16 August 2024

The Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2024, revise several aspects of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. Key updates include aligning the definition of "control" with the Companies Act, 2013, and specifying the conditions under which startup companies are recognized. The rules now mandate prior government approval for all applicable transfers and introduce provisions for equity instrument swaps between residents and non-residents. Investments by entities controlled by Non-Resident Indians or Overseas Citizens of India will not count towards indirect foreign investment. 

Schedule I allows Indian companies to issue equity instruments for various purposes, including swaps and imports, with required government approvals. Additionally, the new sector for White Label ATM Operations includes specific net worth and compliance criteria. Foreign Portfolio Investments with common ownership are treated as a single investor group, and investments in Indian startup companies are subject to sectoral caps and conditions.