The Reserve Bank of India (RBI) is in favour of legalising round tripping. It is of the opinion that money reinvested in India through a foreign subsidiary of an Indian company should also be considered foreign direct investment (FDI).
Round-tripping is the routing of money back into the country through a subsidiary based in tax havens like the British Virgin Islands and Mauritius. Since the money is channeled into the country through a foreign company, it technically qualifies as FDI.
However, the government discourages the flow of such funds as local companies sometimes use this route to evade capital gains tax.
Senior officials of the bank will meet representatives of the Union ministry for industries on April 29 to sort out the issues over the
