Eye on wilful defaulters, FinMin tweaks overseas investment rules

The rules also provide that if lenders, the concerned regulatory body or investigative agency fail to furnish the NOC within 60 days of receiving an application, it may be presumed that they have no objection to the proposed transaction. This has been done through the newly introduced Foreign Exchange Management (Overseas Investment) Rules, 2022 and Foreign Exchange Management (Overseas) Regulations, 2022 notified on Monday.

Additionally, the new rules also prohibit Indian resident from making investments into foreign entities that are engaged in real estate activity, gambling in any form, and dealing with financial products linked to the Indian rupee without the specific approval of the Reserve Bank of India (RBI).

While these particular rules make it difficult for wilful defaulters to send funds out of the country, they also make it easier for domestic corporates to invest abroad. “In view of the evolving needs of businesses in India, in an increasingly integrated global market, there is need of Indian corporates to be part of global value chain. The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics,” the finance ministry said in a statement.

Clarity on Overseas Direct Investment and Overseas Portfolio Investment has been brought in and various overseas investment related transactions that were earlier under approval route are now under automatic route, significantly enhancing ‘ease of doing business’ it said. Last year, the government in consultation with the RBI undertook an exercise to simplify these regulations.