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Highlights of Foreign Exchange Management (Non Debt Instruments) Amendment Rules, 2024

In order to enhance the cross border investment flexibility, the government has amended the Foreign Exchange Management (Non Debt Instruments) Rules, 2019, through the Foreign Exchange Management (Fourth Amendment) Rules, 2024.

The significant changes that have been notified are enumerated below:

Share Swaps for Secondary Transfers:

Permits

swap of equity instruments of an Indian Company and/ or equity capital of a foreign entity against transaction involving transfer of equity instruments of an Indian Company between person resident in India (PRI) and a person resident outside India (PROI) or,

issue of equity instruments of an Indian Company to a person resident outside India.

Prior Government Approval for all Secondary Transfers

The transfer of equity instruments of an Indian company by a person resident outside India by way of sale or gift will now require a prior government approval in all cases

Government Approval for Foreign Portfolio Investment:

The Amendment Rules provide that aggregate foreign portfolio investment (FPI) up to the sectoral cap will not require government approval or compliance with sectoral conditions.

Provided that such investment does not result in transfer of ownership or control.

Sectoral Cap for White Label ATMs Operations (WLAO)

100% FDI under automatic route is now permitted for white label ATM operations inter alia subject to…

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