RBI eases norms for foreign investment in startups

Source: Business Standard, Oct 20, 2016

Mumbai: Reserve Bank of India (RBI) has eased norms for foreign investment in start-ups. The banking regulator said that any Foreign Venture Capital Investors (FVCI) which is registered under the Securities and Exchange Board of India (Sebi) Regulations 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. They will not require any approval from RBI.

Here, a start-up will mean an entity (private limited company or a registered partnership firm or a limited liability partnership) incorporated or registered in India not prior to five years, with an annual turnover not exceeding Rs 25 crore in any preceding financial year.

RBI said that these amendments have been made to further liberalise and rationalise the investment regime for FVCIs and to give a fillip to foreign investment in the start-ups.

Further, any FVCI can also invest in equity or equity linked instrument or debt instrument issued by an Indian company whose shares are not listed on a recognised stock exchange at the time of the issue.These companies can be engaged in sectors like biotechnology, IT related to hardware and software development, poultry industry, seed research and development among others.

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