A.P. (DIR Series) Circular No. 3 dated the June 22, 2000
JVs WOS Abroad
Indian Direct Investment in Joint Ventures (JV)/ wholly Owned Subsidiaries (WOS) outside India
Attention of authorised dealers is invited to the Reserve Bank Notification No. FEMA. 19/RB/2000 dated 3rd May, 2000 making "Foreign Exhange Management (Transfer or Issue of any Foreign Security) Regulations, 2000" under clause (a) of sub-section (3) of Section 6 read with Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999)

2. In terms of the Regulations 6 and 7 of the Notification, Indian parties are permitted to make direct investment in Joint Venture (JV) or wholly Owned subsidiary outside India, subject to their complying with the conditions specified therein. Authorised dealers may allow remittance upto the permissible limit on receipt of an application in form ODA, in triplicate, together with form A-2, duly filled in, from the investing company. Before allowing the remittance authorised dealer should ensure that the necessary documents, as prescribed in form ODA, have been submitted. Immediately after the remittance is made, the authorised dealers should forward to the Regional Office of the Exchange Control Department under whose jurisdiction it is functioning, two copies of form ODA along with a report on remittance in the form ODR, in duplicate (format enclosed). In cases where the investment is being made jointly by more than one Indian company, form ODA should be signed jointly by all the investing companies and submitted to the designated branch of the authorised dealer, who in turn should immediately forward the same to the Reserve Bank, together with a consolidated form ODR. The same procedure should also be followed where the investment is made out of the proceeds of ADR/GDR issues of Indian party in terms of Regulation 6(6) of the Notification.
   
   
3. Clause (vi) of sub-regulation(2) of Regulation 6 provides that all transactions relating to investment in a JV/WOS are to be routed through only one branch of an authorised dealer designated by the Indian party. For proper follow-up, the authorised dealers are advised to maintain party-wise record in respect of each JV/WOS separately.
   
   
4. Authorised dealers may allow remittance towards loan to the JV/WOS and/or issue guarantee to/on behalf of the JV/WOS abroad provided the applicant has an equity stake in the JV/WOS.
   
   
5. In terms of Regulation 11 of the Notification dated 3rd May, 2000 under reference Indian parties are also permitted to make direct investment in JV/WOS abroad by way of capitalisation of exports or other dues/entitlements like royalties, technical know-how fees, consultancy fees, etc. In such cases also the Indian party should be advised to submit details of the capitalisation in form ODA which should be forwarded by the designated branch of authorised dealer to the Regional Office of the Reserve Bank under whose jurisdiction it is functioning together with a report in form ODR. In this regard, it is clarified that the amount of investment by way capitalisation of exports and other dues made in terms of Regulation 11 together with the investment made by way of market purchase of foreign exchange in terms of Regulation 6 (3) (ii) should not exceed 25% of the net-worth of the Indian party as on the date of last audited balance sheet. In cases where the export proceeds are being capitalised in accordance with the provisions of Regulation 11, the authorised dealer should also obtain a custom certified copy of the invoice as required under regulation 12 (2) and forward it to the Reserve Bank together with forms ODA and ODR.
   
   
6. On receipt of the forms ODA and ODR from the authorised dealers, the Reserve Banka will allot a unique identification number to each JV or WOS abroad, which should be quoted in all future correspondence by the authorised dealker or Indian party with the Reserve Bank. Where investment is being made in an existing JV/WOS the unique identification number already allotted by the Reserve Bank should be cited in the forms and all the correspondence by the Indian party as well as authorised dealers.
   
   
7. In terms of Regulation 9 of the Notification under reference in certain cases investment in JV/WOS requires prior approval of the Reserve Bank. All investments made in terms of such approval obtained from the Reserve Bank are also required to be reported to the concerned Regional Office of the Reserve Bank in the form ODR by the designated authorised dealer. Before allowing remittance, authorised dealers should ensure that the terms and conditions stipulated by the Reserve Bank have been complied with.
   
   
8. In respect of approvals already issued by the Reserve Bank where the name of the designated branch of authorised dealer has not been indicated, the remittance may be allowed by the authorised dealer after satisfying itself that no remittance has been effected through any other authorised dealer against the relative approval letter and after obtaining an undertaking from the party that all its future foreign exchange relative approval letter and after obtaining an undertaking from the party that all its future foreign exchange transactions relating to the JV/WOS shall be effected through this authorised dealer only. The investment by way of capitalisation of exports and other entitlements made by the Indian party in accordance with the approval obtained from Reserve Bank should also be reported in form ODR based on the information furnished by the party.
   
   
9. Remittance towards Earnest Money Deposit or Issue of Bid Bond Guarantee
   
   1. Omter,s pf Regi;atopm 14 pf tje Mptofocatopm dated 3rd May, 2000 cited above, authorised dealers may, on being approached by an Indian party which is eligible for investment under Regulation 6, allow remittance towards earnest money deposit (EMD) after obtaining Form A2 duly filled in or may issue bid bond guarantee on their behalf for participation in bidding or tender procedure for acquisition of a company incorporated outside India. On winning the bid, authorised dealers may remit the acquisition value after obtaining Form A2 duly filled in and report such remittance (including the aniybt ubutuakkt renutted tiwards EMD) to the Regional Office of the Exchange Control Department under whose jurisdiction it is functioning, in form ODR, along with the details of the investment in form ODA, in duplicate, submitted by the Indian party. Authorised dealers while permitted remittance towards EMD should advise the Indian party that in case they are not successful in the bid, they should ensure that the amount remitted is repatriated in accordance with Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations, 2000. (cf. Notification No. FEMA 9/2000-RB dated 3rd May, 2000).
      
