{"id":29919,"date":"2020-03-27T16:41:57","date_gmt":"2020-03-27T11:11:57","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=29919"},"modified":"2020-11-20T14:10:53","modified_gmt":"2020-11-20T08:40:53","slug":"basics-of-overseas-direct-investment-investment-by-indians-abroad","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/basics-of-overseas-direct-investment-investment-by-indians-abroad\/","title":{"rendered":"Basics of Overseas Direct Investment: Investment by Indians Abroad"},"content":{"rendered":"

Overseas Direct Investment has allowed Indian<\/strong>s to show their capabilities on the global platform by allowing diversification of businesses abroad and enabling businesses to grab the wide number of opportunities that come from overseas. <\/p>\n\n\n\n

Overseas Direct Investment from India is the opposite of Foreign Direct Investment<\/em><\/a><\/strong>. It not only helps the Indian party to earn profit but also helps in building good relations with other countries by offering a chance to become their business partners and share the knowledge, resources, technology offered by developed nations.<\/p>\n\n\n\n

Channels of Overseas Direct Investment<\/strong><\/h2>\n\n\n\n

Overseas Direct Investment outside India can be made\nby acquiring a significant interest in the foreign entity either as a Joint\nVenture or wholly-owned subsidiary, by way of making Investment through:<\/p>\n\n\n\n

  1. Contribution\nto its capital,<\/li>
  2. Subscription\nto the memorandum,<\/li>
  3. Purchase\nof existing shares of foreign entity either by Market<\/a> Purchase\/Private\nPlacement\/Stock Exchange.<\/li><\/ol>\n\n\n\n

    Overseas Direct Investment can be made either\nthrough automatic route or government approval route.<\/p>\n\n\n\n

    Difference between Portfolio Investment and Overseas Direct Investment (ODI)<\/h3>\n\n\n\n
    1. The\nlisted entity can only make portfolio Investment up to 50% of its net worth\nbased on the last audited balance sheet of the company. Investments made in\noverseas companies can either be in its equity or debt securities issued by\nsuch companies.<\/li>
    2. Portfolio\ninvestment can be much more volatile, whereas direct Investment implies\ncontrolling stake in a business.<\/li><\/ol>\n\n\n\n

      General Permission to Individual (Resident) For Purchase and Sale of Foreign Securities<\/h3>\n\n\n\n

      An Individual resident is allowed to make Overseas Direct Investment through:<\/strong><\/p>\n\n\n\n

      1. RFC\naccount;<\/li>
      2. As\nbonus shares of foreign currency shares;<\/li>
      3. From\nthe foreign Currency.<\/li><\/ol>\n\n\n\n

        Remittance of the amount made shall be up to the\nlimit prescribed under the Liberalized Remittance Scheme for permitted capital\nand cash transaction.<\/p>\n\n\n\n

        Indian Party Making Investment in Joint Venture and Wholly Owned Subsidiary (WOS)<\/h3>\n\n\n\n

        An Indian Party can make Overseas Direct Investment from India in the joint venture and WOS as per the ceiling prescribed by Reserve Bank of India<\/a><\/strong>.<\/p>\n\n\n\n

        If the financial commitment is exceeding USD 1\n(one), billion or its equivalent in a fiscal year would require prior approval\nof RBI though even the financial commitment is under the automatic route. <\/p>\n\n\n\n

        The term ‘Indian Party’ can be\ndefined as: <\/h3>\n\n\n\n