Indian direct investment in
JV/WOS abroad
·
Routes
for overseas investment
·
Streamlining of the overseas investment
policy
·
Overseas investment approvals
·
Sector-wise, country-wise etc. classification of
overseas investment
·
Annexure-1 -
Statement of approved overseas investments
·
Annexure-2 - Actual
investment outflow
·
Annexure-3 - Inflows from JV/WOS
· Annexure-4- Sector-wise break-up of overseas investment approvals
·
Annexure-5-
Classification of approved overseas investments by Economic Regions
·
Annexure-6- Country-wise classification of approved
overseas investment
(Updated
on
Liberalisation of the policy on Indian investment overseas was first undertaken in 1992 on the recommendations of the Kalyan Banerjee Committee. Further liberalisation, and streamlining of procedures, was undertaken in 1995 when revised guidelines were notified. Since then the policy has been consistently liberalised from time to time. RBI was designated as the nodal agency for administering the policy, which had earlier been entrusted to the Ministry of Commerce. The basic rationale for opening up the regime of Indian investments overseas has been the need to provide Indian industry access to new markets and technologies with a view to increasing their competitiveness globally and help the country’s export efforts.
2. Routes
for overseas investment
The liberalised policy provides for the following routes :
(i) Automatic Route : Indian corporates/Registered partnership firms have been allowed to invest in entities abroad upto 100% of their net worth in a year, without prior approval of Reserve Bank or Government of India. The investment can be funded out of balances held in Exchange Earners Foreign Currency Account (EEFC) of the Indian company or 100% ADR/GDR proceeds or by drawing foreign exchanges from an authorized dealer in India up to 100% of the net worth of the Indian company. Such investments would be reported post facto to the Reserve Bank.
(ii) ADR/GDR Automatic Route : In terms of this scheme , Indian companies can freely utilise up to 100% of ADR/GDR proceeds for overseas investments without any limit under the automatic route subject to post facto report to the Reserve Bank. (Refer RBI Notification No. FEMA.40/2002-RB dated March 2, 2001 in partial modification of notification No. FEMA 19/2000-RB dated 3rd May 2000 on RBI website www.rbi.org.in).
(iii) ADR/GDR automatic stock/ swap route : Under this route Indian companies can automatically swap their fresh issue of ADRs/GDRs for overseas acquisitions in the same core activity subject to post facto report to RBI. (Refer RBI Notification No. FEMA 19/2000-RB dated 3rd May 2000 as amended by Notification No. FEMA 40/2001-RB dated March 2, 2001).
(iv) Normal Route : Proposals not covered under the above automatic routes are considered by the Special Committee on Overseas investments headed by the Deputy Governor, RBI with member representatives from Ministries of Finance, Commerce, External Affairs and the Reserve Bank. RBI is the secretariat for this Committee. The application for direct investment in joint venture/ wholly owned subsidiary outside India or by way of exchange of shares of a foreign company, shall be made in form ODI or in form ODB respectively, to RBI, Exchange Control Department., Central Office, Mumbai – 400 001.
3. Streamlining of the overseas investment policy
The policy for Indian direct investment abroad has been substantially liberalized over the past three years. During the fiscal year 2003-04, the policy has been further streamlined as follows :
(i) Corporates - Listed Indian companies are permitted to invest abroad in companies, (a) listed on a recognized stock exchange and (b) which has the shareholding of at least 10% in an Indian company listed on a recognized stock exchange in India (as on 1st January of the year of the investment). Such investments shall not exceed 25% of the Indian company’s net worth, as on the date of latest audited balance sheet.
(ii) Individuals - Resident individuals are permitted to invest in overseas companies indicated as (i) above without any monetary limit.
(iii) Mutual Funds have also been permitted to invest in equity of overseas companies indicated at (i) above.
(iv) Indian corporates/Registered partnership firms are allowed to investment in entities abroad up to 100% of their net worth and the existing monetary ceiling of US$ 100 million (US$ 10 million for partnership firms ) removed.
