The Reserve Bank of India (RBI) has introduced further liberalizations in Foreign Direct Investment (FDI) rules through its latest Master Direction on Foreign Investment, dated January 20, 2025.
Key changes:
1. Flexible Acquisition Options for FOCC: Previously, Foreign Owned and Controlled Corporations (FOCCs) with over 50% foreign shareholding investing in another Indian entity for downstream investments were required to remit the entire deal value upfront. The revised framework introduces much needed flexibility, aligning with the standard FDI provisions:
a) Deferred payment – 25% of the transaction value may be deferred over a period of 18 months.
b) Share Swaps – downward investment through share swaps is now permissible i.e. issue of its own shares in lieu of receipt of shares of the investee company.
2.Tenor Flexibility for CCD/CCPS: The tenor of Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) can now be amended in accordance with the Companies Act, 2013. This is especially beneficial when share conversion needs to be postponed due to fluctuating market conditions.
These changes significantly enhance regulatory clarity and operational flexibility for M&A and investments. This would aid in fostering global-local partnerships, boost investor confidence, and catalyze growth for businesses across India.
What does this mean for you? Let’s connect at dhairya.c@treelife.in for a discussion.
Link to the updated Master direction on Foreign Investment – https://lnkd.in/dUC9sxUD
We Are Problem Solvers. And Take Accountability.
Related Posts
Compliance Calendar February 2026 – GST TDS PF ESI Deadlines
Sync with Google Calendar Sync with Apple Calendar Plan your February filings in one place. Figures and forms are mapped...
Learn More
Alternative Investment Funds(AIFs) in India : Framework, Types, Meaning [Feb 2026]
DOWNLOAD PDF Alternative Investment Funds, often abbreviated as AIFs, have become a buzzword among sophisticated investors, especially High Net Worth...
Learn More
India’s Budget 2026 – Data Centres, IT, Tech & Global AI
Union Budget 2026–27 signals a decisive strategic pivot: India is moving from being a consumer and services executor of global...
Learn More