New requirement for Foreign Direct Investment
The Reserve Bank of India (RBI) has announced that with a view to integrating the reporting structures of various types of foreign investments in India, it will introduce a single master form (SMF) which is to be filed online.
The SMF will provide for reporting to the Reserve Bank of India (RBI) of (i) total foreign investment in an Indian entity, and (ii) investment by a person resident outside India in an investment vehicle in India. As a pre-requisite to implementing the SMF and to receive foreign investments in India, Indian entities will be required to provide data on total foreign investments received by them in a format specified by Reserve Bank of India (RBI). The format for providing information on foreign investment is yet to be issued by the Reserve Bank of India (RBI) and will be made available on the website of Reserve Bank of India (RBI) between June 28, 2018 to July 12, 2018.
What happens if you skip filing the information with the Reserve Bank of India (RBI) within the timeline prescribed by the Reserve Bank of India (RBI)? Indian entities not complying with this pre-requisite will be considered non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder and will not be able to receive foreign investment (including indirect foreign investment) in India.
In order to enable Indian entities to start collating the information in advance, the Reserve Bank of India (RBI) has provided the list of information that will be required to be filled in the form. These details can be found in Annex 1. The format of the SMF currently contemplated by the Reserve Bank of India (RBI) is Annex 2. The final forms will be available in the Master Direction on Reporting under the Foreign Exchange Management Act, 1999 to be issued by the Reserve Bank of India (RBI).