India - Amendment In Foreign Investment Rules

The Ministry of Finance (MoF) has, by way of notification dated 27 July 2020 (Notification), notified amendments in the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (Non-debt Rules). As per the Notification:

(a) Non-debt Rules shall be administered by the Reserve Bank of India (RBI);

(b) RBI may interpret and issue necessary directions, circulars, instructions, or clarifications, for effective implementation of the Non- debt Rules; and

(c) Non-residents Indians (being Indian Nationals) can now acquire upto 100% ownership in Air India Limited (AIL).

Earlier, in order to encourage the non-resident Indians to invest in civil aviation sector and to attract more bidders for AIL, the Department for Promotion of Industrial Policy and Internal Trade had, vide Press Note 2 of 2020 dated 19 March 2020 (PN2), amended the foreign direct policy (FDI) policy to, inter alia, permit FDI by non-residents Indians (being Indian Nationals) in AIL upto 100% under automatic route.

The Notification has now amended the FDI norms for civil aviation sector to give effect to the provisions of PN 2.

Please click here (pdf.6 pages) to access the notification dated 27 July 2020. For further information, please contact: Vineet Aneja, Partner, Clasis Law 

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