Mumbai: Foreign Venture Capital Investors (FVCIs) can invest in Indian start-ups without prior permission of the RBI, the central bank said on Thursday.
Sebi-registered foreign venture capital investors have also been permitted to invest in unlisted firms in sectors like biotechnology, nanotechnology and dairy without prior permission of the RBI. They will not require any approval from Reserve Bank and “can invest in...equity or equity linked instrument or debt instrument issued by an Indian ‘start-up’ irrespective of the sector in which the start-up is engaged,” it said.
The RBI said the extant regulatory provisions have been reviewed and amended in order to “further liberalise and rationalise the investment regime for foreign venture capital investors and to give a fillip to foreign investment in the start-ups”. As per the amendment, foreign venture capital investors will not require any approval from RBI and can invest in “equity or equity linked instrument or debt instrument” issued by an Indian company in certain sectors whose shares are not listed.
The sectors are biotechnology, IT related to hardware and software development, nanotechnology, seed research and development, research and development of new chemical entities in pharmaceutical sector, dairy, poultry, production of bio-fuels, hotel-cum-convention centres and infrastructure.
Foreign venture capital investors can also open a foreign currency account and/or a rupee account for the purpose of making transactions. Also, there will be no restriction on transfer of any security/instrument held by the foreign venture capital investors to any person resident in or outside India.