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ARTICLE · 23 APRIL 2025

Changes Brought By The Updated Master Direction On Foreign Investment In India Dated 20 January 2025

Alpha Partners
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The article discusses the updated Master Direction on Foreign Investment in India, issued by the Reserve Bank of India (RBI) on January 20, 2025, which introduces key changes for Foreign Owned or Controlled Companies (FOCCs).

IndiaGovernment, Public Sector
Alpha Partners
Alpha Partners

The Reserve Bank of India ("RBI") has issued an updated Master Direction on Foreign Investment in India1 ("Master Direction"), dated January 20, 2025, with respect to the guiding principles of downstream investment, arrangements permitted for direct investment under the Foreign Exchange Management (Non-Debt Instruments) Rules, 20192 ("NDI Rules") bringing significant changes to the regulatory framework for Foreign Owned or Controlled Companies ("FOCCs"). These amendments aim to clarify and streamline the regulations governing foreign investment, particularly concerning FOCCs' activities in India.

Deferred Payment for Share Transfers and Swap of Equity

The Master Direction has now specifically permitted FOCCs to undertake downstream investment by way of payment of consideration on a deferred payment basis or by way of swap of equity instruments. This provides greater flexibility for FOCCs in structuring their transactions, enabling them to manage cash flows more

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