Investments with Repatriation Benefits

Government is aware of the concerns of the NRIs and therefore it came up with the investment plan beneficial to them. NRI can invest with full repatriation in certain cases.
NRIs can invest through two routes:

• Automatic route
• Government Route
  

Automatic Route
1.) FDI both by foreign investors and NRIs (non resident Indians), up to 100% (subject to sectoral equity caps/statutory ceilings) is allowed with repatriation benefits without any prior approval except in the following cases:-

• Where industrial licensing is necessary. It is imperative for the investors to have industrial license:

A.) To manufacture items reserved for the public sector

B.) Industries which require compulsory licensing

C) Where the proposal attracts locational restrictions.

• Where the concerned activities are related to civil aviation, housing and real estate development, etc
• In case investor is seeking investment in excess of specified sectoral caps
• When foreign investors seek to invest more than 24% of the equity in small scale sector or in items reserved for manufacturing in small scale unitss
• Where the investing entity has previous tie-up(s) in India.
• When there is an issue of acquiring shares of an existing share holder in an Indian company.
  

2.) Any trading company operating in India and engaged in exports and registered as Export House/Trading House/Star Trading House/Super Star Trading House with the Ministry of Commerce and Industry, may issue shares/convertible debentures up to 51% under the automatic route. If the company is set up recently, for export purpose it can issue shares only after registration as an Export House/Trading House/Star Trading House/Super Star Trading House is obtained, before remittance of dividends to the foreign investor.

3.) Special Schemes
For investment in following sectors by NRIs and the foreign investors, no government permission is required. The scheme include following sectors:

• Export Oriented Units
• Free Trade Zone/Export Processing Zones
• Software Technology Parks
• Electronic Hardware Technology Parks
• Special Economic Zones
  

4.) Existing companies with expansion programmes
The companies which are existing and undergoing expansion programmes, can issue shares under the automatic route. However this expansion must result from the expansion of equity base without acquisition of existing shares and the proposed expansion programme is in sector(s) under the automatic route.

5.) Existing companies without expansion programmes
Companies with no expansion programme can issue shares under the automatic approval scheme if their activities fall under the automatic approval route and increase in equity level is from expansion of the equity base.

The NRI/OCB can invest through either of the two modes- through inward remittance through normal banking channels or from the NRE/FCNR (B) account of the investor.

The Indian company is required to give a report not later than 30 days from the date of receipt of the investment and another report in form FC-GPR, within 30 days of issue of shares to the Reserve Bank of India.

Government Approval
Government approval is necessary if the company is ineligible for automatic approval. In such case company need to seek approval from the Secretariat for Industrial Assistance/Foreign Investment Promotion Board of the Government of India.

ADR/GDR/FCCB Route
With the approval of the Ministry of Finance, any Indian company can issue American Depository Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds.

Housing and Real Estate
NRIs/OCBs, can invest in real state 100% with repatriation benefits. The investors can avail the benefits in the following areas:

• Service plots Development and construction of residential premises
• Real estate Investment which also includes constructing residential and commercial premises including business centers and offices
• Developing townships
• Development of urban infrastructure facilities in cities and regional level including both roads and bridges
• Investing in manufacture of building materials
• Investment in participatory ventures in all the above
• Housing Finance Institutions Investment
• Subject to prescribed guidelines, Government has recently allowed FDI in the development of integrated town ships
  

Civil Aviation
Government has allowed the NRIs/OCBs to invest up to 100% in the civil aviation sector. However for such investment, prior permission of the government is required.