December 8, 2015 INDIAN GOVERNMENT AMENDS FOREIGN DIRECT INVESTMENT POLICY To Our Clients and Friends: On November 24, 2015, the Government of India ("Government") effected several important amendments[1] to India's consolidated foreign direct investment policy ("FDI Policy"). These amendments enable higher levels of foreign direct investment ("FDI") in a number of business sectors and simplify various sector-specific conditions under the FDI Policy. Key amendments to the FDI Policy ("2015 Amendments") are discussed below. Background Under the FDI Policy, there are two routes for foreign strategic investors to invest in an Indian company: • Government Approval Route: Where the prior approval of the Government[2] is required for FDI in certain specific business sectors or beyond certain prescribed investment thresholds; and • Automatic Approval Route: Where FDI is freely permitted without the prior approval of the Government. Revised FDI Policy The 2015 Amendments amend the FDI Policy in a number of business sectors. The previous and revised policies for certain key business sectors are set forth in the table below: Sector Defence Former Policy Cap Route 49% Government Revised Policy Cap Route Up to 49% Automatic Above 49% Government[3] Up to 49% Automatic Above 49% Government Broadcasting[4] Broadcasting Carriage Services 74% Government .

Sector Former Policy Revised Policy Cap Route Cap Route FM Radio Broadcasting 26% Government 49% Government News TV Channels 26% Government 49% Government Non-News TV Channels 100% Government 100% Automatic Up to 49% Automatic 100% Automatic Above 49% and up to 74% Government Up to 49% Automatic 100% Automatic Above 49% and up to 74% Government Credit Information 74% Automatic 100% Automatic[5] Satellites 74% Government 100% Government - - 100% Automatic 100% Government 100% Automatic Civil Aviation Non-Scheduled Air Transport Services Ground Handling Services Others Duty free shops Tea, coffee, rubber, cardamom, palm oil and olive oil plantations Share-Swaps Government approval is no longer required for FDI through share swaps in business sectors where FDI is permitted through the automatic approval route. However, the valuation of shares is still required to be made by a merchant banker registered with the Securities and Exchange Board of India ("SEBI") or an investment banker registered with the appropriate regulatory authority in the host country. 2 . Shell Companies The 2015 Amendments provide that FDI in a company not engaged in any business activity and with no downstream investments (at the time that FDI is received by such company) is permitted under the automatic approval route if such company proposes to engage in activities that are otherwise permitted under the automatic approval route. Prior to the 2015 Amendments, FDI in any company without operations required prior approval of the Government. Limited Liability Partnerships Pursuant to the 2015 Amendments, FDI is now permitted in limited liability partnerships ("LLPs") without Government approval in business sectors where 100% FDI is permitted under the automatic approval route. In addition, LLPs are permitted to make further downstream investments in any company or LLP in India engaged in a business sector where 100% FDI is permitted under the automatic approval route. While this has been done to bring LLPs on par with companies under the FDI Policy for the purpose of receiving FDI, LLPs continue to be subject to certain restrictions under the Limited Liability Partnership Act, 2008.

For example, debt investment in LLPs continues to be prohibited. Transfer of Ownership and Control of Indian Companies Prior to the 2015 Amendments, it was unclear whether the transfer of ownership and/or control of an Indian company from a resident Indian to a non-resident required prior Government approval where the company is engaged in a business sector with an FDI limit. The 2015 Amendments have now clarified that prior Government approval will only be required where ownership and/or control is transferred from resident Indians to non-resident investors in an Indian company engaged in a business sector where FDI in such sector requires prior Government approval. Single Brand Retail Trading The Government has simplified and rationalised the conditions imposed on FDI in single brand retail trading ("SBRT") where 100% FDI is already permitted. The key amendments concerning this sector are as follows: • The FDI Policy requires that 30% of the value of goods purchased for the purpose of SBRT be sourced locally.

Prior to the 2015 Amendments, this requirement had to be met, in the first instance, as an average of the value of goods purchased for a period of five years commencing from April 1 of the financial year during which the first tranche of the investment was received. The 2015 Amendments now stipulate that the local sourcing requirement of 30% must be met annually from the date of the opening of the first store. This requirement may also be relaxed by the Government now (on a case to case basis) for SBRT entities dealing in 'state of the art' and 'cutting edge' technology where local sourcing may not be possible. • All SBRT entities are now permitted to sell goods through e-commerce (in addition to other channels). 3 .

