NEW DELHI: The Ministry of Finance on Thursday notified the new Foreign Exchange (Compounding Proceedings) Rules 2024 to simplify rules and regulations for foreign investments. The new rules are aimed at streamlining and rationalising existing rules and regulations to further facilitate ease of doing business.
The Finance Ministry said in a statement, “As part of a broader initiative to streamline and rationalise existing rules and regulations to further facilitate ease of doing business, the compounding proceeding rules were comprehensively reviewed in consultation with the Reserve Bank of India”.
The new rule will replace the existing Foreign Exchange (Compounding Proceedings) Rules 2000. The ministry said that the government is emphasising simplifying the provisions to expedite and streamline the processing of compounding applications.
The Finance ministry is also working to introduce digital payment options for application fees and compounding amounts, with a focus on simplification and rationalisation of the provisions to eliminate ambiguity and clarify the process. “These amendments indicate the commitment of the government towards promoting ‘ease of investment’ for investors and ‘ease of doing business’ for businesses”, the ministry said.
The Compounding of Foreign Exchange (FEMA) Proceedings Rules, 2000 govern the process of resolving or settling offences related to violations of the Foreign Exchange Management Act (FEMA), 1999. Compounding under these rules allows individuals or entities to admit a violation and pay a penalty to avoid protracted litigation or criminal prosecution.
The move was taken after Union Finance Minister Nirmala Sithraman emphasised that the government would prioritise foreign investment in the country and that it would come up with flexible rules to promote foreign investments.
The Finance Minister has indicated in her budget speech that the rules and regulations for FDIs and overseas Investments will be simplified to facilitate foreign direct investments, nudge prioritisation, and promote opportunities for using Indian Rupee as a currency for overseas investments. (ANI)