Context: The Department of Economic Affairs, Ministry of Finance, has amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, to streamline regulations concerning Foreign Direct Investment (FDI) and Overseas Investment.

Foreign Exchange Management (Non-debt Instruments) Rules, 2024

• Cross-border Share Swaps: Simplifies the process for cross-border share swaps, allowing for the issue or transfer of Indian company equity instruments in exchange for foreign company equity instruments.

o Facilitates global expansion of Indian companies through mergers, acquisitions, and strategic initiatives, helping them enter new markets and grow internationally.

• FDI in White Label ATMs:  Permits 100% Foreign Direct Investment (FDI) under the Automatic Route in White Label ATMs.

o Aims to enhance financial inclusion across the country by allowing non-banks to set up, own, and operate ATMs.

• Definition of 'Startup Company': Aligns the definition of 'Startup Company' with the 2019 notification by the Department of Industry and Internal Trade.
• An entity qualifies as a startup if it is:

o Incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.

o Within 10 years from its incorporation or registration.

o Has a turnover not exceeding ₹100 crore in any of the financial years since incorporation or registration.

Foreign Exchange Management Act (FEMA), 1999

• About: FEMA primarily addresses provisions related to cross-border trade and payments, defining procedures for foreign exchange transactions in India.
• Introduced: In 1999.
• Replacement of FERA: FEMA replaced the earlier Foreign Exchange Regulation Act (FERA) and has since governed foreign exchange transactions in the country.
• Headquarter: Delhi.