Sub-Sector
Industry Classification
Type of Reservation: National Treatment (Articles 10.3) Performance Requirements (Articles 10.5)
Reservation Measure: Senior Management and Boards of Directors (Articles 10.6)
Description:
Any existing or current regulations or measures in force on the date of entry of this Agreement.
Korea reserves the right to maintain any measure relating to investments in services sectors subject to the condition that they do not violate the obligations under the Services Chapter.
Phase-Out: None
Annex I. Schedule of India
Sector: All sectors
Sub-Sector:
Industrial Classification
Type of Reservation: National Treatment (Article 10.3)
Description:
A person resident outside India, including an entity incorporated outside India, can purchase shares of an Indian company under the FDI Scheme.
There are separate regulatory treatment provided to FIs and Venture Capital Funds in relation to investment in Indian Companies, which may be modified from time to time.
Non-resident Indians (NRIs) are allowed to invest in shares of listed Indian companies in recognised Stock Exchanges under the Portfolio Investment Scheme (PIS). NRIs can invest on repatriation and non-repatriation basis under Portfolio Investment Scheme route up to 5% of the paid up capital / paid up value of each series of debentures of listed Indian companies. The aggregate paid-up value of shares / convertible debentures purchased by all NRIs cannot exceed 10 per cent of the paid-up capital of the company / paid-up value of each series of debentures of the company. The aggregate ceiling of 10 per cent can be raised to 24 per cent, if the General Body of the Indian company passes a special resolution to that effect. Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under private arrangement or by way of gift to a person resident in India or outside India without prior approval of the Reserve Bank of India (RBI).
FDI is not permitted in Indian partnerships and any association of persons (which would include societies and trusts) except upon obtaining the prior consent of the Reserve Bank of India for such investment.
NRIs and Persons of Indian Origin (PIOs) can invest into partnerships and any association of persons if such investment is being made on a non-repatriable basis and if such investment is being made on a repatriable basis, then the prior approval of RBI would be needed for such investment.
When the total holdings of FIIs/NRIs under the Scheme reach the trigger limit, which is 2 per cent below the applicable limit (for companies with paid-up capital of Rs. 1000 crores and above, the trigger limit is 0.5 per cent below the applicable limit), Reserve Bank will issue a notice to all designated branches of banks cautioning that any further purchases of shares of the particular Indian company will require prior approval of Reserve Bank. Reserve Bank gives case-by-case approvals to FIs for purchase of shares of companies included in the Caution List. This is done on a first-come-first-served basis. Once the shareholding by FIIs/NRIs reaches the overall ceiling / sectoral cap / statutory limit, Reserve Bank puts the company on the Ban List. Once a company is placed on the Ban List, no FIL or NRI can purchase the shares of the company under the Portfolio Investment Scheme
Reservation Measure:
Regulations 5 (1) , 5(2), 5(3), 5(4), and 5(6) of the Foreign Exchange Management (Transfer or Issue of Security to a Person resident outside India) Regulations, 2000 (FEMA Regulations)
Schedule 1 of FEMA Regulations incorporating the FDI Scheme
Schedule 2 of FEMA Regulations incorporating the Portfolio Investment Scheme.
Schedule 3 of FEMA Regulations for Investment by NRIs/PIOs under the Portfolio Investment Scheme.
Schedule 4 of FEMA Regulations for Investment by NRI/PIOs by purchase of shares on the Stock Exchange other than under
the Portfolio Investment Scheme on Non-repatriation basis.
Schedule 6 of FEMA Regulations for Investment by Foreign Venture Capital Funds
Indian company means a company incorporated in India under the Indian Companies Act, 1956.
Article 2.
Sector: All sectors
Sub-Sector
Industrial Classification
Type of Reservation: National Treatment (Article 10.3)
Description:
Prior approval of the Government will be required even for investments covered under the automatic route, if the foreign investor has an existing joint venture or trademark/technical collaboration agreement in India as on 12.1.2005 in the same field. The same field is determined by the 4-digit National Industrial Code, 1987. If the proposed investment is in an activity that has the same NIC Code classification as that of the existing joint venture or technical collaboration, then these limitations will be applicable.
This is not applicable in the following circumstances:
i. investments made by Venture Capital Funds registered with Securities Exchange Board of India (SEBI)
ii. where in the existing joint venture investment by either of the parties is less than 3%
iii. where the existing venture/collaboration is defunct or sick
iv. investment into Information Technology sector, mining sector for same area/mineral
v. investment by multinational financial institutions
Reservation Measure:
Government policy / Press Note 1(2005) & Press Note 3(2005)/
Provision to regulation 9 of Foreign Exchange Management (Transfer or Issue of Security to a Person resident outside India) Regulations, 2000 governing transfer of shares and convertible debentures of an Indian company to a person resident outside India.
Article 3.
