Master Direction on Foreign Investment in India

In India, there are various government regulations and guidelines that govern foreign direct investments in India. It is important for foreign companies who are making investments in India to abide by foreign investment guidelines.

The Government always keeps a close watch on the investments that are made by foreign companies in the various sectors. Since the starting of foreign investments in India, various reforms have taken place in the policies of foreign direct investments.

The government of India has the motto of encouraging foreign investors for making investments in the country and for they keep on making the relevant changes in the policies so that these FDI policies of India keep on attracting foreign investments in the various sectors of India.

What is a Master Direction?

• Master Direction is called the compilation of the relevant A.P (DIR Series) Circulars that are issues that are in the extent of the relevant regulations that have the amendments up to date and cover the different classes of transactions that are given permission in the rules and regulated that come under the Foreign Exchange Management Act (FEMA), 1999.

• Since January 2016, the Reserve Bank of India has established the use of master Directions for all the regulatory matters. The Master Directions are the consolidated instructions that have the rules and regulations that are framed by the Reserve Bank that are in accordance with the various Acts that include banking issues and foreign exchange transactions. The process that is followed in the issuance of the Master Directions involves issuing one Master Direction for each subject matter that covers all the instructions on the particular subject matter.

• The amendments that are made in the rules and regulations or policies are communicated during the year through the publication of circulars or press releases. Also, simultaneously the Master Directions are updated whenever the changes are made in the rule/guidelines/policies.

• Through the RBI website, all the changes that are done in the Master Directions get reflected online with the dates on which the changes were made to the particular rules or regulations.

• With the help of Frequently Asked Questions (FAQs), the explanations of the rules and regulations are done when the Master Directions gets issued.

Master Direction on Foreign Investment

• Regulations are made in the foreign investments in India through the terms of the Foreign Exchange Management Act, 1999, and Foreign Exchange Management Regulations, 2017. In these regulations, there is management that is remade by the Indian government from Time to Time that is then included in the regulatory framework and they are published through the amendment notifications.

• In the respect to the regulations, there is also powerful with the Reserve Bank of India that issues directions to the authorized persons under section 11 of the FEMA, 1999. Through this Master, Direction has all the information on how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents to implement the regulations framed.