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Important FEMA Provisions

NRI Information Zone

Investments by Non-Residents in Immovable Properties in India

Provisions of FEMA

Investment in Immovable Property

Except under the act/reg acquisition or transfer of imm.prop in india by persons resident outside india (including indian citizens resident outside india) requires prior approval of rbi.
Imm.prop in india by persons resident outside india (including indian citizens resident outside india) requires prior approval of rbi.

Investment in Immovable Property

Investment in Immovable Property

Acquisition of prop other than agri/plantation/farmhouse by nri/pio by way of purchase, gift, inheritancecourtsettlement etc (reg.3-fema21).
Purchase from resd out of funds recd thro inward remtt or nr acs,gift from nri/pio/resd or inheritance from a resd or bonafide nr holder (reg 4(a),(b)& c).
Transfer of imm.Prop (other than agri/plant/farm house) by nri to another nri or pio.
To a citizen of india residing in India.
Transfer by pio by way of sale to resident(other than agri/plant/farmhouse).
Transfer by pio by gift or sale to resd who is citizen of India.
Acquisition of imm.Prop(other than agri/plant/farmhouse) by persons outside india who are permitted to carry on business activity in india by rbi (branch /office of foreign companies).
To report to rbi in form ipi within 90 days of such acqisition.

Acquisition /transfer by foreign citizens of non-indian origin by

Foreign citizens of non-indian originwho are treated as resident in india in t/o sec.2(v) of fema 1999 are permitted (other than agri/plant/farm house).
However citizens of pakistan, bangladesh, srilanka, afghanistan, china, iran, nepal or bhutan whether resd in india or not are prohibited.
All other purchase /sale /transfer of imm.prop requires approval from rbi/goi in some cases.

As Foreign Company

Rbi 's prior approval required for setting up liaison/branch office (fema notification no 22 dt 3.5.2000)
Required to comply with indian companies act,1956
To register with registrar of companies with in 30 days of setting up a place of business.

Liaison Office (LO)

Branch Offices (BO)

Govt allows foreign companies engaged in maufacturing and trading activities to set up branches.
No direct manufacturing allowed.
Activities defined clearly.
Fema 22/reg 5/annexure.
Prior approval from rbi required.
Rbi gives approval on a case by case basis.
Financial soundness,trade links with india of the parent company and proposed activities of the bo considered.
Treated as residents.
Annual certificate on activities and accounts to be submitted from a chartered accountant.
Remittence of annual profits allowed through authorised dealers subject to submission of certain documents.

Project Offices (PO)

Foreign cos awarded projects by indian corporates.
Projects approved by appropriate authorities.
Financed by indian banks/financial institutions/ multilateral/ bilateral international financial institutions.
Application to concerned regional office of rbi.
Other connected permissions for opening of accounts etc given by rbi with the approval.
Subject to conditions applicable as per contract/approval of the project.

Premises for LO/BO

FLiaison offices are not permitted to acquire any immovable properties for carrying on their activities.
Can take on lease for periods not exceeding five years for office premises.
Branch offices allowed to acquire property for their office purposes.
Required to report such acquisition to rbi in form ipi within 90 days.
Regulation 5 of fema 22 -general permission.
All approvals for lo/bo/po under fema and subject to necessary approvals being obtained from appropriate authorities under other applicable laws/acts.
They should abide by the laws of the land.

As an Indian Company

Through incorporation of a company under indian companies act,1956.
Investment can be upto 100% depending on:
- Business plan of investor
- Investment policy of goi
- Receipt of requisite approvals
To be registered with registor of companies(roc) under indian companies act, 1956.
Once registered,indian laws apply as other domestic companies.

Joint Ventures-Advantages

Established distribution/ marketing set up of the indian partners.
Available financial resource of the indian partner.
Established contacts of the indian partner which help smoothen the process of setting up of operations.

Foreign Technology Agreements

Either through automatic route or.
Under delegated powers exercised by rbi or
By GOI.
Not available to fgn companies having /had technology arrangement/previous venture/tie up/trade mark agreement etc in the same or allied field.
Not available for small scale industries (ssi) units/ activities requiring industrial licensing.

Foreign Technical Collaboration

For remittence of fx on account of ftc section 5 of fema applies.
Treated as current account transactions.
Certain limits restrictions apply.
Goi notification no.gsr.381(e) dt 3 may 2000.
Authorised dealers may permit remittences of royalties/technical know-how fees on account of colloaboration agreements.
Subject to conditions and ceilings prescribed under the relevant schedule to section 5 of fema.
Agreements required to be registered with concerned regional office of rbi.
Rbi registers the agreements and grants approval for necessary remittences.
Tech colloaboration agreements require rbi's approval under auto route.
Applications to be submitted on plain paper (five copies) furnishing all required details to the concerned ro of rbi.
Proposals not coming under auto route to be submitted to goi ( sia,dipp,moc & i,udyog bhavan,new delhi).

Linkages/Contacts

Policy-government of inida (goi), ministry of commerce & industry (moc&i), foreign investment promotion board (fipb)/ sia.
Reserve bank of india,exchange control department(ecd), foreign investment division, central office, regional offices of ecd.
Manual on industrial policy and procedures available on govt web site : www.indmin.nic.in
Rbi web site: www.fema.rbi.org.in
Fipb matters-contact director,fc/fdi/fipb.
E-mail : srinivas@ub.nic.in