Easier norms for Foreign Venture Capital Investors

The RBI vide the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Third Amendment) Regulations, 2016 have allowed Foreign Venture Capital Investors (“FVCI”) registered with the SEBI to purchase the following securities without obtaining any prior approval of the RBI:

  • equity or equity linked instruments or debt instruments issued by an Indian Company or by start-ups; and / or
  • units of a Venture Capital Fund (“VCF”) / Category I Alternative Investment Fund (“AIF”) or units of a scheme or of a fund set up by a VCF / Category I AIF.

Further, the current amendments also permit FVCIs to:

  • acquire securities or above stated instruments, by way of subscription or secondary transfer; and
  • transfer, by way of sale or otherwise, the above stated instruments to any person whether resident of India or not. 
RBI has added ten (10) sectors with the Infrastructure Sector to the list of permissible sectors for investments by FVCIs.