Consequently, the Circular authorizes Indian limited partners (LPs) to invest in overseas funds regulated through their regulated investment managers, eliminating the prior requirement that investments could only be made in funds directly regulated by the host country’s financial regulator. Additionally, it removes the limitations on Indian LP investments being confined to units issued by overseas funds, thereby broadening the scope of investment instruments in fund vehicles.
With the RBI’s revised mandate, general partners now possess the flexibility to establish their funds in jurisdictions offering superior commercial advantages without concerns regarding the permissibility of Indian investments. This Circular aims to better align the Overseas Investment Framework with various fund structures abroad, thereby likely enhancing overseas investments and expanding opportunities for Indian entities. Furthermore, the amendments also provide flexibility concerning the legal form of the fund. Investments in any form of fund (for example, corporate bodies or partnerships) are now permissible. As OPI is no longer restricted to investments made solely into units of overseas funds, general partners can now establish funds as Limited Partnerships, Variable Capital Companies (VCC), body corporates, etc.
Source: Barandbench
