Dated 21st January 2013
RBIs FEMA guidelines stipulates that shares be issued against Lumpsum Fee, Royalty, ECB , Import of capital goods/ machineries / equipments (excluding second-hand machine) and Pre-operative/pre-incorporation expenses (including payments of rent). An Indian company eligible to issue shares under the FDI policy and subject to pricing guidelines as specified by the Reserve Bank from time to time, may issue shares to a person resident outside India :
-Being a provider of technology / technical know-how, against Royalty / Lumpsum fees due for payment;
-Against External Commercial Borrowing (ECB) (other than import dues deemed as ECB or Trade Credit as per RBI Guidelines).
-With prior approval from FIPB for against import of capital goods/ machineries / equipments and Pre-operative/pre-incorporation expenses subject to the compliance with the extant FEMA regulations and AP Dir Series 74 dated June 30,2011.Provided, that the foreign equity in the company, after such conversion, is within the sectoral cap.
SOURCE: RESERVE BANK OF INDIA