FDI Linked Performance Condition

    Posted By : Sachin / Published on : 05-Mar-2021 09:28 AM / View : 42 / Comment : 0
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    Dear Sirs/Madam,

    As per the Foreign Exchange Management Act, 1999 (FEMA) read with Foreign Exchange Management (Transfer or Issue of a Security by a Person resident Outside India) Regulations, 2017 issued vide Notification No. FEMA 20(R)/2017-RB dated November 7, 2017 and Master Direction on FDI (updated upto 08 March 2019), for downstream investment by the Company there is no applicability of FDI Linked performance condition clause. For downstream investment by LLP the sector should fall under 100% automatic route and there shall be no FDI Linked Performance conditions.

    However under FDI Policy (Effective from 15.10.2020) Clause 3.2.4 (Eligible Investee Entities - LLP) it is stated that:
    "An Indian company or an LLP, having foreign investment, is also permitted to make downstream investment in another company or LLP in sectors in which 100% FDI is allowed under the automatic route and there are no FDI-linked performance conditions."

    So the question is whether the Company can make downstream investment irrespective of the applicability of FDI Linked Performance conditions or not?

    Read more on : condition performance linked

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