      
   2. In cases where an Indian parrty, after being successful in the bid/tender decides not to proceed further with the investment, authorised dealers should submit details of remittance allowed towards EMD/ invoked bid bond guarantee in form ODR to the concerned Regional Office of the Reserve Bank.
   
   
10. Disposal of pending proposals
    Authorised dealers may dispose of the pending investment proposals received by them before 31st May 2000 under erstwhile EEFC Fast Track Route, in accordance with Regulation 6 of the Notification dated 3rd May, 2000 under reference and report the details of remittance in the form ODR [instead of in form ODA-I prescribed under A.D.(M.A. Serise Circular No. 33 dated 5th November, 1999] along with form ODA, in duplicate, in the existing format.
    
    
11. The directions contained in this Circular are issued under Section 10(4) and section11(1) of the Foreign Exchange Management Act, 1999 (42 pf 1999). Any contravention or non-observance of these directions is subject to the penalties prescribed under the Act.

Sd/-
B. MAHESHWARAN
Chief General Manager

ODR

Report on Remittances for Overseas Direct Investment through Authorised Dealer

I	(a)	Name & Address of Indian Party/Parties	_________________	(b)	Name & Address of the designated branch of Authorised Person Tel. No./Fax No./E-Mail	_________________
			_________________			_________________
			_________________			_________________
						_________________
				(c)	A.D. Code No.	_________________
II	(a)	Name & Address of Overseas Concern	_________________	(b)	Country of Location	_________________
			_________________
	(c)	Nature of Overseas Concern (i.e.JV/WOS)		(d)	Line of Activity of JV/WOS	_________________
			_________________

III Nature of remittance :-a)* Investment in a new JV/WOS   (b)* Investment in an existing JV/WOS                                             (i.e. Freshinvestment)                       (i.e. Additional investment)                                                            Please quote the 13 digit Identification No. allotted to the JV/WOS          *Strike out whichever is notapplicable                            by the Reserve Bank.

ccccccccccccc

IV. (A) Investment under Automatic route (Under Regulation 6 of the Notification No. FEMA 19/RB-2000 dated 3rd May 2000)

Amount of FCY in trousands(                            )**    

Name of the Indian party/ parties	Date of remitt acnce	Details of remittance effected									Date pf exports/date of capitalis atcion of other dues (         ) @	Amount of exports/other dues capitalised
		From EEFC Account			By market purchases			From the ADR/GDR funds parked in India*/ outside India* (*strike out whichever is not applicable)
		Equity	Loan	Guarantee (Invoked)	Equity	Loan	Guarantee(Invoked)	Equity	Loan	Guarantee(Invoked)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)

(B) Investments under Approvals Issued by Reserve Bank (Under Regulation 9 ofthe Notification, ibid)

a) Identification No. ccccccccccccc     b) Date of Approval cccccccc

 D  D  M  M Y Y Y  Y                  

(Amount of FCY in thousands          )**          

Date of Remittance	Details of remittance effected			Date of exports/date of capitalisation of other dues (          )@	Amount of exports/other dues capitalised
	Equity	Loan	Guarantee(Invoked)

@Please specify the other dues being capitalised, viz., royalty, technical knowhow fee, consultancy fees, etc.
** Please indicate the name of the foreign currency(FCY) as per SWIFT code.

We hereby confirm that the remittance* has been allowed under the Automatic Route based on the certification given by the statutory auditirs (in form ODA) confirming compliance with the prescribed terms and conditions by the Indian party/* is in accordance with the terms and conditions of the approval letter issued by the Reserve Bank/* in respect of the invoked guarantee, the remittance has been made after satisfying that the claim is in conformity with the terms and conditions of the guarantee issued to/on behalf of the JV/WOS abroad.

     *strike out whichever is not applicable

		______________________________
Place__________________	Stamp/Seal	Signature of the Authorised Official
Date __________________		Name        :__________________
		Designation:__________________

         Instructions for compiling form ODR

1. This form alongwith form ODA (in duplicate) should be submitted to the concerned Regional Office of the Exchange Control Department, Reserve Bank of India, immidiately after making the remittance.
   
   
2. Investments involving capitalisation of exports should be reported in this form within 15 days of the exports made by Indian Party. The custom certified copy of the invoice should also be enclosed to form ODR.
   
   
3. Foreign Currency (FCY) should be as per the SWIFT code.
   
   
4. The 13 digit Identification No. issued by the Reserve Bank should invariably be quoted (except in the case of fresh investment under the Automatic Route which will be allotted subsequently) in respect of all investments routed through authorised dealer at item III (b) / IV(B)(a).
   
   
5. In case the investment is made by more than one Indian company in the same JV/WOS, the details of the remittances effected by other Indian companies through their respective authorised dealers (based on the certificates issued by the latter) and exports capitalised by other Indian companies should also be incorporated in this form with suitable remarks.
   
   
6. In case the Indian party is successful in winning the contract through bidding or tender procedure, the form ODR should be forwarded to the Reserve Bank immediately after effecting the final remittance to acquire an overseas company. Amounts remitted earlier towards Earnest Money Deposit (EMD) should also be included in the amount under report with suitable remarks.
   

(Pl. refer A.P. (DIR Series) Circular No.51/2002-RB, Dt. 24/06/2002 for Indian Direct Investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) outside India)

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