The Government of India has introduced amendments to the Foreign Exchange Management Regulations, 2024, simplifying processes for startups to operate globally. These changes aim to bolster India’s entrepreneurial ecosystem, fostering international expansion and innovation.

Key changes in the startup definition, as per the Department for Promotion of Industry and Internal Trade (DPIIT), include:

• Increased Eligibility Period: Extended from 5 years to 10 years from incorporation.
• Higher Turnover Cap: Raised from INR 25 crore to INR 100 crore.

This redefinition benefits over 1.5 lakh DPIIT-registered startups, facilitating easier access to foreign markets and funding opportunities.

The Foreign Exchange Management (Deposit) (Fourth Amendment) Regulations, 2024, introduced by the Reserve Bank of India (RBI), include:

1. Foreign Currency Bank Accounts
   • Recognised startups can now open foreign currency accounts via authorised dealers (ADs) in India.
   • This simplifies compliance for international transactions and foreign fund-raising activities.
2. Non-Resident Accounts
   • Non-resident individuals can open interest-bearing accounts in Indian Rupees or foreign currencies, encouraging global investor participation.
3. Eliminating Ambiguity
   • The updated rules resolve confusion among AD banks, streamlining implementation for DPIIT-recognised startups.

Mayank Arora, Regulatory Director at Nangia Andersen India, lauded the move:

“The amendment harmonises the startup definition with the latest DPIIT notification, removing ambiguity for AD banks while facilitating foreign currency bank accounts for startups.”

The amendments reflect the Union Budget 2024-25 announcement, which sought to harmonise startup definitions and remove regulatory bottlenecks. This policy is part of India’s broader strategy to support entrepreneurship, innovation, and global partnerships.

By easing foreign exchange rules, the government demonstrates its commitment to reducing barriers and creating a globally competitive framework for Indian startups.

Credit: This article is based on information from DPIIT notifications, RBI guidelines, and statements by Nangia Andersen India.

Key Highlights:

1. The startup definition now includes entities with up to 10 years of incorporation and a turnover limit of INR 100 crore.
2. New RBI regulations allow foreign currency accounts and non-resident interest-bearing accounts, simplifying global transactions.
3. The changes align with Budget 2024-25 initiatives to foster India’s entrepreneurial ecosystem.