§ 1
The reporting that follows foreign investment
Foreign direct investment in an Indian company is reported on the RBI's FIRMS portal through the company's authorised dealer bank. The main forms are FC-GPR for new shares issued to non-residents (within 30 days of allotment), FC-TRS for transfers between residents and non-residents (within 60 days of transfer or receipt of consideration, whichever is earlier), and Form DI for downstream investment by a foreign-owned Indian company into another Indian company (within 30 days).
Shares issued to, or transferred to or from, a non-resident must respect the pricing guidelines: not below fair value when a non-resident buys, not above fair value when a non-resident sells. Fair value is determined by an internationally accepted pricing methodology and certified by a Chartered Accountant, a SEBI-registered merchant banker or a registered valuer, depending on the case.
Every Indian company with foreign investment, or that has invested abroad, files the annual return on foreign liabilities and assets (FLA) by 15 July, even if nothing changed in the year. External commercial borrowings from the parent need a loan registration number before drawdown and monthly ECB-2 returns.
§ 2
The law that applies
| Foreign Exchange Management Act, 1999 | The framework for all cross-border capital transactions. |
|---|---|
| FEMA (Non-debt Instruments) Rules, 2019 | FDI routes, caps, pricing guidelines and downstream investment. |
| FEMA (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 | FC-GPR, FC-TRS, DI and the annual FLA return. |
| FEMA (Borrowing and Lending) Regulations and the ECB Master Direction | Loans from foreign parents and lenders, LRN and ECB-2 reporting. |
| RBI directions on compounding of contraventions | How contraventions are compounded and the amounts payable. |
§ 3
Issues and how we solve them
The problems that most often hold up or complicate this work, and how we deal with each.
Issue 1
Past FC-GPR or FC-TRS filings were missed or filed late.
Our approach
We reconstruct the share capital history from the register of members, bank records and board minutes, file the pending forms with the late submission fee where the delay is within the permitted window, and apply for compounding where it is not. Compounding before the issue is discovered by the bank or an auditor is usually cheaper and faster.
Issue 2
A share transfer to or from a non-resident is priced outside the guidelines.
Our approach
We obtain a valuation under the appropriate methodology before the transaction, structure deferred or escrowed consideration within the permitted limits, and prepare the FC-TRS so the bank can process it without queries.
Issue 3
The parent funds the subsidiary with an informal intercompany loan.
Our approach
A loan from a foreign parent is an ECB, needing an LRN before drawdown and compliance with cost and maturity limits. We regularise existing loans, or convert them into equity where that is cleaner, and set up monthly reporting.
Issue 4
The FLA return is forgotten because the company had no new investment.
Our approach
We include the FLA return in the annual calendar for every foreign-owned client and file it from audited figures, or from provisional figures with a revision once the audit is complete.
§ 4
Process and timeline
- 1
Diagnostic
Weeks 1–2Review of all foreign investment, transfers, loans and outbound investment since incorporation.
- 2
Regularise
Weeks 2–8File pending returns with late fees or prepare compounding applications.
- 3
Ongoing
Event-based and annualTransaction support, valuations, filings and the annual FLA return.
Filing: FC-GPR · FC-TRS · DI · ECB-2 · FLA
§ 5
Ongoing obligations
| Obligation | Basis | When |
|---|---|---|
| FC-GPR on issue of shares to non-residents | NDI Reporting Regulations | Within 30 days of allotment |
| FC-TRS on transfer of shares | NDI Reporting Regulations | Within 60 days |
| Form DI for downstream investment | NDI Rules | Within 30 days |
| Annual return on foreign liabilities and assets | FLA return | 15 July |
| Monthly ECB return | ECB Master Direction | Within 7 working days of month end |
§ 6
Our scope of work
Included
- FEMA diagnostic
- FIRMS registration
- FC-GPR, FC-TRS, DI filings
- Valuation certificates (by a CA where permitted)
- ECB LRN and monthly reporting
- FLA return
- Compounding applications
Not included (quoted separately)
- Valuations requiring a SEBI-registered merchant banker
- Compounding fees payable to the RBI
§ 7
Practical notes
§ 8
Questions
What happens if FC-GPR is filed late?
A late submission fee is payable. If the delay is beyond the window in which the late fee route is available, the contravention must be compounded with the RBI.
Does every foreign-owned company file the FLA return?
Yes, every Indian company that has received foreign direct investment or made overseas investment files the FLA return by 15 July each year, including in years with no new investment.
Can a foreign parent lend money to its Indian subsidiary?
Yes, as an external commercial borrowing, which needs a loan registration number from the RBI through the AD bank before drawdown and must meet the conditions on cost, maturity and end use.
Prepared by CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375, SU and Company · Last reviewed 4 November 2026. General information only, based on the law as it stood on that date; it is not advice for any particular case.