Section 220.127.116.11 of the new FDI Policy states that only:
(i) equity shares,
(ii) fully, compulsorily and mandatorily convertible debentures; and
(iii) fully, compulsorily and mandatorily convertible preference shares,
in each case with no in-built options of any type, would qualify as eligible instruments for FDI. Equity instruments issued/transferred to non-residents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant external commercial borrowings (“ECB”) guidelines.