"Any Foreigner Can Invest in My Indian Company": What FEMA's NDI Rules and Form FC-GPR Actually Require

Most founders believe receiving foreign funds into an Indian company is a banking transaction. It is not. The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 — commonly called FEMA Notification 20(R) by practitioners — require prior compliance checks, a FEMA-compliant valuation, and a Form FC-GPR filing with the RBI within 30 days of share allotment. Nine sectors are completely barred from FDI. Investments from entities in countries sharing a land border with India now require government approval under Press Note 2 (2026). Missing the 30-day FC-GPR deadline triggers late fees, compounding applications, and compliance flags that scare future investors.

Harun Raaj

Chartered Accountant · Harun Raaj & Associates

"Any Foreigner Can Invest in My Indian Company": What FEMA's NDI Rules and Form FC-GPR Actually Require

Every week, Indian startup founders tell their lawyers the same thing: "We got the wire. We'll sort the paperwork later." Three months later, they are facing a compounding application at the RBI, a frozen AD bank relationship, and a FEMA violation that could have been avoided entirely with a 30-day filing.

The governing regulation for FDI into India is the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 — referred to by most practitioners as the NDI Rules. These rules replaced the older FEMA Notification No. 20 and its 2017 revision commonly called "FEMA Notification 20(R)."

Nine categories are completely barred from receiving FDI regardless of route, approval, or ownership structure: lottery businesses, gambling and betting, chit funds, Nidhi companies, trading in Transferable Development Rights, real estate business (buying and selling of land), manufacturing of tobacco products, atomic energy under the Atomic Energy Act 1962, and railway operations.

Effective May 2, 2026, Press Note No. 2 (2026) requires prior government approval for investments from entities in countries sharing a land border with India — China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan — even in sectors that otherwise allow 100% automatic-route FDI. The rule pierces intermediate holding companies.

Form FC-GPR must be filed with the RBI through the FIRMS portal within 30 days of share allotment. FEMA FMV valuation must be completed before allotment. Every company with outstanding foreign equity must file Form FLA by July 15 each year. Late FC-GPR filing attracts 0.025% per day penalty and may require a compounding application taking 12-18 months.

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