Investment Options

INVESTMENT OPTIONS

Foreign investment is allowed in almost all the sectors of the Indian economy. Investment may be made either under the automatic route (i.e. no prior government approval is required) or the government route (i.e. prior government approval is required) depending upon the specific sector and the sect oral investment limits prescribed by the government under the Foreign Direct Investment (FDI) Policy.

Sectors in which foreign investment is currently prohibited are:

  • A person resident outside India or an entity incorporated outside India may invest in shares, mandatorily and fully convertible debentures or mandatorily and fully convertible preference shares of an Indian company.
  • A person resident outside India may acquire shares of a listed Indian company on the stock exchange through a registered broker as provided under the FDI Scheme.
  • Foreign Institutional Investors (FIIs) registered with SEBI may:
    1. Purchase shares, convertible debentures and warrants issued by Indian companies under the Portfolio Investment Scheme (PIS).
    2. Trade in all exchange traded derivative contracts approved by RBI/SEBI on recognized Stock Exchanges in India
    3. Purchase shares, convertible debentures and warrants of an Indian company through offer/private placement
    4. Short sell, lend and borrow equity shares of Indian companies
  • Registered Foreign Portfolio Investors (RFPI) may:
    1. Purchase and sell shares, convertible debentures and warrants of Indian company through registered broker on recognized stock exchanges in India
    2. Purchase shares and convertible debentures which are offered to public in terms of relevant SEBI guidelines/ regulations.
  • A SEBI registered Foreign Venture Capital Investor (FVCI) may:
    1. Invest in Indian Venture Capital Undertaking (IVCU) or Venture Capital Fund (VCF) or in a scheme floated by such VCFs.
    2. Purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCU or of a VCF or in units of schemes / funds set up by a VCF through initial public offer or private placement or by way of private arrangement or purchase from third party.
    3. Invest in securities on a recognized stock exchange subject to relevant rules/regulations.
  • NRIs / PIOs may purchase:
    1. Units of domestic Mutual Funds
    2. Units of Money Market Mutual Funds
    3. Government dated Securities / Treasury Bills
    4. Bonds issued by a Public Sector Undertaking (PSU) in India
    5. Shares and convertible debentures of Indian companies
    6. Shares and convertible debentures of Indian companies through stock exchange under the Portfolio Investment Scheme
    7. Shares in Public Sector Enterprises being dis-invested by the Government of India
    8. Exchange traded derivative contracts approved by SEBI
    9. Non-convertible debentures of a company incorporated in India
    10. Perpetual debt instruments and debt capital instruments issued by banks in India
  • NRIs / PIOs may purchase any immovable property in India (other than agricultural land, plantation property or a farm house).

CONTACT

DAKSH ASSOCIATES

Corporate Law Advisors
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: (+91) 9312 458 485

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