INVESTMENT ON REPATRIATION BASIS
Investment in
Government Securities and Units of UTI
NRIs can freely purchase units of UTI,
Central and State Government securities (other than bearer
securities) and National Plan/ Savings Certificates by effecting
remittances from abroad through normal banking channels or by
withdrawing funds from their NRE or FCNR accounts. The dividend
and interest income fro9m the investment as well as the sale
proceeds/ maturity proceeds of securities purchased by
remittances from abroad or by withdrawing funds from NRE/ FCNR
accounts can be remitted outside India or may be credited to the
investor’s NRE/ FCNR accounts.
Sale/ transfer of Government securities is
freely permitted through a stock exchange in India provided the
sale/ transfer of such securities is arranged through an
authorized dealer. Similarly NRIs/ OCBs holding units of UTI may
freely tender them for repurchase by the Unit Trust.
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Investment in new
issues of Indian companies under the Forty (40) percent Scheme
Under this scheme, NRIs/ OCBs are permitted
to subscribe to new issues of shares ( equity & preference)
or convertible debentures of any new or existing company with
the right of repatriation of the capital invested and income
earned thereon, provided the aggregate ussue to non-residents
qualifying for the facility of repatriation does not exceed 40
percent of the face value of the new issue. Such investment can
be made only in private or public limited companies raising
capital for setting up new industrial/ manufacturing activities.
Investment under this scheme can also be made in new or existing
companies engaged in the following areas of activity:
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Hospitals ( including diagnostic centres)
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Hotels with 3,4 and 5 start rating
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Shipping
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Development of computer software
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Oil exploration services
Application for permission for investment
under the 40% scheme should be made by the Indian Companies
seeking non-resident capital , in form ISD to the Chief General
Manager, Exchange Control Department, Foreign Exchange Division
II, NRI Cell, RBI, Bombay.
Once the approval to the Indian company is
granted by RBI, NRIs/ OCBs are not required to seek separate
permission from RBI. Subscription under the scheme has to be
made either by fresh remittance from abroad or out of balance in
NRE/ FCNR accounts of the investor.
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Investment
in New Issues of indian companies under 24% Scheme
NRIs/ OCBs are permitted to subscribe to new
issues of equity shares/ convertible debentures of existing or
new companies ( both private and public limited) engaged/
proposing to engage in any activity including finance, hire
purchase, leasing, trading or other services etc ( except
agriculture/ plantation) with the right of repatriation of
capital invested and income earned thereon, provided the
aggregate issue of shares/ debentures to such non-residents (
together with the shares issued to FIIs under this scheme)
qualifying for the facility of repatriation does not exceed 24%
of the face value of the new issue. Applications for issue of
shares/ convertible debentures should be made by Indian
Companies seeking non-resident capital in form ISD® to the
Central office of RBI.
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Investment by NRIs
for establishment of school/ Colleges in India
RBI has allowed investment by NRIs in establishment of
schools and colleges in India. In case the concerned investment
is made by NRIs through a proprietary/ partnership concern or
Indian company on repatriation basis, it will require the
specific permission of RBI for investment under 24% Scheme.
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Investment in
Priority Industries under 100% Scheme
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NRIs./ OCBs are permitted to invest in priority industries
and in Indian Companies primarily engaged in export trading
activity, with full repatriation benefits upto 100% of the
new issue of shares. RBI, vide its Notification No-FERA 180/
98-RB dated Jan 13th, 1998 ( as amended upto 14th
July 1998) has granted general permission under Sections
19(1) and 29(1)(b) of FERA 1973 to Indian Companies for
issue and export of equity shares to NRIs/ OCBs investor in
respect of the eligible investment. Indian companies seeking
investment from NRIs/ OCBs, under the scheme and satisfying
the conditions laid down in the said Notification may issue
equity shares to NRIs/ OCBs, without prior approval of RBI
and file a declaration in form ISD( R ) together with the
relevant documents with the Regional Office of RBI under
whose jurisdiction their registered office is situated,
within 30 days from the date of issue of shares. The scheme
is open to new industries as well as for expansion/
diversification of existing industrial undertakings.
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Since the general permission referred above does not cover
investment by individual NRI in partnership firms,
applications for necessary permission for seeking such
investment should be made to RBI, Central office, Mumbai in
form ISD( R ) by the non-resident investor or the Indian
company proposing to invite the investment.
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Applications for foreign investment which do not satisfy
the parameters prescribed for general permission or in 100%
EOUs are required to be made to the Secretariat for
Industrial assistance (SIA)/ Foreign investment Promotion
Board (FIPB), as the case may be. If the unit is located in
any of the Export Processing Zones, application should be
made to the Development Commissioner of the Export
Processing Zone concerned.
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With a view to simplifying the procedure in respect of
proposals approved by SIA/ FIPB, RBI has granted general
permission under sections 19(1) and 29(1)(b) of FERA 1973 to
Indian Companies
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