Comments and Feedback on Draft FEM (Foreign Investment) Rules, 2026

This note contains TrustBridge’s comments submitted to the Reserve Bank of India on the Draft Foreign Exchange Management (Foreign Investment) Rules, 2026, which propose changes to the regulatory framework governing foreign investment in India. The comments highlight concerns around the potential reclassification of existing investments and additional compliance requirements, and recommend clear grandfathering and transition provisions, retention of the existing treatment of sub-10% investments in unlisted Indian companies as FDI, a uniform “ownership and control” test, continued exemption for AIF downstream investments, and retention of FMV as the floor/ceiling for pricing in transfers. Overall, the recommendations seek to provide regulatory certainty and minimise disruption to existing investments and investment structures.

COMMENTS