Indian companies have now been permitted to issue or transfer equity instruments in exchange for the equity of foreign entities under the automatic route.
Although the same were historically permitted under the regulations, however, RBI in the recent years had adopted a stance that Overseas Direct Investment (ODI)-Foreign Direct Investment (FDI) swap arrangements required prior RBI approval in light of the definition of ‘equity instruments’ under FDI Guidelines which only included equity shares and convertible instruments of an Indian company, inferring that only India-to-India swap was permissible under the automatic route.
Source: Ministry of Finance Notification S.O. 3492(E) dated 16 August 2024
