Korea Newsletter (May - June 2025)

INDIA NEWSLETTER - May to June 2025

As global supply chains continue to fragment and the geopolitical landscape grows more complex, India and South Korea are advancing a pragmatic and strategic partnership. Recent months have witnessed renewed momentum through sector-specific facilitation, institutional collaboration, and growing policy alignment reflecting a shared intent to strengthen their long-standing economic and diplomatic ties. Korean companies are increasingly prioritising sectors such as shipbuilding, electronics, semiconductors, and medical devices, while new areas of cooperation are emerging in green hydrogen, advanced manufacturing, and digital innovation.

The two nations are also enhancing technological collaboration in critical domains like artificial intelligence, green technology, and digital governance. Their partnership is guided by a shared vision for an open, inclusive, and rules-based indo-pacific, and reinforced by growing cultural exchanges, tourism ties. Amid growing bilateral engagement, the ongoing Comprehensive Economic Partnership Agreement negotiations signal a shared commitment to aligning economic priorities and facilitating greater participation in emerging sectors.

In this newsletter, we highlight key legal and regulatory developments in India over recent months.

SUMMARY OF KEY UPDATES

Part A: Sectoral updates

1.    Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI)

Government of India (GoI) has launched SPMEPCI to boost domestic manufacturing through reduced import duties on electric four-wheelers, subject to a minimum USD 484 million investment and phased domestic value addition requirements.

2.    Green Hydrogen Certification Scheme (GHCS)

GoI has introduced GHCS to define standards for certifying green hydrogen with an emission threshold cap of 2 kg CO₂/kg, mandatory certification, third-party verification, and eligibility for carbon credit trading.

Part B: General updates

1.    Framework for Environment, Social and Governance (ESG) debt securities introduced

Securities and Exchange Board of India has introduced a framework for issuance and listing of ESG debt securities. Key provisions include, amongst others, strict use-of-proceeds rules, disclosure obligations, third-party verification, and anti-purpose washing safeguards.

2.    Relaxation for foreign portfolio investors (FPIs) investing in corporate debt securities

Amendments to master directions on non-resident investments in debt securities notified to remove investment caps applicable to FPIs under the general route.

3.    Reserve Bank of India (RBI) (Digital Lending) Directions, 2025 (DL Directions) introduced

RBI has notified the DL Directions, 2025, consolidating earlier digital lending guidelines and prescribing compliance requirements relating to transparency, customer protection, data privacy, and operational accountability for digital lenders.

4.    Master Directions for Electronic Trading Platforms (ETP) issued

RBI has issued the ETP Directions, 2025, prescribing regulatory requirements for ETP operators, including prior authorisation, governance and reporting obligations, maintenance of trade-related data, and RBI approval for voluntary exit.

5.    Master Directions for project finance introduced

RBI has issued the RBI (Project Finance) Directions, 2025, which require common agreements among lenders, minimum exposure thresholds, land availability criteria, and detailed disbursement and repayment structuring.

PART A: SECTORAL UPDATES

Automobile

Government of India (GoI) launches Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI)

On March 15, 2024, the Ministry of Heavy Industries (MHI) notified the SPMEPCI, offering financial incentives to manufacturers to promote domestic manufacturing of battery-operated electric passenger vehicles (BEVs) in India, with detailed guidelines issued on June 2, 2025.[1] The SPMEPCI targets production of BEVs and original equipment manufacturers producing or planning to produce electric vehicles (EVs). Key features of the scheme include:

1. Key eligibility criteria: Eligible companies must meet global group revenue with minimum threshold of USD 1.2 billion and an investment in fixed assets of USD 350 million as per latest audited financial statements. SPMEPCI has a minimum investment mandate of USD 484 million (Minimum Investment) furnished with a bank guarantee.
2. Custom duty benefits: Applicant can import completely built-in units of electric four-wheelers (E-4W) manufactured at a reduced customs duty of 15% (fifteen per cent) for a period of 5 (five) years. Maximum number of E-4W vehicles permissible at reduced duty is limited to 8,000 (eight thousand) per year (carryover of unutilised annual imports is permissible). Total duty foregone will be limited to whichever is lower, (a) maximum duty foregone per applicant, limited at USD 756 million or (b) committed investment of applicant (in INR crores).
3. Compliance: The applicant must ensure domestic value addition (DVA) during manufacturing by 25% (twenty-five per cent) within 3 (three) years and, 50% (fifty per cent) within 5 (five) years from date of issuance of approval letter by MHI. Applicant’s commitment to set up manufacturing and meeting DVA requirements to be supported by a bank guarantee valued at Minimum Investment, or the total duty foregone, whichever is higher. If total duty foregone is higher than Minimum Investment, then additional bank guarantee must be furnished to the extent of incentive sought.

