RBI has vide its notification dated 3rd July 2014 here restored the limits upto which Indian companies can make investments via Overseas Direct Investment or Wholly owned subsidiaries abroad. The limit which was 400% of the networth as on the last audited balance sheet date was brought down to 100% of the net worth vide RBI circular dated 14th August, 2013 here.
However RBI has decided that any financial commitment by the Indian party exceeding USD 1 billion in any financial year shall require the prior approval of the RBI even though the total financial commitment is within the aforesaid limits of 400% of net worth.
The operative part of the July 2014 circular reads as follows:
2. On a review, it has been decided to restore the limit of Overseas Direct Investments (ODI)/ Financial Commitment (FC) to be undertaken by an Indian Party under the automatic route to the limit prevailing, as per the extant FEMA provisions, prior to August 14, 2013. It has, however, been decided that any financial commitment exceeding USD 1 (one) billion (or its equivalent) in a financial year would require prior approval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet).
However RBI has decided that any financial commitment by the Indian party exceeding USD 1 billion in any financial year shall require the prior approval of the RBI even though the total financial commitment is within the aforesaid limits of 400% of net worth.
The operative part of the July 2014 circular reads as follows:
2. On a review, it has been decided to restore the limit of Overseas Direct Investments (ODI)/ Financial Commitment (FC) to be undertaken by an Indian Party under the automatic route to the limit prevailing, as per the extant FEMA provisions, prior to August 14, 2013. It has, however, been decided that any financial commitment exceeding USD 1 (one) billion (or its equivalent) in a financial year would require prior approval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet).
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