SM Advisory Services Private Limited

FEMA Consultancy

India is still not fully convertible on capital account transactions and therefore has fair degree of involvement of Foreign Exchange Regulations-(FEMA) FEMA comes into play in any inbound and outbound investment / transaction and also has implications on expat coming to India or Indians going out of India for employment or business.

We assist clients in complying with various provisions of the FEMA and obtaining approvals of the Reserve Bank of India (RBI) or the Foreign Investment Promotion Board (FIPB), as the case may be. Further, in case of delay or pending compliances, we assist clients in regularising the same and even assist them in filing Compounding Application with RBI. As FEMA consultants we have more than a decade experience in dealing on legal aspects as well as with procedures.

Though for Foreign Direct Investment (FDI) purpose, most of the sectors do not require any prior approval, the Non Resident has to comply with pricing and documentation requirements and that’s where the Company assists the foreigner in effective compliance.

FEMA also gets into play for certain transactions such as transfer of shares held by Non Resident Indian under FDI norms to Non Resident i,e, Foreign Company or Foreigner. This transfer requires prior RBI approval.

Other modes of transfer of shares between Resident and Non Resident or vice-versa are under automatic route, requiring no prior approval just reporting through Authorized Dealer.

External Commercial Borrowings (ECB) or foreign currency borrowing can be one of the attractive source of funding for Indian corporate. Even Non Residents holding equity of 25% or more can lend in foreign currency. The Company assists in complying with procedures to make Indian company eligible for ECB.

Outbound investment being in the nature of capital account transaction is a regulated transaction. Though there are hardly any sectoral caps for outbound investments such as Real Estate trading, else all other sectors are eligible for overseas direct investment. Remittances towards equity or debt in overseas company are to be routed through designated authorized dealer (banker) and is subject to certain reporting requirements.