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ARTICLE · 04 JANUARY 2021

Further Amendments To Foreign Exchange Management (Non-Debt Instruments) Rules

Khaitan & Co.
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On 8 December 2020, the Ministry of Finance, Government of India notified the Foreign Exchange Management Rules, 2020.

IndiaGovernment, Public Sector
Moin Ladha
Moin Ladha
Parag Bhide
Parag Bhide
Anvita Mishra
Anvita Mishra
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Introduction:

On 8 December 2020, the Ministry of Finance, Government of India notified the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2020 (NDI Amendment Rules). The NDI Amendment Rules (i) notified increase in the sectoral cap for foreign direct investment (FDI) in the defence sector to 74%; and (ii) issued certain clarifications on the present policy on investments from countries sharing land borders with India.

We have analysed below the amendments introduced to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) through NDI Amendment Rules.

Analysis:

  • FDI from multilateral banks/funds: The DPIIT, through Press Note 3 (2020 Series) dated 17 April 2020 (PN 3), had introduced certain protectionist measures against investments from countries sharing land borders with India. In view of the PN 3 restrictions, approval of the Government is required for both primary and secondary acquisitions by

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