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Short answer
Indian companies, LLPs and individuals can invest abroad under FEMA's overseas investment framework of 2022. Most investments go through the automatic route via your bank. The main conditions are an Indian entity's total commitment cap of 400% of net worth, a Unique Identification Number (UIN) for the foreign entity before money leaves India, and an Annual Performance Report by 31 December every year.
ODI or OPI — which one is it?
| Overseas direct investment (ODI) | Overseas portfolio investment (OPI) | |
|---|---|---|
| What counts | Any unlisted foreign equity; 10% or more of a listed entity; or any stake with control | Foreign securities that are not ODI, e.g. under 10% of a listed company without control |
| Indian entity limit | Total financial commitment up to 400% of net worth | Up to 50% of net worth |
| Individual limit | Within the LRS limit, subject to conditions | Within the LRS limit |
| Main filings | UIN, bank reporting, Form FC for loans/guarantees, APR, FLA | Periodic reporting through the bank |
Who can invest, and how much
Indian companies and LLPs
An Indian entity's total financial commitment — equity, debt and guarantees given for the foreign entity — generally cannot exceed 400% of its net worth as per its last audited balance sheet. Within this, performance guarantees count at 50% of their value. Going beyond the limit needs prior approval.
Resident individuals
Individuals invest within the Liberalised Remittance Scheme (LRS) limit. They cannot lend to the foreign entity as part of their financial commitment, and individual ODI is generally limited to operating entities rather than financial-services businesses.
Structures to avoid
FEMA restricts round tripping: an Indian resident cannot invest in a foreign entity that invests back into India in a way that creates more than two layers of subsidiaries. Banks, certain NBFCs, insurers and government companies are exempt. Check this early if the overseas company may later invest in India.
Step-by-step: making the investment
- Check eligibility and limits — net worth, existing commitments, sector of the foreign entity, and any round-tripping concern.
- Value the shares — the price must be at arm's length, supported by a valuation where required.
- Get the UIN — your Authorised Dealer bank obtains a Unique Identification Number for the foreign entity before the remittance or acquisition.
- Remit and report — the bank reports the equity investment; loans and guarantees are reported in Form FC.
- Collect evidence — share certificates or equivalent proof of investment must be submitted within the time allowed.
Every year after that
- Annual Performance Report (APR): due by 31 December each year for each foreign entity, based on its financial statements. Where several Indian residents hold the same entity, the one with the highest stake usually files.
- FLA return: due by 15 July each year, reporting foreign assets and liabilities as on 31 March.
- Overseas compliance: the foreign entity keeps its own books and filings in its country — for example UAE Corporate Tax and VAT, US federal and state returns, or UK Companies House and HMRC.
Exiting or restructuring
A disinvestment, such as a sale, liquidation or merger of the foreign entity, must be reported within 30 days of receiving the proceeds. The investment must generally have been held for at least one year. If the foreign entity owes the Indian investor anything other than routine trade dues, that needs to be settled or addressed first.
Common questions
What is the difference between ODI and OPI?
Overseas direct investment (ODI) is any investment in the unlisted equity of a foreign entity, or 10% or more of a listed foreign entity's equity, or an investment that gives control. Overseas portfolio investment (OPI) is investment in foreign securities that is not ODI, such as a small stake in a listed foreign company.
How much can an Indian company invest abroad?
An Indian entity's total financial commitment to foreign entities — equity, loans and guarantees — generally cannot exceed 400% of its net worth as per its last audited balance sheet. Investment beyond this needs prior approval. Portfolio investment by an Indian entity is limited separately to 50% of its net worth.
When is the Annual Performance Report (APR) due?
The APR for each foreign entity is due by 31 December every year, based on the foreign entity's financial statements for the year. Where several Indian residents have invested in the same entity, the one with the highest stake usually files.
Can an individual in India make ODI?
Yes, within the Liberalised Remittance Scheme limit and subject to conditions — for example, individuals cannot make financial commitments by way of loans and generally invest in operating foreign entities. Portfolio investment by individuals is also allowed within the LRS limit.
What happens if an ODI filing is delayed?
A delay can be regularised by filing with a Late Submission Fee in the manner RBI directs. Until the delay is regularised, no further financial commitment or transfer relating to that investment is allowed, so late filings should be fixed quickly.
Taking your business abroad?
TENVY structures the overseas investment, handles the RBI reporting in India, and keeps the books of the overseas entity — US, UK, UAE, Singapore and more — in one engagement.
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This guide is general information, not legal or tax advice. It summarises the Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022 and RBI's directions, which are amended from time to time; confirm the current position for your facts with your bank or adviser before investing.