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Legal Compliances for Foreign Direct Investments (FDI) as per the Reserve Bank of India-Clothing & Apparel Industry: Best FDI Attorney Legal Advice in India

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Legal Compliances for Foreign Direct Investments (FDI) as per the Reserve Bank of India-Clothing & Apparel Industry: Best FDI Attorney Legal Advice in India

“The routes to FDI in India or Foreign Direct Investments in India can be squarely described into twa parts i.e. the automatic route and the government route. The foreign Corporation has to register their company in India or register their Corporation in India to commence their business and the same can be done through an FDI Attorney in India. An online legal consultation should be obtained before opening bank account in India and a proper legal advice should be obtained before applying for licenses and permits. Any noncompliance and/or nonadherence may lead to huge penalties and embarrassment.”

In India, foreign investment is controlled by the Government of India’s FDI policy and the requirements as provided in the Foreign Exchange Management Act (FEMA) 1999. The Reserve Bank published a Notification No. FEMA 20/2000-RB, including the relevant regulations. This notice has been updated on a regular basis. Almost all industries are open to foreign investment.

Foreign Direct Investment Routes
Foreign Direct Investment (FDI) can be made in two ways: automatically or through the government. The foreign investor or Indian corporation does not need Government of India or Reserve Bank authorisation for the investment under the Automatic Route. Prior permission of the Indian government, Foreign Investment Promotion Board (FIPB), Ministry of Finance is necessary under the Government Route. Annex-2 details the foreign investor entry process and also sector-specific investing limitations in India. The Indian government creates the FDI policy. ‘The Guidelines on Investment in India- Foreign Investment, Policies & Procedures’ contains the policies and procedures for FDI in India. This document is in the public domain and may be obtained from the Department of Industrial Policies and Promotion’s website at the Ministry of Commerce and Industry. The way of receiving of money, the issuing of shares or convertible debt securities and preference shares, and the reporting of investments to RBI are all governed by FEMA Regulations.

Prohibited activities as per Reserve Bank of India
Foreign investment in any form is prohibited in a company, a partnership firm, a proprietary concern, or any other entity, whether incorporated or not, engaged or proposing to engage in activities such as farm house construction, real estate company, Nidhi Company, Trading in Transferable Development Rights, lottery or gambling, agricultural or plantation tasks, chit fund or atomic energy business, retail trading. The Reserve Bank of India has stated that real estate sector does not include the development of townships, the building of commercial or residential properties, or the construction of roads or bridges. It is further underlined that partnership businesses or proprietorship concerns with investments in the Print Media sector are not permitted under FEMA laws.

Eligibility as per the Reserve Bank of India Guidelines
A person residing outside of India, or a company formed outside of India, may invest in India, pursuant to the Government of India’s Foreign Direct Investment Policy. It is important to understand that no one from Pakistan or Bangladesh is permitted to invest in India. Former OCBs that have changed themselves into businesses established outside of India are eligible to make new investment as per the FDI Scheme if they are not under RBI or adverse SEBI’s notice. “Overseas Corporate Body (OCB)” means and includes an entity as explained in Regulation 2 clause (xi) of the Foreign Exchange Management Regulations, 2000, that was in presence on the commencement date of these Regulations and was eligible to conduct transactions under the overall permit issued under the Regulations prior to such commencement.

Reporting of the Foreign Direct Investment
Under the FDI Scheme, an Indian entity gaining investment outside from India for convertible debentures, issuing shares, or preference shares must submit the details of the investment to the RBI within 30 days of receipt. The date of receipt of money in foreign currency and its Indian rupee equivalent, the foreign investor’s name and address, details of government authorization for the investment, and the names and addresses of the Authorized Dealer via whom the funds were received are all facts that must be disclosed.

The Foreign Direct Investor can obtain an online legal consultation and understand about the corporate laws of India and the business laws of India through the FDI Attorney in India.

Any foreign investor can invest in India through a single window – the Foreign Investment Facilitation Portal (FIFB) run by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, Government of India under the Automatic Route, that does not demand RBI approval, or the Government Route, which demands prior approval from the relevant Ministries or Departments.
Authored By: Adv. Anant Sharma & Afsana Khan

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