Sector: All sectors
Sub-sector
Industry classification
Type of Reservation: National Treatment (Article 10.3)
Description:
The Central Government may, in public interest, suspend or relax permission granted or restriction imposed by the Foreign Exchange Management Act, 1999 (FEMA, 1999), by notification specifying the duration of such suspension.
The Central Government may from time to time give general or special directions as it thinks fit, to the Reserve Bank of India in the discharge of functions with relation to administration of the FEMA, 1999.
Where a company contravenes any of the provisions of the FEMA, 1999, or any rule, direction or order made there- under, the company and every person who at the time the contravention was committed, was in charge of, and was responsible to the company for conduct of the business of the company would be liable to be punished under the provisions of the FEMA, 1999 unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
Reservation Measure:
Sections 40, 41 and 42 of the Foreign Exchange Management Act, 1999.
The Industries (Development and Regulation) Act, 1951, Securities and Exchange Board of India Act, 1992, Foreign Contribution (Regulations) Act, 1976, Foreign Trade (Development and Regulations) Act, 1976 , Reserve Bank of India Act, 1934 , Banking Regulation Act, 1949, Securities Contracts (Regulation) Act, 1956, Prevention of Money Laundering Act, 2002, Income Tax Act, 1961, Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 , Customs Act, 1962, Central Excise Act, 1944, The Bureau of Indian Standards Act, 1986.
Article 4.
Sector: All sectors
Sub-Sector: Items reserved for manufacture by Micro, Small and Medium enterprises.
Industrial Classification
Type of Reservation: Performance Requirement (Article 10.5)
Description:
The Central Government may, for
(a) promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and
(b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good:
(1) identify ancillary and small scale industrial undertakings that need supportive measures, exemptions and other favourable treatment to enable them to maintain their viability;
(2) specify supportive measures, exemptions and other favourable treatment to such ancillary and small scale industrial undertakings
(3) specify, by notified order, the requirements which shall be complied with by an _ industrial undertaking to enable it to be regarded, as an ancillary, or a small scale, industrial undertaking and different requirements may be so specified for different purposes or with respect to industrial undertakings engaged in the manufacture or production of different articles.
Prior government approval would be required for foreign direct investment where more than 24% foreign equity is proposed to be inducted into a small scale unit manufacturing items reserved for the small scale sector. Such units with more than 24% foreign equity will not be eligible for the benefits available to a small scale unit as per the policy of the Government.
The Central Government has the power to classify enterprises engaged in the manufacture or production of goods pertaining to any industry specified in Schedule I of the Industries (Development & Regulation) Act, 1951(IDRA) as: (i) micro enterprises, (ii) small enterprises or (iii) medium enterprises. The Central Government, may from time to time, notify such measures, programmes, guidelines or instructions as it may deem fit to promote and strengthen micro enterprises, small enterprises and medium enterprises and to promote competition among them.
Non- SSI units can undertake manufacture of items reserved for the small scale sector only if they undertake 50% export obligations.
Industrial units are classified as Small scale based on investment in Plant and machinery in the case of manufacturing units and investment in equipment in the case services sector.
Reservation Measure:
Industries (Development & Regulation) Act, 1951- Section 11 B
Micro, Small & Medium Enterprises Development (MSMED) Act, 2006- Section 7
Article 5.
Sector: Atomic Energy
Sub-Sector: Atomic Power Generation, Manufacturing and supply of nuclear fuel Radioactive Waste Treatment and Disposal Radio isotope and Radiation Generation Facilities, Services relating to Nuclear Energy, Planning, Maintenance and Repair Services
Industrial Classification
Type of Reservation: National Treatment (Article 10.3)
Description: Foreign direct investment is prohibited in Atomic Energy Sector.
Reservation Measure:
Atomic Energy Act, 1962
Industries (Development & Regulation), Act, 1951
Annexure A (B) of Schedule 1 to Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Security to a Person resident outside India) Regulations 2000.
Press Note 4 (2006)
Article 6.
Sector: Chit Fund Business, Nidhi, Transferable Development Rights; Agriculture & Plantation (other than Tea Plantation); and Real estate business(other than construction development)
Sub-Sector
Industrial Classification
Type of Reservation: National Treatment (Article 10.3)
Description:
No person resident outside India shall make investment in India in any form, in any company or partnership firm or proprietary concern, or any entity, whether incorporated or not which is engaged or proposes to engage -
i) in the business of chit fund, or
ii) as Nidhi company, or
iii) in agricultural or plantation activities, or
iv) in teal estate business, or construction of farm houses, or
v) in trading in Transferable Development Rights.
i) Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name which a person enters into an agreement with a specified number of persons that every shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of installments over a definite period and that each such subscriber shall, in his turn, as demand or by auction or by tender or in such other manner as may be specified in the chit agreement entitled to the prize amount.
ii) Nidhi or mutual benefit society means a company which the Central Government may by notification in the official gazette declare to be a nidhi company or a mutual benefit society.
iii) Real estate business (however for the purposes of this limitation, "real estate" does not include development of townships, construction of residential/commercial premises, roads and bridges)
iv) Transferable Development Rights means certificates issued in respect of category of land acquired for public purposes either by the Central or State Government in consideration of surrender of land by the owner without monetary compensation which are transferable in part or whole.
