JOIN US“Applications complete in all respects, for conversions of import payables for capital goods into FDI being made within 180 days from the date of shipment of goods (would be required),” RBI said in a circular.
As per the earlier rules, all such conversions of import payables for capital goods into FDI did not require any prior submission of applications.
The apex bank has also directed companies to file applications for capitalisation being made within the period of 180 days from the date of incorporation of the company.
The RBI in June had come out with norms allowing domestic companies to issue shares against import of capital goods and machineries, making it easier for them to expand.
However, companies are required to get prior approval of the government to trade equities for imports.
“... it has been decided to permit issue of equity shares /preference shares under the Government route of the FDI scheme for import of capital goods/machineries/equipments (including second-hand machineries)...,” RBI had said while releasing the original guidelines.
The notification follows liberalisation of Foreign Direct Investment (FDI) policy in March. Then, the Government had permitted trading in equity or preference shares for settlement of capital import bills to help the domestic industry to access latest machinery without paying cash.
Earlier, an Indian company was only allowed to issue shares to a foreigner in lieu of technology or technical know-how and against royalty and lumpsump fees.
Equities could also be issued under the FDI norms against pre-operative expenses like payment of rent.
For conversion of shares for payments of imported capital goods, the company has to pass a special resolution.
The government approval would be subject to pricing guidelines of RBI and appropriate tax clearance.