Renewable Energy

GoI notified Green Hydrogen Certification Scheme

The Ministry of New and Renewable Energy (MNRE) notified the Green Hydrogen Certification Scheme (GHCS) to establish a uniform framework for the production, certification, and trading of green hydrogen in India.[2] Key features of the scheme are as follows:

1. Applicability: The scheme applies to all green hydrogen production facilities in India that intend to (a) sell/use green hydrogen in India; (b) receive any form of subsidy, exemption or concession from the central or state government; or (c) supply hydrogen to both domestic and export markets. However, production facilities with an annual capacity of 10 (ten) tons or less are exempted from mandatory certification and may participate on a voluntary basis. Facilities producing green hydrogen exclusively for export and not availing any government benefits are also exempt but are required to report production and emission data in accordance with the importing country's requirements.
2. System Boundary and Emission Accounting: Green hydrogen producers are required to report emissions data for certification. This includes both direct and indirect emissions arising from energy and material inputs used in the green hydrogen production process. Inputs such as water, catalysts, and salts used within the project boundary also form part of emission intensity calculations.
3. Emission threshold: To qualify as green hydrogen under the GHCS, the product carbon footprint (PCF) of hydrogen production must not exceed 2 kg (two kilograms) CO₂ equivalent per kg of hydrogen, measured at the point of completion of green hydrogen production process and prior to any off-site transportation or storage. The PCF calculation must include all greenhouse gas emissions associated with the production process as per ISO 14067 standards.
4. Materiality threshold: Any change in production methodology, feedstock, energy source, or any other factor that may affect the PCF by more than 1% (one percent) shall be reported and may trigger reassessment. Deviations below the threshold must be documented and disclosed during the annual certification cycle.
5. Verification and record keeping: Producers must retain production records for five evaluation cycles (or from the start of operations, whichever is shorter) and maintain daily data on production, input consumption, and energy usage. Appointment of a Bureau of Energy Efficiency-accredited carbon verification agency (ACV Agency) by March 31 each year is mandatory. The appointed ACV Agency must verify compliance with the GHCS (including the calculation of PCF) and submit verified data and findings through the green hydrogen certification portal.
6. Certification framework: GHCS provides for (a) concept certificate (voluntary, design stage), (b) facility level certificate (mandatory, commissioning stage), (c) provisional certificate (voluntary, monthly production), and (d) final certificate (mandatory, annual certification).
   Each final certificate will carry a unique identification for each 100 kg (one hundred kilograms) of hydrogen produced and will specify the project details, production year and emission intensity values. If the annual average emission intensity exceeds the threshold, the entire quantity of hydrogen produced during that financial year from the relevant facility will not qualify as ‘green’. The final certificate can be transferred and can also be used to claim carbon credits under the Carbon Credit Trading Scheme, 2023 issued by the Ministry of Power, Government of India on June 28, 2023.
7. Governance and compliance: Certification under the GHCS is based on third-party verification by an MNRE-approved ACV, with final review and approval by a technical committee constituted under MNRE. In case of unresolved discrepancies, the committee may direct an independent re-verification, and its decision will be final. Notably, GHCS certification does not replace any statutory environmental, safety, or land-use approvals required under Indian law.

