New Foreign Exchange Rules to Streamline Foreign Investments: DEA Issues Rules

The updated rules are part of a broader initiative to simplify and rationalize regulations to enhance ease of doing business.

In line with the Union Budget 2024-25 announcement by Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman, the Department of Economic Affairs (DEA), Ministry of Finance, has today issued the Foreign Exchange (Compounding Proceedings) Rules, 2024. These new rules, which supersede the Foreign Exchange (Compounding Proceedings) Rules of 2000, are introduced under Section 46 in conjunction with Section 15 of the Foreign Exchange Management Act (FEMA), 1999.

The updated rules are part of a broader initiative to simplify and rationalize regulations to enhance ease of doing business. The comprehensive review of the compounding proceedings rules was conducted in consultation with the Reserve Bank of India (RBI).

Key changes in the new rules include:

Expedited Processing: Enhanced provisions to speed up the processing of compounding applications.

Digital Payments: Introduction of digital payment options for application fees and compounding amounts.

Simplification: Rationalization of provisions to remove ambiguity and clarify procedures.

These amendments reflect the government's commitment to facilitating foreign investments and improving the overall business environment, aligning with the goals of promoting ‘ease of investment’ and ‘ease of doing business’ in India.