FDI Compliances in India

In India, the foreign transactions are regulated by the Foreign Exchange Management Act, 1999 and are governed by the Reserve Bank of India as FEMA acts as an important factor for growth of various sectors in India.

  • Get your FDI Compliances in India starting from ₹15,000/-
  • Filing of forms
  • Provide full-fledged information/guidelines
  • Guidance of RBI compliance process along with drafting of documents
  • Effortless Online Procedure
  • Advices from Professionals
  • To accomplish compliances on time
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Overview

Introduction of FDI Compliances in India

In India, the foreign transactions are regulated by the Foreign Exchange Management Act, 1999 and are governed by the Reserve Bank of India as FEMA acts as an important factor for growth of various sectors in India. The main objective of FEMA is to assist in external trade, making balance payments, promoting orderly development, and maintaining the foreign exchange market in India.

Due to the extent of various industrial segmental regulations by the Central and state government, Corporate and the Individuals are continuously facing challenges to comply with the regulations within the stipulated time and manner. The importance of Foreign Exchange Management Act, 1999 (FEMA)/ Reserve Bank of India (RBI) Compliances has increased due to globalization which includes Company Secretary and Chartered Accountants Certifications for the transactions prescribed in the said regulations, making the applications to Reserve Bank of India for as specified under FEMA and RBI regulated transactions, also the advisory services related matters.

Legal Window has a team of experts providing you the best assistance, timely delivery and guaranteeing the highest customer satisfaction with respect to Reserve Bank of India Compliances. You may get in touch with our team on 072407-51000 or email [email protected].

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Details

Foreign Investment

Generally, in India the foreign investment is attracted in the form of Foreign Direct Investments. The Reserve Bank of India has specifically initiated the process of reporting through the SINGLE MASTER FORM (SMF) unless specifically stated.

Under SMF those transactions are reported where an entity receives any foreign investment as per the FDI Policy of the country and such entity has issued securities as per Foreign Exchange Management Act, 1999.

There are various forms like FC-GPR, FC-TRS, FORM DI etc depending upon the type of transaction carried out.

Where an entity issues capital instruments or securities in respect of the foreign investment received from a person resident outside India then such Indian entity is required to file Form FC-GPR (Foreign Currency Gross Provisional Return) within 30 days of issue of such securities or capital instruments. It has to be duly signed by MD/any director/CS of the company and to be submitted to the Authorized Dealer who will forward the same to RBI.

Where the capital instruments are transferred either by a person resident in India to a person resident outside India, the Indian resident is required to file Form FC-TRS within 60 days from either from date of transfer of remittance or from the date of transfer whichever is earlier to the Authorized Dealer Bank.

Documents

Documents Required

Checklist
  • FOR FC-GPR
  • PAN Card of the two persons to be appointed as Authorized person on behalf of the entity
  • Board Resolution by the entity to authorize any person
  • Valuation Report of the Registered Valuer for the valuation carried out for issue of securities (if required)
  • Foreign Inward Remittance Certificate (FIRC)
  • KYC of the person resident outside India
  • Declaration (in the format prescribed by Reserve Bank of India and the format to be shared by us)
  • Copy of FIPB approval (if so required)
  • Copy of Board Resolution for issue of securities
  • Any other document if so required
  • FOR FC-TRS
  • Transfer Agreement or Gift Deed depending upon the case
  • Remittance Details through FIRC or outward remittance
  • KYC of the person resident outside India
  • Valuation Report
  • Board Resolution for purchase/sale of securities (in case of non-individuals)
  • Certificate of Incorporation (in case of non-individuals)
  • PAN Card of the person resident in India
  • Various professional certificate (in the format prescribed by Reserve Bank of India, draft to be shared by us)
  • Consent Letter (in the format prescribed by Reserve Bank of India, draft to be shared by us)
  • Non-resident declaration (in the format prescribed by Reserve Bank of India, draft to be shared by us)
  • Acknowledgment of FC-GPR/FC-TRS in case of sale by the non-resident
  • Any other documents may be required by the Authorized Dealer Bank
How it works

Process of FDI Compliances in India

1

Complete the Application Form

You are requested to first fill the simple questionnaire provided by our expert team which will enable us to study your case and will help us to provide you the appropriate information.

2

Document Processing

At the second step we will be requiring the documents in accordance with the questionnaire filled by you so that we can arrange them as per the requirement and for processing.

3

Drafting of Documents

The third step comprises drafting of relevant documents as per the checklist and the same is to be signed by the authorized person whosoever.

4

Filing of Form

Your respective Form will be filled on the portal of RBI i.e. firms.rbi.org.in on your behalf for further processing. We will enter the required details as per the information and documents provided by you and in order to prove the same relevant attachments will be attached with them.

5

Getting Compliance done

The status of the form along with the screenshot of form filled will be shared with you on the earliest basis specifying that the compliance has been made and regular follow up will be done till the final approval of the form.

