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Friday, April 2, 2010

ODI under Automatic route for participating in Submarine Cable Systems consortium subject to FEMA online filing & other conditions

In general, Overseas Direct Investments (ODI) shall not 400% cent of the net worth of the Indian company, under the automatic route.

Now, Indian companies are allowed to participate in a consortium with other international operators to construct and maintain submarine cable systems on co-ownership basis under the automatic route on satisfying the following conditions,

  1. Licence from the Department of Telecommunication, Ministry of Telecommunication & Information Technology to establish, install, operate and maintain International Long Distance Services (ILDS).
  2. Certified copy of the Board Resolution approving such investment.
  3. Comply with Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004.
  4. Make Online filing for allotment of Unique Identification Number as per A.P. (DIR Series) Circular No. 36 dated February 24, 2010 which are detailed below,
  • Online Filing: The new system would enable on-line generation of the Unique Identification Number (UIN), acknowledgment of remittance/s and filing of the Annual Performance Reports (APRs) and easy accessibility to data at the AD level for reference purposes.
    Transactions in respect of Mutual Funds, Portfolio Investment Scheme (PIS) and Employees Stock Options Scheme (ESOPS) are also required to be reported on-line in the Overseas Investment Application.
  • FEMA Online Website: The on-line reporting would be required to be made by the Centralized Unit/Nodal Office of AD Category - I banks. The Overseas Investment Application would be hosted on the Reserve Bank's Secured Internet Website (SIW) https://secweb.rbi.org.in and a link would be made available for accessing the Application on the main page of the website.
  • Physical Filing: The application for overseas investment under the approval route would continue to be submitted to the Reserve Bank in physical form as hitherto, in addition to the on-line reporting of Part I as contemplated above, for approval purposes. Further, the transactions relating to closure / disinvestment/ winding up/ voluntary liquidation of the overseas Joint Ventures/Wholly Owned Subsidiaries (JVs / WOSs) under the automatic and approval routes (Part IV of form ODI) would continue to be submitted to the Reserve Bank in physical form as is being done at present.

Source: Liberalisation of Overseas Direct Investment as per A.P. (DIR Series) Circular No.45 dated 1st April 2010.

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