(v) Indian corporates/Registered partnership firms are allowed to undertake agricultural activities either directly or through an overseas branch.
(vi) Investments in JV/WOS abroad through the medium of a Special Purpose Vehicle permitted under the automatic route.
(vii) Investments in JV/WOS abroad by way of share swap permitted under the automatic route.
(viii) The stipulation of minimum net worth of Rs.15 crores for Indian companies engaged in financial sector activities in India removed for investment abroad in the financial sector.
(ix) The requirement of prior approval of RBI dispensed with for diversification of activity/ stepdown investment by JV/WOS established by an Indian party.
(x) Prior permission of RBI dispensed with for transfer by way of sale of shares of a JV/WOS abroad.
(xi) Indian companies permitted to make overseas investments in foreign entity engaged in any bonafide business activity.
(xii) The overall annual ceiling on overseas investment by Indian corporates/ Registered partnership firms in JV/WOS abroad removed with effect from the financial year 2003-04.
4.
Overseas
investment approvals/ actual outflows/ inflows from
JVs/WOSs
(i) Overseas
investment approvals
Between April 1996 and March 2004, approved overseas investments have increased by about 160.6% to US$ 1450.56 million. In the current financial year 2004-05, during the period April 04-September 04, 557 approvals were granted to Indian companies for overseas investments worth US$ 567.45 million as compared to 587 approvals worth US$ 546.29 million approved in the corresponding period of last year.
Trends of approved Indian investment abroad and actual outflows over the last eight years is at
Annexure
1.
Actual ODI outflows rose from US$ 204 million in 1996-97 to US$ 1710 million in 2002-03. In 2003-04, there is a decline in outflows to US$ 1483.70 million .
In the current financial year 2004-05, during the period of April 04- September 04, actual outflows on account of overseas investment was US$ 638.78 million as compared to US$ 536.66 million in the corresponding period of last year. The trend of ODI outflows over the last five years is shown in the statement a Annexure-2.
Foreign exchange inflows from Indian overseas investments in joint ventures and wholly owned subsidiaries have been steadily rising. While inflows rose from US$ 49 million in 1999-2000 to US$ 51 million in 2000-01, there was more than five-fold increase in 2001-02 when the
inflows aggregated US$ 279 million. Thereafter the inflows have declined to US$ 102 million in 2002-03 and rose to US$ 295.05 million in 2003-04.
The returns during the period of April 04- September 2004 on account of repatriation of dividend etc. from overseas JV/WOS was US$ 43.25 million and non equity exports was Rs.262.96 crores as against US$ 74.99 million and Rs. 231.25 crores in the corresponding period of previous year.
A
statement showing trend of Actual outflows/ inflows and non-equity exports
over the last five years is at Annexure
3.
6.
Sector-wise, Country-wise etc. outgoing investments
(i) A Sector-wise break up of approvals of overseas investments is at Annexure 4. IIn the current financial year 2004-05 (April 04-September 04), India’s outgoing investments was largest in the field of manufacturing at US$ 341.40 million followed by non-financial services (including software development) at US$ 118.90 million, Others at US$ 69.34 million and Trading Sector at US$ 34.42 million .
(ii) Regionwise,
A Statement showing regional break-up of overseas investments approved is at Annexure
5.
IIn the current financial year 2004-05, during the period April 04-September 04, Economic & Social Commission for Asia & Pacific region accounted for major share of India’s overseas investment at US$ 240.19 million followed by North American region at US$ 147.29 million and European Common Market at US$ 64.29 million respectively.
During the year 2003-04, Economic & Social Commission for Asia & Pacific Region accounted for major share of India’s overseas investment approvals at US$ 290.28 million followed by European Union Region at US$ 285.24 million and North American Region at US$ 207.81 million.