PART B: GENERAL UPDATES

Securities and Exchange Board of India (SEBI)

Introduction of Framework for Environment, Social and Governance (ESG) debt securities

On June 5, 2025, SEBI issued a circular introducing a comprehensive framework for issuance and listing of ESG debt securities, other than green debt securities, under the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.[3] ESG debt securities include green, social, sustainability, and sustainability-linked bonds. The circular operationalizes the issuance of social bonds, sustainability bonds, and sustainability-linked bonds in alignment with international standards and Indian regulatory adaptations. Key highlights include:

1. Use of proceeds and labelling: ESG labels may be used only if the proceeds are applied to eligible projects. For instance: (a) social bonds must fund projects targeting positive social outcomes such as affordable infrastructure, healthcare, education, housing, employment, and food security, (b) sustainability bonds must fund a mix of green and social projects, and (c) sustainability-linked bonds must be linked to pre-defined sustainability key performance indicators and performance targets.
2. Disclosure and reporting requirements: Issuers must make initial and continuous disclosures, including: (a) project selection criteria, (b) fund allocation and tracking, (c) impact assessment and risk mitigation, and (d) annual reporting and auditor verification.
3. Third-party review: Issuers are required to appoint independent reviewers or certifiers (including SEBI-registered ESG rating providers) to validate alignment with applicable standards and verify the impact reporting process.
4. Anti-purpose washing measures: SEBI mandates monitoring and accountability to avoid misleading claims, cherry-picking of data, and misuse of proceeds. Issuers are required to disclose any misalignments and may be required to redeem bonds prematurely if violations occur.

Reserve Bank of India (RBI)

Relaxations to framework for investments by foreign portfolio investors (FPIs) in corporate debt securities

The RBI, through a circular dated May 08, 2025, brought in amendments to the RBI Master Directions on Non-Resident Investments in Debt Securities, 2025, removing certain regulatory caps for investments by FPIs in debt securities.[4] FPIs can invest in Indian debt securities through the general route, voluntary retention route, or fully accessible route.  These routes allow debt investments by FPIs as per different investment limits.  Under the erstwhile framework, FPIs using the ‘general route’, i.e., for investment in government securities and corporate debt securities, had to ensure that (i) no more than 30% (thirty percent) of their corporate debt holdings were in securities with residual maturity up to 1 (one) year, and (ii) the general route investment could not exceed 15% (fifteen percent) of the overall FPI corporate debt limit for long term FPIs (such as sovereign wealth funds and multilateral agencies) and 10% (ten percent) of the prevailing limit for other FPIs. The RBI, through this circular, has removed both of the aforementioned investments limits.

RBI Digital Lending Directions, 2025

The RBI, on May 08, 2025, issued the RBI (Digital Lending) Directions, 2025 (DL Directions) marking a significant step in formalising and strengthening the regulatory framework for digital lending in India.[5] The DL Directions consolidate earlier guidelines on digital lending and introduce new measures to address emerging risks in the digital lending ecosystem and enhance consumer protection, such as the introduction of new compliance obligations aimed to strengthen transparency, customer protection, data privacy, and accountability in digital lending operations.

A detailed analysis of the DL Directions is available in out InfoLex article available at https://induslaw.com/publications/pdf/alerts-2025/digital-lending-20-breaking-down-the-rbi-digital-lending-directions-2025.pdf

Payment Regulatory Board Regulations, 2025

The RBI, on May 20, 2025, notified the Payment Regulatory Board Regulations, 2025 (Revised Regulations), repealing the erstwhile Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008 (Erstwhile Regulations).[6] The new 6 (six) members payment regulatory board will be established to regulate and supervise payment systems (including prepaid payment instruments, payment aggregators and payment banks) in India, and will replace the board formulated under the Erstwhile Regulations. Key changes introduced through the Revised Regulations include:

1. Composition of the board: Under the Erstwhile Regulations, the committee comprised of the RBI Governor as the chairperson, deputy governors of the RBI, and up to 3 (three) directors of the central board. Further, 2 (two) executive directors of, and the principal legal advisor to, the RBI were also permanent invitees to the board. The Revised Regulations retains the RBI Governor as the chairperson and specify that the regulatory board will only have the RBI deputy governor in charge of payment and settlement systems. Instead of directors of the central board, the board will nominate one RBI officer. Three persons will be nominated by the central government, and RBI executive directors will no longer be permanent invitees to the Board.
2. Eligibility for nominated members: Under the Revised Regulations, the members nominated by the central government to the board must have expertise in the fields of payment systems, information technology or law, must be less than 70 (seventy) years of age, must not be a member of parliament or a members of any legislative assembly, and must not have been convicted of offence punishable with imprisonment of at least 180 (one hundred eighty) days.

