Foreign Exchange Management (Nondebt Instruments) (Amendment) Rules, 2021

The document provided outlines the amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, specifically addressing the exclusion of investments made by Indian entities controlled by Non-Resident Indians (NRIs) from the indirect foreign investment calculation.

Key Points:

1. Short Title and Commencement:

   • The new rules are titled "Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2021".
   • They come into effect upon publication in the Official Gazette.

2. Exclusion of NRI-controlled Investments:

   • Investments made by Indian entities that are owned and controlled by NRIs, under the condition of non-repatriation, will not be considered for the calculation of indirect foreign investment.

3. Historical Context:

   • The principal rules were initially published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), on 17th October 2019.
   • Subsequent amendments have been made on dates including 5th December 2019, 22nd April 2020, 27th April 2020, 27th July 2020, and 8th December 2020.

This amendment aims to clarify the foreign investment landscape by excluding certain types of investments made by Indian entities with NRI control from the indirect foreign investment calculation, providing clarity and guidance within the regulatory framework.