(iii) Countrywise : During the period April 04 - Septembr 04, USA attracted highest Indian direct investments (US$ 147.13 mn) followed by Australia (US$ 123.73 mn), Hongkong (US$ 53.08 mn) and Kazakistan (US$ 39.05
mn)
In the year 2003-04, USA attracted highest approvals of Indian direct investments (US$ 207.14 million) followed by Mauritius (US$ 175.59 million) and Sudan (US$ 162.02 million).
A country-wise break up of overseas investments approved in the last
seven years is at Annexure
6
(Amount
in USD million)
|
Period |
No. of approvals |
Equity |
Loan |
Guaran- tee |
Total |
Annual Cap |
Actual outflow |
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
1996-97 |
290 |
363.73 |
37.76 |
155.12 |
556.61 |
500 |
204.99 |
|
1997-98 |
228 |
482.01 |
8.34 |
135.52 |
625.87 |
750 |
120.77 |
|
1998-99 |
275 |
144.98 |
18.48 |
86.21 |
249.67 |
750 |
142.83 |
|
1999-00 |
395 |
1298.93 |
50.44 |
407.64 |
1757.01 @ |
750 |
271.14 |
|
2000-01 |
714 |
1176.83 |
89.84 |
113.43 |
1380.10 @ |
1000 |
1211.85 |
|
2001-02 |
906 |
2712.46 |
157.21 |
155.86 |
3025.53 # |
1000 |
974.89 |
|
2002-03 |
1029 |
1233.29 |
96.33 |
140.69 |
1470.31 # |
1000 |
1710.08 |
|
2003-04 |
1229 |
812.40 |
224.32 |
413.84 |
1450.56 |
Annual Ceil ing removed w.e.f. 1.4.2003 |
1483.70
* |
|
2004-05
(April – Sept. 04) |
557 |
83.00 |
201.23 |
567.45 |
---- |
638.78
** |
@
The approved investments for the purpose of ceiling for the year
1999-2000 and 2000-01 is US$ 726.95million
and US$ 738.85 million respectively after excluding ADR/GDR utilisation
and large remittances by ONGC.
#
Annual ceiling of overseas investments is to be reckoned with reference
to actual outflows w.e.f. 2001-02.
*
Includes ONGC remittances – US$ 482.24 million .
**
Includes ONGC remittances of US$ 383.26 million.
Actual
investment outflows
|
Financial
year |
Equity |
Loan |
Invoked
guarantee |
Total |
|
1999-2000 |
314.31 |
3.93 |
0.40 |
318.64 |
|
2000-2001 |
1138.32 |
68.55 |
4.98 |
1211.85 |
|
2001-2002 |
850.36 |
121.11 |
3.42 |
974.89 |
|
2002-2003 |
1683.77 |
99.08 |
-- |
1782.85 |
|
2003-2004
|
1229.33 |
254.37 |
-- |
1483.70* |
|
2004-05 (April 04 – September
04) |
557.29 (441.12) |
59.46 (95.54) |
--- (---) |
616.75
# (536.66) |
Note – Figures in brackets represent the amount for the corresponding period in the previous year.
Annexure - 3
US$ million
|
Financial
year |
Dividend
|
Others
(Tech.know-how, royalty, Engg. fees,
consultancy etc.)
|
Total
@ |
Non-equity
exports
(Rs.
in crs) |
|
1999-2000 |
17.63 |
31.56 |
49.19 |
555.30 |
|
2000-2001 |
12.50 |
38.93 |
51.43 |
1325.80 |
|
2001-2002 |
36.31 |
242.97 |
279.28 |
1889.68 |
|
2002-2003 |
33.60 |
68.66 |
102.26 |
1007.07 |
|
2003-04 |
18.27 |
276.78 |
295.05 |
384.87 |
|
2004-05 ( April 04- September
04 ) |
9.73 (4.70) |
33.52 (70.29) |
43.25 (74.99) |
262.96 (231.25) |
Note – Figures in brackets represent the amount
for the corresponding period in the previous year.
@
Figures are provisional and are updated on receipt of ODRs/APRs
by RBI.