• A wholesale/cash and carry trading entity is now permitted to engage in SBRT activities provided that it meets the conditions imposed under the FDI Policy in both these sectors separately. If an entity does conduct both such businesses, the FDI Policy now mandates that such entity maintains separate books of accounts for each of the two activities. Manufacturing The 2015 Amendments have clarified that Indian manufacturing entities with FDI are permitted to engage in wholesale and retail trading of products manufactured by them (including by way of ecommerce), without prior Government approval. The 2015 Amendments stipulate that for the purpose of this provision, the Indian manufacturer should: • own the brand of the product that is being sold; • manufacture at least 70% of its products in-house; and • not source more than 30% of its products from other Indian manufacturers. Construction The FDI Policy permits 100% FDI in the construction sector under the automatic approval route, subject to certain conditions. The 2015 Amendments have now amended the conditions imposed by the FDI Policy in the construction sector: • The 2015 Amendments have removed the requirement of minimum capitalisation of USD 5 million and floor area of 20,000 square metres for a project to be eligible to receive FDI. • Previously, a foreign investor was permitted to exit or repatriate its investment only on the completion of the project or on development of 'trunk' infrastructure (roads, water supply, street lighting, drainage and sewerage).

However, pursuant to the 2015 Amendments, investors are now permitted to repatriate their investment after a three year lock-in period (which is calculated with reference to each tranche of FDI made by such investor). • The transfer of shareholding of an Indian company engaged in the construction sector by one foreign investor to another foreign investor now does not require prior Government approval. • The FDI Policy prohibits FDI in the 'real estate business' i.e., the sale or transfer of real estate. The 2015 Amendments clarify that the definition of 'real estate business' excludes income or rent derived from leasing of real estate. • The 2015 Amendments have further clarified that 100% FDI is permitted in entities engaged in the operation and management of completed projects such as townships, malls and business centres, subject to a lock-in period of three years. 4 . • The 2015 Amendments reiterate the existing policy that the three year lock-in requirement does not apply to FDI in special economic zones, hotels and tourist attractions, educational institutions, hospitals and old age homes. Private Banking The FDI Policy now permits foreign institutional and portfolio investment in private banks up to a limit of 74% under the automatic approval route, subject to the approval of the board of the private bank followed by a special resolution approval of the private bank's shareholders. However, the FDI should not result in a change in the control and management of the private bank and the aggregate holding of an individual investor cannot exceed 10%. Aditionally, prior approval of the Reserve Bank of India ("RBI") is required if any individual or company makes an investment of 5% or more in a private bank. Investment Trusts and Funds In a separate recent development, the RBI has permitted[6] FDI in investment trusts including real estate investment trusts, infrastructure investment trusts and alternative investment funds. The establishment and operation of these trusts and funds are regulated by SEBI. [1] Press Note 12 (2015 Series) dated November 24, 2015. [2] The Foreign Investment Promotion Board ("FIPB") is the Government agency responsible for evaluating and approving foreign direct investment proposals up to INR 50 Billion (approx.

USD 830 Million) (earlier INR 30 Billion – approx. USD 500 Million). Foreign direct investment proposals above INR 50 Billion (approx.

USD 830 Million) require the approval of the Cabinet Committee on Economic Affairs. [3] The FDI Policy now requires that such proposals be considered by the FIPB instead of the Cabinet Committee on Security (as previously required). These proposals are considered on the criteria of securing access to new and state of the art technologies. Additionally, investment in the defence sector is subject to satisfaction of other conditions including security clearance. [4] Companies operating in broadcasting sectors for which the FDI Policy specifies a foreign investment cap of 49% or lower must be owned and controlled by resident Indian citizens and/or by Indian companies that are owned and controlled by resident Indian citizens. [5] Investment in the credit information sector is subject to obtaining regulatory clearance from the Reserve Bank of India. [6] Notification No.

FEMA. 355/2015-RB, Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eleventh Amendment) Regulations, 2015. 5 . Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. For further details, please contact the Gibson Dunn lawyer with whom you usually work or the following lawyers in the firm's Singapore office: Jai S. Pathak (+65 6507 3683, jpathak@gibsondunn.com) Priya Mehra (+65 6507 3671, pmehra@gibsondunn.com) Bharat Bahadur (+65 6507 3634, bbahadur@gibsondunn.com) Karthik Ashwin Thiagarajan (+65 6507 3636, kthiagarajan@gibsondunn.com) Sidhant Kumar (+65 6507 3661, skumar@gibsondunn.com) © 2015 Gibson, Dunn & Crutcher LLP Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice. 6 .