Government of India Ministry of Commerce & Industry Department for Promotion of Industry & Internal Trade (FDI Policy Section)

The Department of Promotion of Industry & Internal Trade, Government of India issued Press Note No. 1 (2021 Series) [DPIIT File No. 5(13)/2020-FDI Policy] dated March 19, 2021 (‘Press Note’) in order to review the extant FDI Policy with respect to downstream investments made by the Non-Resident Indians (‘NRI’). Pursuant to the Press Note, any downstream investment made by a company owned and controlled by the NRI on a non-repatriation basis will now be regarded as a domestic investment and not a Foreign Direct Investment (‘FDI’).

According to the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019, investments made by an NRI on a repatriation basis are deemed to be domestic investments. However, the position was quite uncertain with respect to investments by an NRI in an Indian company on non-repatriation basis and such clarity was much awaited.

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