Fdi in information technology

Dear Sir,

1. For FDI you should have a collaboration agreement with the overseas investor..
2. The investment should not be more than the cap stipulated under FEMA by RBI
3. Within 30 days from the date of receipt of investment, you have to file Advance Information Report to the Bank through whom you received the investment.  They shall submit it to RBI Regional Office.
4. On receipt of Advance Information Report through your Bank, RBI shall allot Unique Identification Number (UIN) to you. This should be quoted in all future correspondence or submission.
5. You have to issue shares to the Investor within 180 days from date of receipt of investment
6. You have to submit Form Foreign Collaboration General Purpose Route (FCGPR) to the Bank through whom you received investment.  They shall submit the same to RBI.
7. For full details, please go through the Master Circular on FDI which is available on RBI website.  You may click on the following link to access the same:

https://rbidocs.rbi.org.in/rdocs/notification/PDFs/15MCNFDI270613.pdf

           8. You may click on the following link to read FAQs on FDI from RBI web site:

https://www.rbi.org.in/scriptttts/FAQView.aspx?Id=26

           9. Form FCGPR is avaialable in the following link:

https://rbidocs.rbi.org.in/rdocs/Forms/PDFs/AP110214_ANN.pdf

A foreign company planning to set up business operations in India has the following options:

 As an incorporated entity by incorporating a company under the Companies Act, 1956 through Joint Ventures; or Wholly Owned Subsidiaries.

 As an unincorporated entity through:
- Liaison Office/Representative Office, or
- Project Office, or
- Branch Office

A) Automatic Route

FDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require prior approval of the Government:

Ø  Activities/items that require an Industrial License;

Ø  Proposals in which the foreign collaborator has an existing financial / technical collaboration in India in the 'same' field,

Ø  Proposals for acquisition of shares in an existing Indian company in: Financial services sector and where Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers ) Regulations, 1997 is attracted;

Ø  All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permitted.

FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

B) Government Route

FDI in activities not covered under the automatic route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB), Ministry of Finance. Application can be made in Form FC-IL; Plain paper applications carrying all relevant details are also accepted. No fee is payable.

 For further details you may consult a local consultant who will be able to draft a proper agreement and will help you comply with necessary formalities in this regard.