Updated as on 04.11.2022
Yes, a Resident Individual is eligible to make investment in the equity capital of listed as well as unlisted foreign entities by way of Overseas Direct Investment (ODI) as well as Overseas Portfolio Investment (OPI).
Let’s understand the term ODI and OPI.
Overseas Direct Investment (ODI) means an investment by way of acquisition of equity capital of a foreign company which is engaged in a bonafide business activity.
Overseas Portfolio Investment (OPI) means investment by way of acquisition of equity capital of a foreign listed company.
Can a Resident Individual invest in a Listed Foreign Entity?
Yes, Resident Individuals are eligible to invest in the equity capital of a listed and unlisted foreign entity. The investments made in the listed foreign entity shall have the following specification-
- Investment of 10% or more (with or without control) of the paid-up equity capital of a listed foreign company, shall be treated as ODI.
- Investment of less than 10% of the paid-up equity capital of a listed foreign entity, with control shall be treated as ODI
- Investment of less than 10% of the paid-up equity capital , without any control, shall be treated as OPI
Amount of investment permitted for overseas investment Indian individuals?
Investment up to USD 2,50,000 is permitted under automatic route.
Can being an individual invest in a Start-up set-up abroad?
ODI in the start-ups recognised under the laws of host country. The said investment shall be done only from the owned funds.
Can investment in a financial sector foreign entity is also permitted?
Investment by way of inheritance, ESOP/ Sweat Equity or Minimum Qualification Shares can be done in a foreign entity which is engaged in a financial sector.
Want to invest in IFSC-GIFT City. Will the investment be treated as ODI?
Yes, the investment made in IFSC will be
Being a wilful defaulter, am I eligible to make investment outside India?
Yes, RBI has permitted individuals who are listed as wilful defaulter, or has account appearing as NPA or are under investigation by financial regulator/ CBI/ ED/ SFIO to invest outside India subject to submission of NOC.
Compliances to done for making investment outside India?
Investment made is subject to the compliances with the provisions related to investment route, investment limit, pricing guidelines, reporting requirements, obligations and many more as stated in the Liberalised Remittance Scheme as well as Overseas Investment Regulatory Framework comprising Rules, Regulations and Master Directions.
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I am a seasoned expert in international investments and financial regulations, having delved deeply into the intricacies of Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI). My wealth of knowledge is not only theoretical but stems from practical experience and an understanding of the nuances in the field. Let me walk you through the concepts discussed in the article.
Overseas Direct Investment (ODI): ODI involves acquiring equity capital of a foreign company engaged in a legitimate business activity. It is crucial to note that the investment is made by a resident individual. This type of investment is significant and requires compliance with specific regulations and guidelines.
Overseas Portfolio Investment (OPI): In contrast to ODI, OPI pertains to investments in the equity capital of a foreign listed company. The key distinction lies in the nature of the target company, which must be listed. The article outlines the criteria for categorizing investments as ODI or OPI based on the percentage of equity capital acquired and the presence or absence of control.
Investment in Listed Foreign Entities: Resident Individuals are eligible to invest in both listed and unlisted foreign entities. The article specifies the conditions under which such investments are categorized as ODI or OPI, taking into account the percentage of equity capital acquired and the presence or absence of control.
Investment Limit for Indian Individuals: The article mentions that Indian individuals can invest up to USD 2,50,000 under the automatic route. This emphasizes the importance of adhering to prescribed limits and guidelines.
Investment in Start-ups Abroad: Residents can engage in Overseas Direct Investment in start-ups recognized under the laws of the host country. Notably, such investments should be made only from owned funds, adding an additional layer of regulatory consideration.
Investment in Financial Sector Foreign Entities: The article discusses the permissibility of investment in financial sector foreign entities through means such as inheritance, ESOP/Sweat Equity, or Minimum Qualification Shares.
Investment in IFSC-GIFT City: The article clarifies that investments made in the IFSC-GIFT City will be treated under specific regulations, highlighting the need for individuals to be aware of the unique considerations for such investments.
Investment by Wilful Defaulters: Surprisingly, even individuals listed as wilful defaulters or under investigation by financial regulators are permitted to invest outside India, subject to certain conditions and submission of a No Objection Certificate (NOC) as per RBI regulations.
Compliances for Overseas Investments: The article underscores the importance of complying with various provisions related to investment routes, limits, pricing guidelines, reporting requirements, and obligations. The compliance framework includes adhering to the Liberalised Remittance Scheme and the Overseas Investment Regulatory Framework.
In conclusion, understanding and navigating the complexities of Overseas Direct Investment and Overseas Portfolio Investment require not only knowledge of the regulations but also a keen awareness of the specific conditions and compliance requirements. This expertise is vital for individuals, and Corporate Professionals (CP) stands as a reliable source for comprehensive advisory and legal services in this domain.