Sectorwise approved overseas investments
from April 1999 to September 2004
(Amount in US$/million)
|
Year |
Manufa cturing
|
Financial
services |
Non
financial services |
Trading
|
Others |
Total |
|
1999-00 |
535.84 |
4.26 |
1130.74 |
58.31 |
2.30 |
1731.45
|
|
2000-01 |
370.74 |
16.61 |
876.53 |
89.17 |
29.14 |
1382.19
|
|
2001-02 |
2210.90 |
48.62 |
565.49 |
139.18 |
61.34 |
3025.53 |
|
2002-03 |
1056.74 |
1.82 |
280.17 |
69.88 |
61.69 |
1470.31 |
|
2003-04 |
765.64 |
35.11 |
438.79 |
76.94 |
134.08 |
1450.56 |
|
2004-05 (April 04 –Sept. 04) |
341.40 |
3.39 |
118.90 |
34.42 |
69.34 |
567.45 |
|
Total
|
5281.26 (54.8%) |
109.81 (1.14%) |
3410.62 (35.4%) |
467.90 (4.86%) |
357.89 (3.7%) |
9627.49 |
|
Line
of activity |
Equity/
Cash |
Loan |
Guarantee |
Total
|
%
of total |
|
Manufacturing |
160.976 |
40.065 |
140.362 |
341.403 |
60.16 |
|
Non
Financial Services |
80.900 |
26.149 |
11.852 |
118.901 |
20.96 |
|
Financial
Services |
3.393 |
--- |
3.393 |
0.59 |
|
|
Trading
|
19.464 |
13.686 |
1.271 |
34.421 |
6.06 |
|
Others
|
18.488 |
3.100 |
47.759 |
69.338 |
12.22 |
|
Grand
Total |
283.221 |
83.00 |
201.234 |
567.455 |
100 |
Grand
Total - US$ 567.455 million
Regionwise approved overseas investments during
2004-05
April 04
– September 04
|
Name
of the Region |
No.
of approvals |
Equity |
Loan |
Guarant ee |
Total |
% |
|
7 |
0.966 |
0.240 |
39.050 |
40.256 |
7.09 |
|
|
East
African Community |
4 |
0.384 |
0.091 |
--- |
0.473 |
0.08 |
|
East
European Countries |
2 |
0.346 |
0.000 |
0.500 |
0.846 |
0.15 |
|
Economic
Commission for |
48 |
9.165 |
1.382 |
1.374 |
11.921 |
2.1 |
|
92 |
43.629 |
20.664 |
--- |
11.33 |
||
|
European
Free Trade Area |
7 |
1.218 |
--- |
1.685 |
0.29 |
|
|
Economic
& Social Com- mission
for Asia & Pacific |
157 |
82.658 |
18.634 |
138.899 |
240.191 |
42.33 |
|
|
166 |
119.681 |
17.445 |
10.166 |
25.95 |
|
|
Organisation
of African Unity |
10 |
1.405 |
1.066 |
5.000 |
7.471 |
1.31 |
|
Organisation
Commune Africine El Malagache |
30 |
12.145 |
16.922 |
--- |
29.067 |
5.12 |
|
Other
Asian & Oceanian & Antartic & Artic Countries |
2 |
1.541 |
0.500 |
2.041 |
0.36 |
|
|
Other
Central American & Carribean countries |
4 |
0.176 |
2.300 |
6.246 |
8.722 |
1.54 |
|
Other
African countries |
11 |
3.212 |
0.922 |
-- |
4.134 |
0.73 |
|
Other
European countries |
3 |
0.350 |
0.817 |
-- |
1.167 |
0.2 |
|
|
14 |
6.349 |
1.550 |
--- |
7.899 |
1.39 |
|
Total |
557 |
283.221 |
83.000 |
201.234 |
567.455 |
99.9 |
COUNTRY-WISE APPROVED
INDIAN DIRECT INVESTMENTS
(Amount US$ million)
|
S.No |
Name
of the country |
1996
to 2000 |
2000-01 |
2001-02 |
2002-03 |
2003-04 |
2004-05
(April 04- Sept.
