Foreign Direct Investment Approval
- An industrial undertaking, i.e., a company with interests in
industry can invest upto 24% equity in a MSME unit.
- If the equity goes beyond 24%, the industrial unit loses its MSME
- There is no restriction on the extent of equity that can be held
by a Non-resident Indian (NRI) as an individual/partner in a MSME
- Investors need to file an application with the Reserve Bank of
India (RBI) in the prescribed format and approval is ordinarily
granted within 15 days.
- For foreign investment outside the automatic route, clearance
has to be obtained from Foreign Investment Promotion Board (FIPB).
- Applications for setting up a 100% Export Oriented Unit are also
required to be filed with the SIA.
- For setting up a unit in an Export
Processing Zone (EPZ),
application has to be filed with the Development Commissioner of the
- Under automatic procedures, foreign technology agreements are
being permitted in respect of industries that are designated as high
- The use of foreign brand names and / or trade mark of goods is
also now being permitted freely.
For further information regarding automatic
approvals, write to
EXCHANGE CONTROL DEPARTMENT
RESERVE BANK OF INDIA
NEW CENTRAL OFFICE BUILDING
SHAHEED BHAGAT SINGH ROAD
BOMBAY - 400023
TEL: 2861602, 2860604 FAX: 2864667, 2861892
For proposals not coming in the automatic approval
category write to:
SECRETARIAT OF INDUSTRIAL APPROVAL (SIA)
DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION
MINISTRY OF INDUSTRY UDYOG BHAWAN
NEW DELHI - 110001
TEL: 3014005 FAX: 3011770
FOREIGN TECHNOLOGY AGREEMENTS
Automatic permission is given for foreign technology agreements
up to certain ceilings covering the same high priority areas.
HIRING FOREIGN TECHNICIANS
permission is necessary for hiring foreign
technicians and full powers have been delegated to the RBI.
Liberalisation in "FDI"
TRATMENT IN PAYMENT OF ROYALTY
UNDER FOREIGN TECHNOLOGY COLLABORATION
It has now been decided by the Government that all companies
irrespective of the extent of foreign equity in the shareholding,
who have entered into foreign technology collaboration agreements
may henceforth be permitted on automatic approval route to make
royalty payments at 8% on exports and 5% on domestic sales without
any restriction on the duration of the royalty payments. The ceiling
on payment of lumpsum fee/ royalty on the automatic route would
continue to apply in all cases.
Earlier only wholly
owned subsidiaries were permitted to make payment of royalty at the
same rate to their offshore parent companies without any restriction
on the duration of the royalty payment.