Category A: Fast Track or Automatic Route

Under the Automatic Route, an Indian Party does not require any prior approval from the Reserve Bank of India for setting up a JV/WOS abroad (except in case of investment in the financial sector, where, prior approval is required from the concerned regulatory authority both in India and abroad). The criteria/conditions for direct investment under the Automatic Route are :-

* The total 'financial commitment' of the Indian Party in JVs/WOSs in any country other than Nepal, Bhutan and Pakistan should be upto 100% of its net worth and the investment should be in a lawful activity permitted by the host country. Thus,the net worth is the overall ceiling for overseas direct investment and any fresh overseas investment can be made only on the basis of accretion to the net worth.

* The Indian Party should not be on the Reserve Bank's exporters caution list / list of defaulters to the banking system published/ circulated by the Credit Information Bureau of India Ltd (CIBIL)/ Reserve Bank of India or under investigation by the Enforcement Directorate or any investigative agency or regulatory authority.

* The Indian Party should route all the transactions relating to the investment in a JV/WOS through only one branch of an authorised dealer to be designated by it.

* In case of partial or full acquisition of an existing foreign company, where the investment is more than USD 5.00 million, valuation of the shares of the company shall be made by a Category I Merchant Banker registered with SEBI (Securities and Exchange Board of India) or an investment Banker or Merchant Banker outside India registered with the appropriate regulatory authority in the host country. While in all other cases, by a Chartered Accountant or Certified Public Accountant.

The eligible Indian Party intending to make a direct investment under the automatic route is required to fill in the Form ODA supported by documents listed therein, i.e., certified copy of the Board Resolution, Statutory Auditors certificate, Valuation report (in case of acquisition of an existing company) as per the valuation norms and approach an Authorised Dealer (designated Authorised Dealer) for making the investment/remittance.