The new rules would apply FDI obligations to the transfers of sharing and the internal restructuring that involve spotlights, which requires compliance with the limits and fair assessments of the market.
India plans to harden foreign property rules, two sources said, in a movement that can have significant implications for companies that range from electronic commerce to pharmaceutical products.
The changes would redefine how India sees foreign property companies, whether directly or indirectly, making the issue subject to direct foreign investment regulations (FDI) when it comes to sharing transfers or restructuring.
The discussions are close to the finished bees, the sources said, both government officials said. They refused to be identified since the discussion was not public.
The Ministry of Finance and the Bank of the Reserve of India, which issues the final rules, did not respond to requests for comments.
India is reviewing its foreign investment laws to simplify them and plug the lagoons.
Nueva Delhi plans to create a new category of “foreign and controlled property entities” (FOCE), which will also include Indian companies with “indirect foreign investment,” said the first source.
“What cannot be done directly should not afford indirectly. That will now be clearly reflected in the rules,” said the source.
“Only a domestic restructuring or an internal transfer could trigger IED Bligations for foreign property companies if the change of rules is implemented,” said the source.
A fece will be defined as an Indian company or investment fund that is controlled by residents outside India. In addition to covering indirect property, it will also cause foreign direct property companies to be subject to FDI rules when it comes to changes in the structure or property.
In particular, any transfer of indirect participation must be reported and will have to comply with foreign sector investment limits.
These transactions will also be subject to rules that indicate that they are carried out at a fair market value.
The review of proposing in the rules aims to ensure that foreign investors cannot overlook the intention of the IED policy of India, sources said.
The Central Bank agrees on the matter, said the second official.
Since 2020, India has required the previous approval of the Government for the investments of the nations that share their land borders, including China, after clashes between the two neighbors in the remote border of the Himalayas.
The new definition of FOCE will make it more difficult for Chinese investors or other foreign investors to use indirect structures, such as investment funds in the high seas or Indian entities in layers, to enter regulated sectors through the rear door, said the second source.
Posted on May 19, 2025