A Non-Resident Entity (Other Than A Citizen Of Pakistan Or An Entity Incorporated In Pakistan) Can Invest In India, Subject To The FDI Policy.  A Citizen Of Bangladesh Or An Entity Incorporated In Bangladesh Can Invest In India Under The FDI Policy, Only After Approval From Government Of India.

NRI’s Resident In Nepal And Bhutan As Well As Citizens Of Nepal And Bhutan Are Permitted To Invest In The Capital Of Indian Companies On Repatriation Basis, Subject To The Condition That The Amount Of Consideration For Such Investment Shall Be Paid Only By Way Of Inward Remittance In Free Foreign Exchange Through Normal Banking Channels.

Indian Companies Can Issue Equity Shares, Fully, Compulsorily And Mandatorily Convertible Debentures And Fully, Compulsorily And Mandatorily Convertible Preference Shares Subject To Pricing Guidelines/Valuation Norms Prescribed Under FEMA Regulations. The Pricing Of The Capital Instruments Should Be Decided/Determined Upfront At The Time Of Issue Of The Instruments.
Other Types Of Preference Shares/Debentures  I.E.  Non-Convertible,  Optionally Convertible Or Partially Convertible For Issue Of Which Funds Have Been Received On Or After May 1, 2007 Are Considered As Debt.  Accordingly All Norms Applicable For ECBs Relating To Eligible Borrowers, Recognized Lenders, Amount And Maturity, End-Use Stipulations, Etc. Shall Apply.

Indian Companies Including Those Which Are Micro And Small Enterprises (MSEs) Can Issue Capital Against FDI.

A Non-Resident Indian (NRI) Or A Person Of Indian Origin (PIO) Resident Outside India Can Vest By Way Of Contribution To The Capital Of A Firm Or A Proprietary Concern In India On Non-Repatriation Basis Provided;

• Amount  Is  Invested  By  Inward  Remittance  Or  Out  Of  NRE/FCNR(B)/NRO   Account Maintained With Authorized Dealers / Authorized Banks.
• The Firm Or Proprietary Concern Is Not Engaged In Any Agricultural/Plantation Or Real Estate Business Or Print Media Sector.
• Amount Invested Shall Not Be Eligible For Repatriation Outside India.
• Investments With Repatriation Benefits: NRIs/PIO May Seek Prior Permission Of Reserve Bank For Investment In Sole Proprietorship Concerns/Partnership Firms With Repatriation Benefits.  The Application Will Be Decided In Consultation With The Government Of India.

The 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 Of The Non-Resident Investor.  In Case, The Capital Instruments Are Not Issued Within 180 Days From The Date Of Receipt Of The Inward Remittance Or Date Of Debit To The NRE/FCNR (B) Account, The Amount Of Consideration So Received Should Be Refunded Immediately To The Non-Resident Investor By Outward Remittance Through Normal Banking Channels Or By Credit To The NRE/FCNR (B) Account, As The Case May Be.  Non-Compliance With The Above Provision Would Be Reckoned As A Contravention Under FEMA And Would Attract Penal Provisions.  In Exceptional Cases, Refund Of The Amount Of Consideration Outstanding Beyond A Period Of 180 Days From The Date Of Receipt May Be Considered By The RBI, On The Merits Of The Case.

Price Of Shares Issued To Persons Resident Outside India Under The FDI Policy, Shall Not Be Less Than

• The Price Worked Out In Accordance With The SEBI Guidelines, As Applicable, Where The Shares Of The Company Is Listed On Any Recognised Stock Exchange In India;
• The Fair Valuation Of Shares Done By A SEBI Registered Category – I Merchant Banker Or  A Chartered Accountant As Per The Discounted Free Cash Flow Method, Where The Shares Of The Company Is Not Listed On Any Recognised Stock Exchange In India ; And
• The Price As Applicable To Transfer Of Shares From Resident To Non-Resident As Per The Pricing   Guidelines Laid Down By The Reserve Bank From Time To Time, Where The Issue Of Shares Is On Preferential Allotment.

Investments Can Be Made By Non-Residents In The Equity Shares/Fully, Compulsorily And Mandatorily Convertible Debentures/ Fully, Compulsorily And Mandatorily Convertible Preference Shares Of An Indian Company, Through Two Routes; The Automatic Route And The Government Route. Under The Automatic Route, The Non-Resident Investor Or The Indian Company Does Not Require Any Approval From The RBI Or Government Of India For The Investment. Under The Government Route, Prior Approval Of The Government Of India Through Foreign Investment Promotion Board (FIPB) Is Required. Proposals For Foreign Investment Under Government Route As Laid Down In The FDI Policy From Time To Time, Are Considered By The Foreign Investment Promotion Board (FIPB) In Department Of Economic Affairs (DEA), Ministry Of Finance.

The Following Guidelines Are Laid Down To Enable The FIPB To Consider The Proposals For FDI And Formulate Its Recommendations.

While Considering Cases And Making Recommendations, FIPB Should Keep In Mind The Sectoral Requirements And The Sectoral Policies Vis-À-Vis The Proposal (S).

The Following Approval Levels Shall Operate For Proposals Involving FDI Under The Government Route I.E. Requiring Prior Government Approval:

• Activities / Sectors Not Opened To Private Sector Investment Including Atomic Energy And Railway Transport (Other Than Mass Rapid Transport Systems).Besides Foreign Investment In Any Form, 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.