The Reserve Bank of India (RBI) has amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 to insert the definition of “manufacture” and to amend the definition of “Ownership and Control” as stated under the Guidelines for calculation of total foreign investment in Indian companies, transfer of ownership and control of Indian companies and downstream investment by Indian companies.

The amendment regulations further seeks to amend the sector specific policy for foreign investments and the guidelines for the establishment of Indian companies/ transfer of ownership or control of Indian companies, from resident Indian citizens to non-resident entities, in sectors under government approval route. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Second Amendment) Regulations, 2016 has been issued through Notification No.FEMA.362/2016-R, dated February 15, 2016 in this regard.

By another Notification No.FEMA.361/2016-RB of the same date, definition of NRI has also been amended for the purpose of said Regulations. NRI now means an individual resident outside India who is citizen of India or is an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.