Overseas Direct Investment (ODI)

Investment Support

Overseas Direct Investment (ODI)

Plans

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About Investment Pitch Report

Overseas investments (or financial commitment) in:

  • Joint Venture (JV) – A foreign entity is termed as JV of the Indian Party when there are other foreign promoters holding the stake along with the Indian Party.
  • Wholly Owned Subsidiaries (WOS) – In case of WOS entire capital is held by the one or more Indian Parties.

have been recognized as important avenues for promoting global business by Indian entrepreneurs.

Investment in wholly owned subsidiaries and joint ventures outside India by person resident in India is governed by FEMA (Transfer or Issue of Foreign Security) (Amendment) Regulations, 2004, issued vide Notification No. FEMA 120/RB-2004 dated 7th July, 2004.

An Indian Party and a Resident Individual making an overseas investment is required to submit Form ODI with the RBI FIRMS Portal. This Package ensures 100% Error Free compliance with FEMA (Foreign Exchange Management Act, 1999) and its rules and guidelines applicable to your organisation, assuring a 100% compliance, stress free and penalty free services.

Applicability
  • Any Indian Party/Resident Individual incorporating a company outside India.
  • Any Indian Party/Resident Individual purchasing existing shares of a foreign entity in any of the following modes
    • Market purchase
    • Private placement
    • Stock Exchange
  • Any Indian Party/Resident Individual selling the shares he owns in any company outside India.
Scope
  • File Form ODI within 30 days from the date of investment
  • File Form FC-TRS within 30 days from the date of transfer
  • File APR in Part II of Form ODI in case of any changes in the investment.
  • File Foreign Liabilities and Assets (FLA) return
  • Representation before the Reserve Bank of India under Approval Route
  • Support in drafting of documentation
  • Support of documentation filing with the AD Bankers
  • Legal briefs & Regular consultation
Frequently Asked Questions

Who is considered to be an Indian Party?

An Indian Party is a

  1. company incorporated in India or
  2. body created under an Act of Parliament or
  3. partnership firm registered under the Indian Partnership Act 1932 or
  4. Limited Liability Partnership (LLP) incorporated under the LLP Act, 2008
  5. and any other entity in India as may be notified by the Reserve Bank.
  6. When more than one such company, body or entity makes investment in the foreign JV / WOS, such combination will also form an “Indian Party”.

An Indian Party is eligible to make overseas direct investment under the Automatic Route.

Who is considered to be a Resident Individual?

A natural person residing in India for more than 182 Days during the course of the preceding financial year but does not include-

  1. a person who has gone out of India or who stays outside India, in either of the cases-
    1. for or on taking up employment outside India, or
    2. for carrying on outside India a business or vocation outside India, or
    3. for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
  2. a person who has come to or stays in India, in either case, otherwise than-
    1. for or on taking up employment in India, or
    2. for carrying on in India a business or vocation in India, or
    3. for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

RBI has made different provisions for Indian Party and for resident Individuals w.r.t. Overseas Direct Investments.

Who needs to file Annual Return on Foreign Liabilities and Assets (FLA), what is due date?

FLA Return is required to be submitted mandatorily by all the India resident companies which have received FDI and/ or made ODI in any of the previous year(s), including current year. Who holds foreign assets or liabilities in their financial statements as on 31 March of that year.

It has to be filed on or before 15th July every year.

If the Indian company doesn’t have any outstanding investment in respect of FDI/ODI as of 31st of March of that year, there is no need to file FLA return in respect of that year.

Who needs to file Form ODI, when is the due date?

An Indian Party or a Resident Individual making an overseas investment is required to submit Form ODI.

The Form has to be submitted within 6 months from the date of investment and on receipt of share certificates or any other documentary evidence of investment in the foreign JV / WOS.

Part III of ODI report on disinvestment has to be filed within 90 days in the following scenarios:

  1. Closure / Merger / Voluntary Liquidation / Winding up / Amalgamation of overseas JV / WOS
  2. Sale/ Transfer of the shares of the overseas JV/WOS to another eligible resident or non-resident.
  3. Buyback of shares by the overseas JV/WOS
  4. Closure / Voluntary Liquidation / Winding up/ Merger/ Amalgamation of the Indian Party

Who needs to file Annual Performance Report (APR), when is the due date?

Any Indian Party or resident individual who have made an Overseas Direct Investment (ODI) has to submit Annual Performance Report (APR) in Form ODI Part II in respect of each Joint Venture (JV) / Wholly Owned Subsidiary (WOS) outside India.

It has to be filed on or before 31st December every year.

APR is required to be certified by the statutory auditor of the Indian party. Certification of APRs by the Statutory Auditor or Chartered Accountant shall not be insisted upon in the case of Resident Individuals and self-certification can be accepted in such case.

Who needs to file Form FC-TRS, when is the due date?

Any transfer of shares and other eligible securities between residents and non-residents and vice- versa has to be reported to the RBI in the Form FC-TRS. The possible types of transfers can include:

  1. Transfer by way of sale or gift
    1. Resident to Non-Resident (including NRI/OCI on repartiable basis)
    2. Non-Resident (including NRI/OCI on repartiable basis) to Resident
    3. NRI/OCI/Eligible Investor on Non-repartiable basis Non-Resident (including NRI/OCI on repartiable basis)
    4. Non-repartiable basis Non-Resident (including NRI/OCI on repartiable basis) to NRI/OCI/Eligible Investor on Non-repartiable basis

The Form has to be submitted within 60 days from the date of transfer of capital instruments or receipt/ remittance of funds whichever is earlier.

The responsibility to file the Form FC-TRS is upon the transferor/transferee, whoever is the resident of India in such a transaction. Except in cases of transfer between to non-residents.

What is Form A2?

Application for Remittance Abroad (For Payments other than Imports and Remittances Covering Intermediary Trade)

The remitter needs to fill up the details on the amount of remittance, beneficiary detail and the purpose code to indicate the reason for remittance of such funds.

What is an AD Bank?

RBI cannot do all transactions in foreign exchange itself. Hence, RBI delegates its powers to the ‘Authorised Persons’ with suitable guidelines, to deal in foreign exchange and foreign securities.

Categories of ‘Authorised Persons’ are as follows:

 

CATEGORY PERMITTED ENTITIES PERMITTED ACTIVITIES
Authorised Dealer – Category I Commercial Banks, State Co-op Banks, Urban Co-op Banks All current and capital account transactions as per RBI directions issued from time to time
Authorised Dealer – Category II Upgraded FFMCs, Coop Banks, Regional Rural Banks (RRBs), others Specified non-trade related current account transactions and all activities permitted to FFMC
Authorised Dealer – Category III Select Financial and other institutions Transactions incidental to the foreign exchange
Full Fledged Money Changers (FFMC) Department of Post, Urban Co-op Banks, Other FFMC Purchase of foreign exchange and sale for private and business visits abroad.