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Investment in a Firm
or Proprietory Concern
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| 1. |
General
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i. |
To regulate investment
by a person resident outside India in a partnership firm or a proprietory
concern in India, the Reserve Bank has framed FEM (Investment in Firm
or Proprietory Concern in India) Regulations, 2000. |
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| 2. |
Investment
in Partnership/ Proprietorship Concerns |
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Reserve Bank has granted
general permission to a non-resident Indian or a person of Indian
origin resident outside India, to make investment by way of contribution
to the capital of a firm or a proprietory concern in India subject
to the following conditions: |
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i. |
the amount invested is
received either by inward remittance through normal banking channels
or out of an account maintained with an authorised dealer/ authorised
bank by the non-resident Indian or the person of Indian origin in
accordance with the relevant Regulations; |
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ii. |
the firm or the proprietory
concern is not engaged in any agricultural/ plantation activity or
real estate business, ie. dealing in land and immovable property with
a view to earning profit or earning income therefrom; |
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iii. |
the amount invested shall
not be eligible for repatriation outside India; |
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iv. |
where investment is made
out of NRSR account of the non-resident investor, the income earned
on investment or proceeds of investment shall be credited only to
the NRSR account of the investor; |
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v. |
the firm or the proprietory
concern is not engaged in print media. |
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| 3. |
Payment
or Credit of Income and Investment |
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i. |
Reserve Bank has granted
general permission to a firm or proprietory concern to make payment
in rupees to or for credit of the non-resident Indian or a person
of Indian origin, the amount invested in the said firm/ concern and
income accruing on such investment by way of profit to such person. |
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| 4. |
Other
Investments |
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i. |
Any other investment by
way of contribution to the capital of a firm or a proprietory concern
or association of persons in India by a non-resident, not covered
above, shall require prior approval of Reserve Bank (which may permit
so on an application made to it in this respect). |
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| 5. |
Definitions
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i. |
Non-Resident Indian (NRI):
means a person resident outside India who is a citizen of India or
is a person of Indian origin. |
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Note: Non-resident Indians
become residents of India only when they come back to India for employment
or for carrying on in India any business or vocation or for any other
purpose indicating an indefinite period of stay in India. They are
not regarded as persons resident in India during their short visits
to India for holiday, business, etc. |
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Note: Indian citizens who
proceed abroad for short business visits, medical treatment, higher
studies and such other purposes which do not indicate their intention
to stay outside India for an indefinite or uncertain period are considered
as persons resident in India during their temporary absence from India. |
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ii. |
Person of Indian Origin:
means a citizen of any country other than Bangladesh or Pakistan or
Sri Lanka, if: |
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a. |
he, at any time, held an Indian passport; or |
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b. |
he or either of his parents or any
of his grandparents was a citizen of India, by virtue of the Constitution
of India or Citizenship Act, 1955 (57 of 1955); or |
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c. |
the person is a spouse of an Indian
citizen or a person refered to in (a) & (b) above. |
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