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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM68227
Volume:
10 |
10 |
Oct 2026
Pages:
1-4
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Law
SRM Institute of Science and Technology
Indian companies are no longer only on the receiving end of foreign capital. Over the past two decades they have bought foreign firms, set up subsidiaries abroad and taken stakes in overseas ventures, and individuals too now invest outside the country in growing numbers. This paper examines the legal framework that governs such outward investment, with particular attention to the overseas investment regime introduced in August 2022 under the Foreign Exchange Management Act, 1999. It traces the movement from a permission-based system to a largely automatic one, and studies the key features of the present law: the line drawn between overseas direct investment and overseas portfolio investment, the limits on financial commitment, the restriction on round-tripping and the reporting duties placed on investors. The paper then looks at investor protection from two sides, namely the protection of the Indian investor in the host state, which depends largely on India's investment treaty practice, and the protection of the shareholders of the Indian parent company, which rests on company and securities law. The study is doctrinal. It finds that the regime is far more workable than before but that gaps remain, especially in treaty coverage, cross-border insolvency and the treatment of minor compliance lapses. Some reforms are suggested.
KEYWORDS
Outward investment is now part of the ordinary growth of Indian enterprises. The 2022 regime reflects that reality by replacing a cluttered, approval-heavy system with a principled and mostly automatic one. Yet the law of outward investment is not only about permission to remit money. It is also about what happens afterwards, both to the Indian investor in a foreign country and to the shareholders who ultimately own that investment. On this second question Indian law is less developed. Treaty protection is narrow, cross-border insolvency is missing and oversight of overseas subsidiaries is uneven. If India wants its companies to compete globally, its legal framework must protect them abroad as carefully as it regulates them at home.
[1] The Foreign Exchange Management Act, 1999 (Act No. 42 of 1999), India. [2] Foreign Exchange Management (Overseas Investment) Rules, 2022, G.S.R. 646(E), Ministry of Finance, Government of India, Aug. 22, 2022. [3] Foreign Exchange Management (Overseas Investment) Regulations, 2022, Notification No. FEMA 400/2022-RB, Reserve Bank of India, Aug. 22, 2022. [4] Reserve Bank of India, "Master Direction – Foreign Exchange Management (Overseas Investment) Directions, 2022," A.P. (DIR Series) Circular No. 12, Aug. 22, 2022. [5] The Companies Act, 2013 (Act No. 18 of 2013), ss. 2(87), 129, 179, 186, 188; Companies (Restriction on Number of Layers) Rules, 2017. [6] Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. [7] Ministry of Finance, Government of India, "Model Text for the Indian Bilateral Investment Treaty," Dec. 2015. [8] White Industries Australia Ltd. v. Republic of India, UNCITRAL, Final Award, Nov. 30, 2011. [9] Union of India v. Vodafone Group PLC United Kingdom, 2018 SCC OnLine Del 8842. [10] Foreign Exchange (Compounding Proceedings) Rules, 2024, Ministry of Finance, Government of India, Sept. 12, 2024.
Publication Date
10/22/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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Conflict of Interest
The authors declare no conflict of interest related to this research work.
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