A few months ago, we had discussed a change of policy stance by the Government of India in allowing options (such as puts and calls) on shares of Indian companies to foreign investors. While the Government initially specified that the existence of such options would turn the foreign investment into an external commercial borrowing, it was quick to withdraw this stipulation due to the immediate outcry from various quarters. We had remarked at that time: “it remains to be seen whether the Reserve Bank of India (RBI) will also now adopt a more liberal approach to options and modify their prevailing position”. It appears that the RBI has not changed its approach despite the change in policy stance of the Government of India, and continues to raise doubts with respect to transactions where the foreign investor is conferred such options. The contrary signals emanating from different government authorities does give rise to tremendous regulatory uncertainty in structuring investments in India.