What you need to know about RBI rules when investing abroad

livemint.com:

Subscribe to enjoy similar stories. A burgeoning appetite for global diversification is driving Indian investors beyond domestic shores. Driven by a combination of technological advancements, a more permissive regulatory landscape, and the allure of higher returns, Indian capital is increasingly flowing into foreign markets.

Investing abroad demands a strategic approach to navigating evolving tax landscapes and regulatory complexities, particularly as financial borders continue to blur. Read this | Your guide to investing in the US and global stocks through the Liberalised Remittance Scheme Navigating this landscape presents a complex web of challenges for Indian investors pursuing global opportunities. It includes examining permissible investment avenues, regulatory restrictions, and the crucial tax implications of investing abroad, while grappling with intricate tax laws and exchange control regulations and the ever-shifting sands of global geopolitics.

Here is a look at various rules governing overseas investments. Under the Liberalised Remittance Scheme (LRS), resident Indians can invest up to $250,000 per financial year in foreign markets. The Reserve Bank of India's (RBI) Overseas Investment Guidelines provide the framework for permissible investments, with two primary categories: Overseas Direct Investment (ODI): Primarily involves acquiring equity capital in unlisted foreign entities.

Investments exceeding 10% of the equity capital of a listed foreign entity are also generally categorized as ODI. Overseas Portfolio Investment (OPI): Covers equity investments that do not qualify as ODI, such as investments in listed foreign equities below the 10% threshold and participation in regulated overseas funds. Read this |