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ARTICLE · 06 JUNE 2020

Amendment To The Foreign Investment Rules: Harmonizing The Regulatory Landscape

CMS INDUSLAW
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On April 27, 2020, the Ministry of Finance notified the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2020 to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

IndiaGovernment, Public Sector
Revathy Muralidharan
Revathy Muralidharan
Ravi Dubey
Ravi Dubey
Shweta Adhikari
Shweta Adhikari
Nabarun Chandra Ray
Nabarun Chandra Ray
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1. INTRODUCTION

On April 27, 2020, the Ministry of Finance notified the Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 20201 (the "Amendment") to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (the "Rules").

The Amendment introduces changes with respect to (i) acquisition of shares by way of rights issue after renunciation by an existing shareholder; (ii) sourcing norms for Single Brand Retail Trading ("SBRT"); (iii) relaxations for foreign investment in the insurance sector; and (iv) clarifications with respect to foreign portfolio investors ("FPIs"). Considering the current political and economic landscape in our country, these changes were introduced with the intention of harmonizing and clarifying certain foreign investment norms.

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