This comes after the Reserve Bank of India (RBI) changed the laws for foreign investments in August of last year, allowing profitable non-financial businesses to establish financial services units outside of India and spend up to 400% of the investing firm’s net worth.
This is a welcome liberalisation that enables Indian business and industrial houses to establish a family office and investing vehicle outside of India in a flexible, tax-efficient, and regulatory-compliant manner, and to take advantage of possibilities, both listed and unlisted, outside of India.
Source: Forbes India
Punit Shah, partner at Dhruva Advisors, suggested that it may be desirable for the RBI to explicitly state that financial services operations include investment activity.
Market observers predict that the RBI will publish Frequently Asked Questions (FAQs) to highlight specific issues with portfolio investments, layering, and pricing restrictions related to the new overseas investment laws. These regulations now allow Indian entities to trade with foreign entities as long as they do not directly or indirectly have more than two levels of subsidiaries.
Source: Business Standard
High net worth individuals (HNIs) have two reasons for wanting to establish family offices abroad. First off, a lot of second-generation HNI families want to go and reside abroad for reasons like education, a better lifestyle, business expansion, and new chances.
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