RBI relaxes ban for those looking to buy stake of foreign firms in India

Indian companies cannot set up their subsidiaries through their foreign wholly-owned subsidiaries or joint ventures

The Reserve Bank of India (RBI) has clarified that there would be no “blanket ban” on Indian companies wanting to buy stakes in overseas firms, which already have investments in India under the automatic route. An approval from the apex bank would be required, though. 

According to the RBI’s frequently asked questions (FAQs) on overseas direct investment (ODI) updated in May, no Indian company, partnership firm or LLP can acquire a stake in an offshore company that has investments in an Indian entity. Also, Indian companies cannot set up their subsidiaries through their foreign wholly-owned subsidiaries (WoS) or joint ventures