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In 2011, the Government of India (GoI) allowed foreign investments in Limited Liability Partnership (LLP) with prior approval of the Foreign Investment Promotion Board, however these changes were not incorporated under the Foreign Exchange Management Act, 1999 (FEMA). The above dichotomy between the Foreign Direct Investment (FDI) policy and FEMA (being the underlining statute governing foreign investments in India), lead to uncertainty amongst foreign investors in setting up LLP in India for their business operations.
The Reserve Bank of India has now amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB dated 3 May, 2000) (regulations) vide Notification dated 13 March 2014, to incorporate the provisions relating to FDI in LLP in FEMA.