FDI Compliance — Inbound Foreign Investment

FEMA (Non-Debt Instruments) Rules, 2019, issued under Section 6 of FEMA, 1999, govern inbound foreign direct investment into India. Key compliance anchors:

Rule 9(2): equity instruments issued to a person resident outside India must be reported to the RBI via Form FC-GPR within 30 days of allotment, filed through the investee company's AD Category-I bank on the FIRMS portal.

Rule 21: pricing of capital instruments issued to, or transferred from, a non-resident must be supported by a valuation certificate from a Chartered Accountant, a SEBI-registered Category I Merchant Banker, or a practising Cost Accountant, applying an internationally accepted, arm's-length pricing methodology. Issuance or downstream investment below the certified fair value is a pricing violation.

Entry route: investment is permitted either under the Automatic Route (no prior government approval) or the Government Route (approval required for specified sectors), classified sector-wise under Schedule I along with applicable sectoral caps and conditions.

Non-compliance — most commonly a delayed FC-GPR filing — is a contravention under FEMA s.13 and can only be regularised through RBI compounding under s.15; there is no late-filing fee mechanism, and unreported allotments accumulate as open contraventions until compounded.

FDI compliance is the set of obligations an Indian company carries once it receives foreign investment. The framework: FEMA 1999 and the Foreign Exchange Management (Non-debt Instruments) Rules 2019 govern how foreign investment comes in — the sectoral conditions, the pricing, the eligible instruments and the reporting. Once the money is in, the company must report the issue of shares in Form FC-GPR within the prescribed period, report transfers in Form FC-TRS, file the annual FLA return, and maintain the records that the RBI and the company's own auditors check.

The compliance runs on two rails: the sectoral and pricing rules at entry, and the reporting discipline afterwards. A company that accepts foreign investment in a sector with conditions — or at a price below the floor — has a contravention at entry. A company that issues shares and never files FC-GPR has a reporting default that accumulates. Both are FEMA contraventions with the penalty exposure of the framework (VERIFY: the penalty provisions of FEMA 1999 for contraventions under Section 13).

The cost of FDI non-compliance surfaces at the moments the company needs its record clean: the next round, where investors check the previous filings; the audit, where the statutory auditor reports the FEMA position; and any interaction with the RBI, where an unreported investment is a defect on file. The FLA return alone, missed for years, is a known friction point.

This service is for Indian companies that have received or are receiving foreign investment. We structure the investment under the Non-debt Instruments Rules 2019, complete the FC-GPR and FC-TRS filings within the prescribed timelines, file the annual FLA return, maintain the FDI records and registers, and clean up past reporting gaps so the company's foreign investment record is current and defensible.