Applications seeking FIPB approval as an investee or investor company for the first time are called "Fresh Applications". Applicants may, therefore, click on the "Fresh Application" link in case they are approaching FIPB for the first time. • "Amendment Applications" are those which seek an amendment to the FIPB approval already granted. • On submission of the Mandatory Preliminary Application, whether for Fresh or Amendment cases, a computer generated unique (FC Registration No.) number shall be allotted. Thereafter, the applicant may either use the FC Registration No. to proceed for filing the on-line application or mention this number on the hardcopy of the application to be submitted at the FIPB Facilitation Center, Near Gate No. 9, North Block, New Delhi-110001 (Tel: 011 23095123/ 4031; Intercom: 5123) . The applicant must also quote this number in all future correspondences with the FIPB. • For Amendment Applications which are procedural in nature, users may click "Amendment Application which is procedural in nature" and submit in the prescribed proforma. • For Submission of information for intimation/ record of FIPB, including information with respect to P.N. 4/2009 user may click "Submission of information for intimation / record of FIPB" and submit in the respective format.

42. Any query pertaining to application filed or in the process of being filed, may be asked through the link – "Clarification/Query". • In case an applicant wishes to make a change in the recently submitted application, that has not been processed, he/she may click on the link "Updation/Additional Information Form". Additional details being sought by the FIPB may also be submitted through the same link. • It is mandatory to file complete details of the Directors in applications seeking FIPB approval in Telecom, Defense and Private Security Services sectors to enable capturing the inputs in the first instance for expeditious processing from the security angle. This requirement is also mandatory in case the foreign collaborator has Bangladesh, Chinese/ Hong Kong registration/links. • After e-filing the application, one hard copy (alternative 1+15; 18 copies in case of Defence, and Telecommunication proposals) bearing the Unique FC Registration No. generated after submitting the Mandatory Preliminary Application, in original, with all annexure should immediately be sent by post at FIPB Facilitation Center, North Block, New Delhi-110001. • Only the applications that are complete in all respect, filed three weeks prior to the scheduled date of the FIPB meeting, only, shall be taken up for consideration in that meeting.

43. Thank You