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ARTICLE · 20 MAY 2024

Investments Into Foreign Funds: FEMA Implications

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This article seeks to simplify and summarize the legal provisions and their implications on such fund investments.

IndiaFinance and Banking
Metalegal Advocates
Metalegal Advocates
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Outbound investments made by Indian resident individuals and entities into foreign funds such as alternative investment funds, venture capital funds, etc., are regulated by the foreign exchange laws in India. While such law seeks to primarily regulate inward and outward fund flows in India, the interplay between the commercial exigencies to make investments and the legal regime presents a difficult and confusing terrain. This article seeks to simplify and summarize the legal provisions and their implications on such fund investments.

Introduction

Investments made into foreign funds by Indian resident individuals and entities are governed by the provisions of the Foreign Exchange Management Act, 1999 ('FEMA') and the Overseas Investment Rules, 2022 and the regulations and master directions issued along with such rules (collectively referred to as 'OI Rules').

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