Master Directions for entities operating Electronic Trading Platforms

On June 16, 2025, the RBI issued the Master Direction – Electronic Trading Platforms (ETPs) Directions, 2025 (Master Directions).[7] The Master Directions supersedes the earlier regulatory framework, The Electronic Trading Platforms (Reserve Bank) Directions, 2018. The Master Directions aims to enhance transparency, standardisation and investor protection mechanisms on ETPs.

1.  Applicability and authorisation: All ETP operators are required to obtain prior authorisation from the RBI under the Payment and Settlement Systems Act, 2007 for operating their platforms. Existing operations prior to issuance of Master Directions are mandated to comply within 90 (ninety) days from the effective date of the Master Directions, (i.e., September 3, 2025), and RBI can withdraw authorisation upon failure to comply.
2. Governance standards and operational requirements: Authorised ETP operators must: (a) submit quarterly and annual compliance reports to the RBI, (b) report trade data to trade repositories, (c) notify RBI of system disruptions or market abuse and cooperate with any regulatory investigations, and (d) maintain all trade related data for at least 10 (ten) years and ensure continued access to it even after operational exit.
3. Participant obligations: All users of ETPs, including banks, mutual funds, insurance companies, foreign portfolio investors and corporates must adhere to ETP operator’s terms and conditions and RBI’s regulatory requirements.
4. Reporting and supervision: ETPs are required to submit regular reports to RBI detailing: (a) traded volumes and types of instruments trades, (b) profile and number of market participants, (c) details of system performance including outages, failures and cyber incidents, and (d) changes in business model, ownership or operational structure.
5. Cancellation and exit provisions: Authorisations given are non-transferable and RBI may cancel any authorisation for violations or systemic concerns. Voluntary exit by an ETP requires the approval of RBI and surrender of authorisation letter previously granted.

Master Directions for Project Finance, 2025

On June 19, 2025, RBI issued the Reserve Bank of India (Project Finance) Directions, 2025 establishing a comprehensive framework for project financing across regulated entities (REs) governing infrastructure and non-infrastructure projects.[8] These directions are applicable to commercial banks, non-Banking Financial Companies (NBFCs), and other financial institutions.

1. Applicability: These directions will apply to those loans where: (a) at least 51% (fifty one percent) of the repayment is to be made from the cash flows generated by the project being financed, and (b) all lenders have a common agreement with the debtor.
2. Exposure Conditions and Sanction: All projects financed by a lender must meet certain conditions, which includes: (a) original date of commencement of commercial operations (DCCO) documented before fund disbursal, (b) inclusion of project specific disbursement schedule against stage of completion in the loan agreements, (c) post DCCO repayment schedule designated as per initial cash flows, and (iv) individual lenders must have an exposure of 10% (ten percent) with loan amount up to USD 176 million and a minimum of 5% (five percent) or for loan amounts above USD 176 million, a minimum exposure of 5% (five percent) or INR 150 crore, whichever is higher, must be maintained.
3. Availability of land: A lender must ensure availability of sufficient land/right of way for all projects before disbursing funds. For infrastructure projects under public private partnership model at least 50% (fifty percent) of the available land must be available while for other projects the threshold is higher at 75% (seventy five percent). For transmission line projects, minimum availability of land will be decided by the lender.

Arbitration

Supreme Court (SC) clarifies powers of courts to modify arbitral awards

A five-judge constitution bench of the SC in Gayatri Balasamy v. ISG Novasoft Technologies Limited (4:1 majority), held that courts have limited power to modify arbitral awards under the Arbitration and Conciliation Act, 1996. The Court clarified that under Sections 34 and 37, courts may, in certain circumstances, modify or excise parts of an award without setting it aside entirely. This power may be exercised where: (a) the award is severable, and the impugned portion can be isolated; (b) there are clerical, arithmetical, or typographical errors; or (c) post-award interest needs recalibration due to new developments.

The court adopted a purposive interpretation of Section 34, allowing partial modifications where appropriate, without reassessing the merits. Courts may also invoke Article 142 of the Constitution to modify awards, provided such exercise aligns with the act.

Others

Revised procedure for off-market transfers in private companie 

The National Securities Depository Limited (NSDL) on June 03, 2025, issued a circular introducing the revised procedure for execution of off-market transfer instructions relating to shares of private limited companies.[9] Under the erstwhile framework, any shareholder desirous of transferring securities held by them were only required to submit a ‘delivery instruction slip’ to their depository participant. While such transfers were subject to the transfer restrictions set forth in such company’s articles of association, or shareholders’ agreement, there was no mechanism for the depository participant to verify such transfer restrictions. 

