Overseas Direct Investment is any investment made by an Indian entity by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity. This investment can be in the nature of Joint Ventures/ Wholly Owned Subsidiaries. Like FDI, there are two routes for such investments to be made: Automatic route and Approval route.
In India, under ODI Scheme, investments can be made out of various avenues like:
- drawal of foreign exchange from an AD bank in India
- capitalisation of exports;
- swap of shares
- proceeds of External Commercial Borrowings (ECBs) / Foreign Currency Convertible Bonds (FCCBs)
- balances held in EEFC account of the Indian party
- other such avenues as defined by RBI from time to time
Did you know that – “If the ODI is made out of a company’s EEFC account balances, the ceiling on the maximum remittance amount, which is linked to the Net Worth of the company, does not apply”!!!