Investment in unlisted foreign entity by way of acquisition of equity capital or subscription as a part of the Memorandum of Association of the foreign entity (irrespective of % stake), or  Investment in listed foreign entity where the stake if 10% or more of the paid-up equity capital, or  Investment with control* where investment is less than 10% of the paid-up equity capital of a listed foreign entity.

Control: The right to appoint a majority of the directors or control management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreement or voting agreements that entitle them to 10% or more of voting rights or in any other manner in the entity.

Permissible investors under automatic route

An Indian entity which is defined as a ‘Company defined under the Companies Act, 2013 or a body corporate incorporated by any law for the time being in force or a Limited Liability Partnership (LLP) formed under the Limited Liability Partnership Act, 2008 or a partnership firm registered under the Indian Partnership Act, 1932’ and Resident Individuals.

Financial commitment

Financial commitment by a person resident in India means the aggregate amount of investment by way of investment into equity capital, debt other than Overseas Portfolio Investment (OPI) and non-fund based facility or facilities extended by it to all foreign entities. Resident Individuals are permitted only to make investment in equity capital of overseas entities.

Permissible limits

Financial commitment shall not exceed 400% of net worth as per the last audited balance sheet (not more than 18 months preceding the date of transaction) or USD 1 (one) billion (or its equivalent) in a financial year, whichever is lower. Any resident individual may make ODI by way of investment in equity capital or OPI in the manner provided in Schedule III of subject to the overall ceiling under the Liberalized Remittance Scheme i.e. USD 250,000 per annum.

Prohibited sectors

Real estate activity, gambling in any form, dealing with financial products linked to the Indian Rupee without having specific approval of the Reserve Bank of India. In addition to these, Resident Individuals are not allowed to invest in financial sectors and set up any Step-Down Subsidiary (SDS).