NRIs are allowed to invest in development of serviced plots, construction of built up residential premises, investment in real estate covering residential and commercial premises including business centers and offices, development of townships, city and regional level urban infrastructure facilities including roads and bridges, investment in manufacture of building materials, investment in participatory ventures for all of the above; and investment in housing finance institutions without the conditions of minimum capitalization or minimum area for development or lock-in of investment.
Reservation Measure:
Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000- Regulation 4b.
Chit Funds Act, 1982 and policies, rules, regulations, notifications, circulars, guidelines, press notes, made thereunder.
Companies Act, 1956 and policies, rules, regulations, notifications, circulars, guidelines, press notes, made thereunder.
Article 7.
Sector: Gambling, Betting, Lottery
Sub-Sector
Industrial Classification: Lottery- NIC 840 and 841
Type of Reservation: National Treatment (Article 10.3)
Description:
Foreign investment is not permitted in lottery business, gambling and betting.
Foreign technology collaboration or use of franchise/trademark/brand name of foreign collaborator, or management contract, etc. is not permitted in lottery business, gambling and betting. This includes foreign investment through, FI portfolio investment, NRI/OCB investment on non- repatriable basis and investment by foreign venture capital investors.
Reservation Measure:
Annex A (B) of Schedule 1 to Regulation 5 (1) of the Foreign Exchange Management (Transfer or Issue of Security to a Person resident outside India) Regulations, 2000 Government Policy vide Press Note 5(2002)
Article 8.
Sector: Retail trading (except Single Brand Product Retailing)
Sub-Sector
Industrial Classification: Retail trade- NIC 65- 68
Type of Reservation: National Treatment (Article 10.3)
Description:
Foreign investment is prohibited in Retail trade except in Single brand product retail trade.
However, FDI upto 51% is allowed with prior permission of the Government in retail trading of Single Brand products subject to the following conditions:
i. Products to be sold should be of a "Single Brand" only.
ii. Products should be sold under the same brand internationally.
iii. "Single Brand" product-retailing would cover only products which are branded during manufacturing.
Reservation Measure:
Annex A(B) of Schedule 1 to regulation 5 (1) of the Foreign Exchange Management (Transfer or Issue of Security to a Person resident outside India) Regulations, 2000.
Press Note 3 (2006) dated 10.2.2006
Article 9.
Sector: Acquisition of Land
Sub-Sector
Industrial Classification
Type of Reservation: National Treatment (Article 10.3)
Description:
Save and except as otherwise provided under FEMA and regulations made thereunder, no person resident outside India can transfer any immovable property in India.
A person resident outside India, who is a citizen of India, may : (a) acquire immovable property in India other than agricultural property, plantation or farmhouse, in accordance with prescribed regulations; (b) transfer immovable property in India to a person resident in India; (c) transfer immovable property other than agricultural or plantation property or farmhouse to a person resident outside India who is a citizen of India or to a person of Indian origin, resident outside India.
A person of Indian origin, resident out-side India may: (a) acquire immovable property in India other than agricultural property, plantation or farmhouse, in accordance with prescribed regulations; (b) acquire any immovable property in India other than agricultural land, plantation or farmhouse by way of gift from person resident in India or from a resident out-side India who is a citizen of India or from a person of Indian origin resident outside India, (c) acquire any immovable property by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of foreign exchange laws in force at the time of acquisition by him or the provisions of the FEMA regulations or from a person resident in India; (d) transfer any immovable property in India other than agricultural land, farmhouse or plantation by way of sale to a person resident in India; (e) transfer agricultural land, farmhouse or plantation property in India by way of gift or sale to a person resident in India who is a citizen of India; (f) transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India or to a person of Indian origin resident outside India.
A person resident outside India can purchase immovable property in India including land only if he has established in India a branch, office (excluding liaison office) or other place of business for carrying on a permitted activity in India which is necessary for or incidental to carrying on such activity provided that it complies with all applicable laws, regulations or directions and a declaration in this regard is filed with Reserve Bank of India.
Reservation Measure:
Article 73 of the Constitution of India Read with Article 246 of the Constitution of India
Regulation 5 of the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000
Foreign Exchange Management ( Establishment in India of Branch or Office or other place of business) Regulations, 2000- permitted activities for a branch office of a person resident outside India included as Schedule 1
Transfer of Property Act and rules, regulations, notifications, policies, guidelines and circulars made thereunder.
The Registration Act, 1908 and rules, regulations, notifications, policies, guidelines and circulars made thereunder.
The Indian Stamp Act (as may have been amended by each state in respect of transactions in its jurisdictions) and rules, regulations, notifications, policies, guidelines and circulars made thereunder.