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  • Professional Consultation
  • Drafting of Documents
  • Coordinating with Reserve Bank of India
  • Certificate by Professional wherever required
  • Timely Compliances
  • Filing of Forms
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More Insights on FDI Compliances in India

MODES OF FOREIGN INVESTMENTS

There are two ways through which foreign investment can be infused in India.

Preserve the envelope and save the copy of mail: - If the notice comes by speed post or registered post, preserve the envelope. If notice comes on mail then save the copy of that mail as It serves as proof of the dates on which it was posted and received.

Don’t Ignore the notice: Handle the notice very carefully and sincerely, otherwise you have to pay a hefty penalty.

For filing the respective Form FC-GPR and FC-TRS the person resident in India has to create login credentials.

Entity Master:- At first an entity master is created for reporting the foreign investment with the objective of obtaining data information related to the total foreign investment received by a person resident in India.

Business User:- For reporting the foreign investment as when received a Business User Registration is required which can only be done after entity master registration.

In order to create the above credentials. You may get in touch with us on 072407-51000 or email [email protected].

Additional Service Offered by Legal Window

Application to the Reserve Bank of India for the transactions pertaining to purchase/sale of shares, debentures, other securities and directly to or/and from Resident in India and resident outside India.

Compliances with the Foreign Direct Investment (FDI) regulations as stated by the Reserve Bank of India for getting various necessary regulatory approvals.

Compliances for the procedure of repatriation of income/assets from India including Chartered Accountants Certification.

Transfer of shares from the Indian resident to non-residents.

Setting up of Joint Venture (JV)/ Partnership by the Non India Residents or person of Indian origin.

Issuance of the Statutory Certificates under the FEMA & RBI regulation.

Advice on the Inbound and Outbound transactions.

Advise on the External Commercial Borrowings.

Setting up of Joint Venture (JV)/ Partnership by the Non India Residents or person of Indian orApprovals from Foreign Investment Promotions Board (FIPB), the Ministry of Finance of India and assistance in the preparation of Foreign Collaboration Agreement.

Advisory service on the change/exit from the existing Business model.

Other Advisory Services on the matters related to FEMA/RBI including the Representation before Reserve Bank of India.

Questions

FAQs on FDI Compliances in India

A foreign direct investment (FDI) is a type of investment for controlling the ownership of a business in one country by a foreign entity based in the another country either for expanding the business or operations or to take over the operations of another entity.

  • Gambling & Betting
  • Business of Lottery (including the governments/private lottery's, online lottery etc)
  • Activities or sectors which are not open to the private sector investment (like atomic energy, railways etc.)
  • Retail trading's (expect the single-brand product retailing)
  • Chit Fund Business
  • Nidhi company
  • Real estate businesses or the construction of farm houses
  • Trading in the transferable development rights (TDRs)
  • Manufacturing of tobacco's, cigars, cheroots, cigarallos, cigarettes and other tobacco substitutes
  • Agriculture (except floriculture, apiculture, horticulture and cultivation of vegetables and mushrooms under controlled conditions, animals husbandry including the breeding of dogs, the development and production of seeds & planting materials, viniculture & aquaculture under controlled conditions and other services related to the agro and allied sectors)

  • Where the capital instruments are transferred either by a person resident in India to a person resident outside India, the Indian resident is required to file Form FC-TRS within 60 days from either from date of transfer of remittance or from the date of transfer whichever is earlier to the Authorized Dealer Bank.
  • Note: FC-TRS is not required to be filed when the transfer pertains to transfer of capital instruments in accordance with FEMA 20 (R) between a person resident outside India holding capital instruments on a non-repatriable basis and person resident in India.

No, only NRIs/OCIs are allowed to invest in partnership/proprietorship concerns in India i.e. on non-repatriation basis.

In such case Form FC-TRS has to be filed with the AD bank on receipt of every tranche of payment. The onus of reporting such transfer shall be on the resident transferor/transferee.

It can be either received through the following ways:-

  • Mergers and acquisitions
  • Building new facilities
  • Intra company loans
  • Reinvesting profits earned from overseas operations
  • Joint Ventures or strategic alliances
  • Transfer to technical know-how
  • Investment through purchase of securities
  • Hiring of expertise

Where an entity issues capital instruments or securities in respect of the foreign investment received from a person resident outside India then such Indian entity is required to file Form FC-GPR (Foreign Currency Gross Provisional Return) within 30 days of issue of such securities or capital instruments.

As such there is no upfront statutory fees applicable for filing of FC-GPR or FC-TRS on FIRMS portal (like MCA portal), but the Authorized Dealer Bank may charge the fees for processing the Form. This fees varies from Bank to Bank. It may also ask for the authorization from the Applicant in order to deduct amount as bank charges from account.

The Indian Company has to issue capital instrument within sixty days from the date of receipt of the consideration.

Foreign Investment means any type of investment which is made by a person resident outside India on a repatriable basis in capital instruments of an Indian company or to the capital of an LLP. Foreign Direct Investment (FDI) is the investment which is carried out by by a person resident outside India through capital instruments (a) in an unlisted Indian company; or (b) in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis of a listed Indian company.

FDI Compliances in India

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