Under the revised framework, both the transferor and the transferee, for all such transactions (excluding transmission, dematerialization, or re-materialization of securities) must obtain from the concerned company, and submit to the depository participant a consent/ confirmation letter in the prescribed format which includes the details of the transferor, transferee, number of shares being transferred, and the reason for such transfer. 

Mandatory dematerialization of securities of private companies - In October 2023, the Ministry of Corporate Affairs (MCA) amended the Companies (Prospectus and Allotment of Securities) Rules, 2014, mandating dematerialization of securities of all private companies (excluding governmental companies and small companies) by September 30, 2024.[10] Failure to facilitate dematerialization would hinder the company in issuing securities, and the shareholders from transferring and subscribing to any new securities of such company. On February 12, 2025, the MCA vide a notification extended the compliance timeline from September 30, 2024, to June 30, 2025.[11]

Market Bulletin

Key market developments in the month of May and June 2025 included the following:

1. LG Electronics India Limited is establishing its third manufacturing facility in India at Sri City, Andhra Pradesh, with a planned investment of USD 600 million over 4 (four) years. The new facility will produce a wide range of consumer electronics, including AC compressors, refrigerators, washing machines, and air conditioners.

[1] Ministry of Heavy Industries, Scheme to Promote Manufacturing of Electric Passenger Cars in India, dated March 15, 2024, available at https://heavyindustries.gov.in/scheme-promote-manufacturing-electric-passenger-cars-india-0, last accessed June 30, 2025.

[2] Ministry of New and Renewable Energy, Green Hydrogen Certification Scheme of India dated April 29, 2025, available at https://mnre.gov.in/en/notice/green-hydrogen-certification-scheme-of-india/ last accessed May 31, 2025.

[3] Securities and Exchange Board of India, Framework for Environment, Social and Governance (ESG) Debt Securities (other than green debt securities), dated June 05, 2025, available at https://www.sebi.gov.in/legal/circulars/jun-2025/framework-for-environment-social-and-governance-esg-debt-securities-other-than-green-debt-securities-_94424.html, last accessed June 30, 2025

[4] Reserve Bank of India, Investments by Foreign Portfolio Investors in Corporate Debt Securities through the General Route – Relaxations dated May 08, 2025, available at https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12847&Mode=0 last accessed May 31, 2025.

[5]  Reserve Bank of India, Reserve Bank of India (Digital Lending) Directions, 2025 dated May 08, 2025, available at https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12848&Mode=0 last accessed May 31, 2025.

[6] Reserve Bank of India, Payment Regulatory Board Regulations, 2025 dated May 20, 2025, available at https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BPSSR2008FDCA9885A88E45D29C680794D63E84AD.PDF last accessed May 31, 2025.

[7] Reserve Bank of India, “Master Direction – Reserve Bank of India (Electronic Trading Platforms) Directions, 2025”, dated June 16, 2025, available at https://rbidocs.rbi.org.in/rdocs/notification/PDFs/137MDEF04E0A142F948C58A9503C136E565AF.PDF, last accessed June 30, 2025.

[8] Reserve Bank of India, “Reserve Bank of India (Project Finance) Directions, 2025”, dated June 19, 2025, available at https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT59345BFF7593E047D587358A7A802B0F4A.PDF, last accessed June 30, 2025.

[9] National Securities Depository Limited, Processing of off-market transfer instructions in shares of Private Limited Companies, NSDL/POLICY/2025/0071, available at, https://nsdl.co.in/downloadables/pdf/2025-0071-Policy-Processing_of_off-market_transfer_instructions_in_shares_of_Private_Limited_Companies.pdf, last accessed June 30, 2025

[10] Ministry of Corporate Affairs, “G.S.R. 802(E): The Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023”, dated October 27, 2023, available at, https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=Mzc2MDY5NjEw&docCategory=Notifications&type=open,  last accessed June 30, 2025.

[11] Ministry of Corporate Affairs, “G.S.R. 131(E): The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025”, dated February 12, 2025, available at https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=NTE3MjcxODc4&docCategory=NotificationsAndCirculars&type=open, last accessed June 30, 2025.