FDI Alert: Report Foreign Investments in India to RBI by July 12

RBI introduces a single form SMF for all foreign direct investment (FDI). Through this form, the Indian entities will be able to file a single form to report the investments, transfer of shares and interest between resident and non- resident corporation/individuals.

There was a time when the foreign companies were required to submit truckload of documents to the apex authority, but now RBI has introduced a new concept called SMF or Single Master Form.

This would be an integrated reporting platform that would subsume the following forms within it like FC-GPR and FC-TRS form for issue and transfer of shares, Form LLP I& II for foreign direct investment in LLP, Form ESOP for ESOP, Form CN for transfer of convertible share, Form DR for transfer of depository receipts.

It is a positive move made by RBI and it would simplify the whole procedure of reporting the foreign investments in India. It is also aimed to bring consistency and accuracy of the foreign investments reported. Also, it will help the government to create a strong FDI policy.

FDI Reporting: Deadline and Implications

The RBI has given sufficient time to the Indian entities to start preparing for it and has set a deadline of 12^th July, 2018. The entities that are not able to comply with this requirement will not be allowed to transfer or receive the foreign direct investment. Furthermore, if the entities which fail to adhere to the deadline, it will be subjected to the penalties and compounding requirements.

Prior to the implementation of SMF, a single window for Equity Master Form will be available to the Indian entities receiving the foreign investment to input the data on the total foreign investment collected dated 28.06.2018 to 12.07.2018.

The entities who don’t comply with the regulations will be treated as non-compliant under the FEMA act, 1999 and will not be able to further receive the foreign investments. This integration would definitely result in better analytics and will simplify the whole procedure.

This procedure is formulated to decode the difficulties that might be faced by the Indian entities due to the implementation of this law.

With this stringent regulation, one thing is quite clear; the government is in a process of digitizing various sectors. The idea of creating a single database of foreign investments on an online portal, is definitely a moment to be cherished for.