Definition
Foreign Direct Investment (FDI) refers to investments made by foreign entities in Indian companies or businesses, where the foreign investor holds a significant stake and has substantial control over management decisions.
Process of Investing
Sectoral Caps:
India has specified sectoral caps for FDI in various sectors. Some sectors allow 100% FDI under the automatic route, while others require government approval.
Routes
FDI can be made through two routes:
Automatic Route:
No prior approval is required from the government or RBI for investments within the specified limits.
Government Route:
Prior approval from the Foreign Investment Promotion Board (FIPB) or concerned ministry is required for investments that exceed the limits under the automatic route or for sectors restricted under automatic route.
Reporting and Compliance:
Companies receiving FDI are required to comply with reporting requirements to the RBI and other regulatory authorities. Certain compliance requirements may include valuation reports, filings with Registrar of Companies (ROC), etc.
Our role
An FDI investor is not obligated to appoint a Broker for investments in unlisted securities. However, they do require a broker if shares of an unlisted entity are listed on a stock exchange in India. Kai Securities can collaborate with an FDI investor to ensure smooth trade executions and effective coordination with other stakeholders, including Custodians, to facilitate seamless transactions once the shares are listed.