REDUCTION OF LIMIT FOR OVERSEAS DIRECT INVESTMENT

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 14/08/2013

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 23

Previously, in terms of the provisions under FEMA, 1999 on Overseas Direct Investments (ODI), the total Direct Investment by an Indian Party in Overseas Joint Ventures (JV) or Wholly Owned Subsidiaries (WOS) was limited to the extent of 400% of the Indian Party's Net Worth. This limit has now been reduced to 100% of the Indian Party's Net Worth as on the date of last audited Balance Sheet under the Automatic Route.

The reduced Limit is also made applicable to Investments by Indian Companies in Overseas Unincorporated Entities in the Energy and Natural Resource Sector. Any ODI in excess of 100% of the Net Worth shall be considered under the Approval Route by RBI.

These provisions would apply to all fresh Overseas Direct Investment proposals on a prospective basis but would not apply to the existing JV/WOS set up under the extant guidelines.

For detailed Circular, follow the Link given below:
A. P. (DIR Series) Circular No.23