Foreign Investment
December 7, 2020

PROTECTIONISM IN THE COVID-19 ERA – A STEP BACK FOR THE GLOBAL ECONOMY?

The COVID-19 pandemic has caused widespread economic uncertainty globally, and coupled with the US-China trade war, has caused countries to adopt protectionist measures.  While the regulations introduced by India, the US, the UK, and the European Union have taken different forms, the underlying concern is uniform – save homegrown companies, especially in strategic sectors, from being acquired by state-backed investors from other countries.

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Covid-19, Foreign Investment
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June 24, 2020

THE AMRAPALI FRAUD – INDIA’S FOREIGN INVESTMENT AND MONEY LAUNDERING LAWS SHOULD NOT BE TAKEN LIGHTLY BY INVESTORS

Foreign investment in India is regulated by the Ministry of Finance and the Reserve Bank of India (RBI), and foreign investors have a strict onus of complying with India’s Foreign Exchange Management Act, 1999 (FEMA), and its rules and regulations. Any breach of the FEMA rules and regulations can result in penalties being levied against…

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Foreign Investment, Insolvency and Restructuring
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April 29, 2020

SCRUTINY OF CHINESE INVESTMENTS IN INDIA – IMPACT DECODED

On April 17, 2020, India’s Department for Promotion of Industry and Internal Trade issued a press note amending the foreign direct investment (FDI) rules applicable to investments from countries having a land border with India. Following this, the Ministry of Finance issued a notification in the official gazette on April 22, 2020 (Notification) to amend…

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Foreign Investment
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April 2, 2020

INDIA’S NEW GUIDELINES FOR PAYMENT AGGREGATORS AND PAYMENT GATEWAY PROVIDERS

Introduction and implications in a nutshell As per the Reserve Bank of India’s (the “RBI”) Annual Report, the number of card payment transactions carried out through credit cards and debit cards during 2018 and 2019 was 1.8 billion and 4.4 billion, respectively. Prepaid Payment Instruments (PPIs) recorded a volume of about 4.6 billion transactions valued…

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Banking and Finance, Financial Services, Payment Aggregators, Payment Gateway
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November 14, 2019

THE NEW FOREIGN DIRECT INVESTMENT NORMS FOR INSURANCE INTERMEDIARIES

Background Previously, foreign direct investment (“FDI”) in insurance intermediaries was treated at par with FDI in insurance companies and was restricted up to 49% under the automatic route.  Insurance intermediaries (including, insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrator, surveyors and loss assessors) vehemently argued this to be unfair as they did…

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Foreign Investment, Insurance Law
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September 10, 2019

INDIA’S CABINET LIBERALIZES THE FOREIGN DIRECT INVESTMENT REGIME

Introduction Addressing India’s need to attract investments to revitalize its economy, on August 28, 2019, the Union Cabinet (the “Cabinet”) has approved a number of changes to the foreign direct investment (“FDI”) regime.  The reforms cover the single brand retail trading (“SBRT”), digital media and coal mining sectors.  This update discusses the key changes approved…

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Foreign Investment
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June 29, 2018

IMPACT OF THE NEW REPORTING REQUIREMENTS UNDER INDIA’S FOREIGN INVESTMENT REGULATIONS AND COMPANY LAW

Consolidated reporting form for foreign investment transactions On June 7, 2018, the Reserve Bank of India (the “RBI”) released a circular (the “Circular”) changing the reporting formats in all transactions involving issuance, or transfer of shares of Indian companies to foreign investors or vice versa.  Formerly, this was done by filing the Forms FC-GPR and…

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Corporate/M&A, Foreign Investment
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April 21, 2018

A YEAR ON, THE RESERVE BANK OF INDIA NOTIFIES REGULATIONS ON CROSS BORDER MERGERS

The Companies Act, 1956 permitted inbound mergers, i.e., merger of a foreign company into an Indian company.  Even then, there were no foreign exchange regulations on inbound mergers.  A key change that was introduced by the Companies Act, 2013 (the “Companies Act”) was to enable outbound mergers as well, i.e., merger of an Indian company…

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Corporate/M&A, Foreign Investment, Tax
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January 25, 2018

INDIA EASES FOREIGN INVESTMENT NORMS IN SINGLE BRAND RETAIL TRADING, CIVIL AVIATION AND OTHER KEY SECTORS

Introduction On January 10, 2018, the Indian government approved a number of amendments to India’s Foreign Direct Investment Policy (the “FDI Policy”) with a view to further improve the ease of doing business in India.  The reforms cover single brand retail trading, civil aviation, construction development, power exchanges and the medical devices sector.  In addition,…

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Corporate/M&A, Foreign Investment
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November 27, 2017

THE IMPACT OF INDIA’S 18/25 CAP ON INDEMNITIES IN CROSS-BORDER M&A TRANSACTIONS

It is commonplace in global M&A deals for buyers and sellers to strongly negotiate the seller’s indemnity obligations, and many a times, unsatisfactory seller indemnities result in deals not going through.  Effective May 20, 2016, the Reserve Bank of India (the “RBI”) amended India’s foreign exchange regulations (the “FEMA Regulations”), and imposed a requirement to…

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Corporate/M&A, Foreign Investment
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April 26, 2017

INDIA – CROSS-BORDER MERGER PROVISIONS NOTIFIED

The erstwhile Companies Act, 1956 (the “1956 Act”) contained provisions for the merger of a foreign company with an Indian company but not vice versa. The Companies Act, 2013 (the “ 2013 Act”) made a significant change and introduced enabling provisions for merging an Indian company into a foreign company. The provisions relating to both inbound and outbound mergers along with the corresponding amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, have been notified on April 13, 2017.

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Corporate/M&A, Foreign Investment
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June 24, 2016

INDIA EASES FOREIGN INVESTMENT NORMS IN DEFENCE, PHARMACEUTICALS, AND OTHER KEY SECTORS

Introduction India’s foreign investment regime has been liberalized significantly in the last couple of years.  On June 20, 2016, the Indian government announced a host of reforms to further liberalize foreign investment in the defence, pharmaceuticals, retail trading, civil aviation and broadcasting carriage services sectors, as also in private security agencies, and the Department of…

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Foreign Investment
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June 15, 2016

RBI PRESCRIBES LIMITS ON DEFERRED CONSIDERATION AND INDEMNITY IN CROSS-BORDER TRANSACTIONS

Introduction M&A transactions often include escrow and indemnification provisions. Recently, the Reserve Bank of India (the “RBI”) has amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, permitting parties to defer the payment of a certain portion of the consideration and open escrow accounts (to deposit…

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Corporate/M&A, Foreign Investment
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April 4, 2016

DIPP ISSUES REGULATIONS ON FOREIGN INVESTMENT IN E-COMMERCE; LIBERALIZES INSURANCE AND PENSION SECTORS

Introduction The Indian government has implemented a host of reforms to liberalize India’s foreign direct investment (“FDI”) regime.  Last week, the Indian government issued guidelines clarifying the FDI policy in the e-commerce sector, and has also further liberalized FDI in the insurance and pension sectors. This update discusses these recent changes announced by the Indian…

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Foreign Investment
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December 4, 2015

INDIA’S FOREIGN DIRECT INVESTMENT POLICY CHANGES – A CRITIQUE

Introduction India stands committed to having a Foreign Direct Investment (“FDI”) regime that is investor friendly and promotes foreign investment for overall economic growth.  Since the Modi government came to power in June 2014, many FDI policy reforms were made in sectors such as defence, rail infrastructure, construction development, insurance, pension, medical devices and others. …

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Foreign Investment
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