FEMA, Overseas Investments

The Ministry of Finance has notified Foreign Exchange Management (Overseas Investment) Rules, 2022 (“Rules”) with a view to ease the restrictions on outbound investments in India. The Overseas Direct investment (“ODI”) rules were earlier governed by Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations 2004 and Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations 2015. The Central Government has now issued Overseas Investment Rules replacing the Two Regulations. The Rules has made significant changes to the framework for allowing overseas investments by Indian entities and resident individuals. It is now easier for domestic corporates to invest abroad while making it harder for loan defaulters and others probed by investigative agencies to remit funds overseas. The aim of these regulations is to align the current business and economic dynamics and help India in ease of doing business.