Recent RBI Changes Expand M&A Flexibility for Foreign Companies in Deferred Consideration Deals

Abstract

The Foreign Exchange Management Act, 1999 (the “FEMA”), along with the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (the “NDI Rules”), constitutes the primary legal framework governing foreign equity investments (both direct and indirect) in India. Additionally, instructions issued on foreign investment in India and its related aspects under the FEMA in the ‘Master Directions on Foreign Investment in India’ (the “Master Directions”), issued by the Reserve Bank of India lay down the modalities as to how the foreign exchange business has to be conducted with a view to implementing the NDI Rules. The FEMA read with the NDI Rules, and the Master Directions, collectively forms the comprehensive "FDI Regime" for foreign investments in India.