S. Jaykishan

Chartered Accountants

Financial Commitment (FC) by Indian Party under Overseas Direct Investments (ODI) – Restoration of Limit

Financial Commitment (FC) by Indian Party under Overseas Direct Investments

In an attempt to shore up the rupee, former RBI chief Duvvuri Subbarao vide A.P. (DIR Series) Circular No. 23 dated August 14, 2013 had limited the overseas investment by Indian companies to 100% of their net worth from the existing 400%. Assessing the improvements in the market scenario, and the appreciation in rupee from the last years recorded low levels against dollar, RBI has again relaxed the norms for overseas investments by Indian parties and restored the ODI Investment limits to 400% of the Net Worth. This is a welcoming change for the Indian corporates who wish to strengthen their foothold overseas; however, the same is accompanied with a restriction wherein any ODI or financial commitment of more than USD 1 billion in a particular financial year would require prior approval of the RBI, even if such ODI or financial commitment is within the permissible ODI limit of 400%.