'Overseas Direct Investment” or “ODI” means investment by way of acquisition of unlisted equity capital of a foreign entity, or subscription as a part of the memorandum of association of a foreign entity (irrespective of % stake), or investment in listed foreign entity where the stake is 10% or more of the paid-up equity capital, or Investment with control* where the investment is less than 10% of the paid-up equity capital of a listed foreign entity'

*Control : The right to appoint majority of the directors or to control management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders’ agreements or voting agreements that entitle them to 10% per cent. or more of voting rights or in any other manner in the 

FDI or Foreign Direct Investment refers to an investment through equity instruments by a resident outside India, in an unlisted Indian company; or in ten per cent or more of the post issue paid-up equity capital, on a fully diluted basis of a listed Indian company.

The difference between the ’Foreign Direct Investment’ and ‘Foreign Portfolio Investment’ is the percentage stake being held by the foreign investor.

A “Foreign Portfolio Investment” refers to an investment made by a resident outside India through equity instruments where such an investment is less than ten percent of the post issue paid-up share capital on a fully diluted basis of a listed Indian company, or less than ten percent of the paid-up value of each series of the equity instrument of a listed Indian company.

Some of the methods through which foreign investors can invest in India under FDI are:

• Subscription to the Memorandum of Association (MoA)
• Merger/ De-merger /Amalgamation
• Preferential allotment/ Private placement/ Private arrangement
• Purchase of shares from the Indian residents/companies
• Rights/Bonus Issue
• Conversion of convertible notes
• Swap of capital instruments.

Overseas Investors can invest in India under two routes as mentioned below:

Automatic Route: An entry route for FDI, wherein investments made by a resident outside India does not require a prior Reserve Bank or Government approval.

Government Route: An entry route for FDI, wherein investments made by a resident outside India requires prior Government approval. The foreign investment received under this route shall comply with the conditions stipulated by the Government in the approval form. An application can be made on the Foreign Investment Facilitation Portal (FIFP), which is a new online portal to facilitate FDI approvals for investors. This portal is administered by the Department of Industrial Policy and Promotion and the Ministry of Commerce and Industry. The SOP for applying for an approval of an FDI on the FIFP portal isAn entry route for FDI, wherein investments made by a resident outside India requires prior Government approval. The foreign investment received under this route shall comply with the conditions stipulated by the Government in the approval form. An application can be made on the Foreign Investment Facilitation Portal (FIFP), which is a new online portal to facilitate FDI approvals for investors. This portal is administered by the Department of Industrial Policy and Promotion and the Ministry of Commerce and Industry. The SOP for applying for an approval of an FDI on the FIFP portal is.

External Commercial Borrowings are commercial loans raised by eligible resident entities from recognised non-resident entities to meet their capex expenditure, working capital requirements, etc.

As per extant regulations, External Commercial Borrowing transactions should adhere to criteria like

• minimum maturity period,
• permitted and non-permitted end-uses,
• maximum all-in-cost ceiling, etc.

ECB can be raised in INR or any freely convertible Foreign Currency.