04) |
Total |
|
1. |
|
-- |
-- |
-- |
-- |
0.54 |
0.004 |
0.544 |
|
2 |
|
2.61 |
2.47 |
1.91 |
94.97 |
92.87 |
123.726 |
318.556 |
|
3 |
|
26.28 |
0.50 |
50.86 |
--- |
--- |
|
77.64 |
|
4 |
|
0.30 |
---- |
-- |
--- |
--- |
|
0.3 |
|
5 |
|
0.01 |
---- |
-- |
--- |
--- |
|
0.01 |
|
6 |
|
13.45 |
0.37 |
1.13 |
1.18 |
4.08 |
0.509 |
20.719 |
|
7 |
Bahmas |
0.01 |
----- |
-- |
--- |
0.02 |
|
0.03 |
|
8 |
|
8.56 |
1.30 |
1.50 |
1.16 |
--- |
|
12.52 |
|
9 |
|
4.35 |
0.39 |
0.41 |
0.30 |
9.19 |
0.043 |
14.680 |
|
|
752.08 |
18.01 |
6.44 |
3.27 |
6.436 |
791.156 |
||
|
11 |
|
0.36 |
---- |
-- |
--- |
--- |
|
0.36 |
|
12 |
|
156.90 |
0.70 |
75.03 |
28.95 |
142.46 |
6.246 |
410.286 |
|
13 |
|
0.23 |
1.02 |
2.21 |
--- |
0.05 |
|
3.51 |
|
14 |
|
2.54 |
5.38 |
5.06 |
5.17 |
4.95 |
6.499 |
29.599 |
|
15 |
Burkino Faso |
-- |
-- |
-- |
-- |
-- |
0.047 |
0.047 |
|
16 |
|
11.14 |
1.50 |
1.00 |
0.49 |
--- |
|
14.13 |
|
17 |
|
-- |
-- |
-- |
0.02 |
--- |
|
0.02 |
|
18 |
|
3.00 |
0.93 |
1.65 |
2.34 |
0.009 |
8.589 |
|
|
19 |
|
11.03 |
--- |
0.60 |
--- |
--- |
0.005 |
11.635 |
|
20 |
|
16.23 |
---- |
-- |
--- |
--- |
|
16.23 |
|
21 |
|
17.08 |
7.94 |
13.33 |
29.55 |
26.59 |
8.464 |
102.954 |
|
22 |
|
1.85 |
--- |
|
--- |
0.03 |
0.350 |
2.230 |
|
23 |
|
-- |
-- |
-- |
-- |
0.01 |
0.346 |
0.356 |
|
24 |
|
-- |
0.01 |
--- |
--- |
--- |
0.124 |
0.134 |
|
25 |
|
5.13 |
3.36 |
--- |
0.01 |
--- |
3.066 |
11..566 |
|
26 |
|
-- |
0.54 |
-- |
0.57 |
0.22 |
0.118 |
1.448 |
|
27 |
|
2.61 |
1.80 |
0.66 |
1.83 |
84.37 |
4.639 |
95.909 |
|
28 |
|
2.40 |
---- |
-- |
--- |
--- |
0.025 |
2.425 |
|
29 |
|
6.62 |
3.49 |
1.71 |
4.92 |
18.24 |
4.998 |
39.978 |
|
30 |
|
-- |
--- |
0.03 |
0.33 |
0.01 |
|
0.37 |
|
31 |
|
-- |
--- |
0.05 |
--- |
--- |
|
0.05 |
|
32 |
391.41 |
37.64 |
16.07 |
14.80 |
16.15 |
53.088 |
529.158 |
|
|
33 |
|
0.41 |
0.17 |
4.82 |
--- |
1.89 |
|
7.29 |
|
34 |
|
7.81 |
---- |
12.38 |
0.12 |
19.28 |
19.450 |
59.040 |
|
35 |
|
-- |
-- |
5.00 |
--- |
--- |
|
5.00 |
|
36 |
|