Q. Query regarding FDI

Question

Non Resident investor wants to make investment In India Rice Mill Private Limited  . AD Banks have no complete knowledge  regarding this. We want to enquire is there any government approval route or automatic approval route for investment from outside India.

How much percentage they can invest in Indian company under Automatic Route?

Which documents need if  government approval route requires?

Please guide us

RBI/2007-2008/18
Master Circular No.02/2007-08

Investments in Small Scale Industrial units

A foreign investor can invest in an Indian company which is a small scale industrial unit provided it is not engaged in any activity which is prohibited under the FDI policy. Such investments are subject to a limit of 24% of paid-up capital of the Indian company/SSI Unit. An SSI Unit can issue equity shares / fully convertible preference shares / fully convertible debentures more than 24% of its paid-up capital if: (a) It has given up its small scale status, (b) It is not engaged or does not propose to engage in manufacture of items reserved for small scale sector, and (c) It complies with the sectoral caps specified in Annex-2. It is clarified that the company/SSI Unit would be reckoned as having given up its SSI status, if the investment in plant and machinery exceeds the limits prescribed under the Micro, Small and Medium Enterprises Development Act, 2006.

 

Where Non Resident investor wants to invest the money , It's a Private limited company and It has given up its large scale status   It is covered under Large Scale Unit. Private limited company  have taken registration under large enterprise registration- Industrial Entrepreneur Memorandum