Is transfer of shares to non-residents/ NRIs permitted as per the FDI policy?

General permission is granted to non-residents/ NRIs for acquisition of shares by way of transfer in the following situations:

1) Transfer of shares in the investee company from one non-resident to another non-resident in sectors which are under automatic route. Government approval is required for transfer of stake from one non-resident to another non-resident in sectors which are under Government approval route

2) NRIs may transfer by way of sale or gift shares or convertible debentures to another NRI

3) Person resident outside India can transfer any security to a person resident in India by way of gift

4) A person resident outside India can sell shares and convertible debentures of an Indian company on a recognized Stock Exchange in India through a registered stock broker or a registered merchant banker

5) A person resident in India can transfer by way of sale, shares/ convertible debentures (including transfer of subscriber’s shares), of an Indian company under private arrangement to a person resident outside India, subject to the FDI Policy guidelines

6) Transfer of shares/convertible debentures, by way of sale under private arrangement by a person resident outside India to a person resident in India, subject to the FDI guidelines

7) The above mentioned situations also covers transfer by a resident to a non-resident of shares/convertible debentures of an Indian company, engaged in an activity earlier covered under the Government Route but now falling under Automatic Route, as well as transfer of shares by a non-resident to an Indian company under buyback and/or capital reduction scheme of the company.

Please refer to section 4 of Annexure-3 of Consolidated FDI Policy at link for more information.