Overseas Direct Investment (ODI) by Indian Companies
Plan an overseas investment under FEMA, from eligibility checks and structuring to RBI reporting and annual filings.
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Overseas direct investment, or ODI, is an investment by an Indian entity or a resident individual in the equity or related instruments of a foreign entity, such as a subsidiary or joint venture abroad. It is governed by the Foreign Exchange Management (Overseas Investment) Rules, 2022, the associated Regulations and the RBI Master Direction. Indian companies that want to set up a foreign arm, acquire a stake overseas or fund an existing foreign subsidiary need to check eligibility, the route and the reporting before any money is sent. Our team advises on structure, reviews the documents and manages the filings with your Authorised Dealer bank.
Who provides this service: our team of Company Secretaries and compliance specialists.
Who Needs Overseas Investment (ODI) by Indian Companies?
- Indian companies opening a wholly owned subsidiary or similar presence abroad
- Businesses acquiring a stake in a foreign company or entering a joint venture overseas
- Indian groups funding an existing foreign subsidiary with fresh equity or loans
- Companies restructuring overseas holdings that need to check past filings
- Technology and service firms taking their product to a foreign market through a local entity
Key Benefits
- An eligibility check of the investing entity and the foreign entity, including permitted activities and sector restrictions
- A view on whether the investment sits within the automatic route or needs prior approval, based on the current limits
- Structuring input on layers of subsidiaries and funding routes, which the rules restrict in some cases
- Review of subscription, shareholder and loan documents for consistency with FEMA
- Coordination with your Authorised Dealer bank so that remittances and reporting match
- An annual compliance calendar so performance reports and returns do not lapse as the foreign entity grows
How It Works
Establish eligibility
We review the investing entity status, financial position and compliance record, and the proposed foreign entity business, to confirm that overseas investment is permitted and on what conditions.
Compute the financial commitment
We work out the proposed financial commitment against the limit linked to net worth and other conditions, and identify whether the automatic route applies or prior approval is needed.
Structure the investment and obtain approvals
We advise on the holding structure and funding mix, and prepare board, shareholder and lender approvals, keeping in mind the company law limits on investments and loans.
Prepare documents for the bank
We assemble the application and supporting papers your Authorised Dealer needs, including valuation and due diligence inputs, so that the remittance can be processed on a compliant footing.
Remit and report
After the remittance we file the prescribed reporting through the bank on the RBI portal, and we collect share allotment or other evidence of the investment from the foreign entity.
Run the annual reporting
We schedule the annual performance report with the bank, the annual return on foreign liabilities and assets, and updates for any later change in the investment or the foreign entity.
Documents Required
- Certificate of incorporation and constitutional documents of the Indian investing entity
- Latest audited financial statements and the net worth computation
- Board resolution, and shareholder resolution where needed, approving the investment
- Constitutional documents and business description of the foreign entity
- Draft or executed subscription, shareholder or joint venture agreement
- Valuation report for the foreign entity shares, where required
- Proof of outward remittance through the Authorised Dealer bank
- Details of earlier overseas investments and their reporting history, if any
Timeline and Fees
Indicative timeline: Eligibility and preparation work usually takes a few days to a few weeks, depending on how complete the financials and documents are. Remittance and reporting depend on your Authorised Dealer bank and the RBI portal, and approval cases take longer.
Professional fee: Our fee depends on the investment structure, the number of entities involved, whether valuation and agreement review are included and the scope of annual reporting. Bank charges and any government fees are paid at actuals. Contact our team for a written quote.
What Can Go Wrong if This Is Missed or Done Incorrectly
- Investing or remitting without the required reporting is a FEMA contravention that may need compounding
- Late annual performance reports and returns can lead to late submission steps and added cost
- Investing in prohibited sectors or through non-permitted structures can be disallowed or invite enforcement action
- Weak documentation on valuation and funding can trigger queries from the Authorised Dealer bank and cause delays
Frequently Asked Questions
What is the ODI limit under the automatic route?
Under the 2022 framework an Indian entity can make financial commitments up to a stated multiple of its net worth under the automatic route, with a different basis for some categories. Beyond that, RBI or government approval is needed. Because limits and calculation methods can be revised, we compute the figure from your latest audited balance sheet and the current Directions.
Who can make overseas direct investment?
Indian companies, LLPs and certain other resident entities can invest, subject to conditions on their standing and compliance record. Resident individuals can invest only in narrower circumstances. An entity that is on a regulatory defaulter or caution list, or under investigation, may face restrictions, so we check this at the start.
Which forms are filed for ODI reporting?
Reporting is filed through the Authorised Dealer bank on the RBI portal using the forms prescribed under the 2022 framework, which replaced the older Form ODI structure, and an annual performance report follows. Because form names and portal steps have changed over time, we confirm the current requirement at the start of every engagement.
What is the annual performance report in ODI?
It is the yearly filing in which the Indian investor reports the financial position of its foreign entity, based on the latest audited accounts, through the Authorised Dealer bank. It is required for as long as the investment is held, and delay can lead to late submission steps or compounding. Treat it as a standing calendar item.
Can an Indian company invest in any foreign business?
No. Certain activities, such as real estate business and gambling, are prohibited for overseas investment, while financial services activity abroad is allowed only if specified conditions are met. The structure also faces limits on layers of subsidiaries and on investments that route funds back to India, so each plan needs a case-by-case check.
What if an overseas investment was made without proper reporting?
Such lapses can often be regularised through the late submission or compounding routes the RBI provides, usually for a fee, and the process is simpler when the gap is found early. Our team reviews past overseas investments, identifies missing filings and prepares the application for your Authorised Dealer bank or the RBI.
Official Sources
Rules, forms and fees change. Check the current position on the official portal:
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Last reviewed: . Laws, fees and procedures change; check the official portal before you act.
Disclaimer: The information on this page is for general informational purposes only and does not constitute professional legal, tax or compliance advice. Requirements vary by situation. Please consult a qualified CA or CS for advice specific to your needs. Government fees and timelines are subject to change; verify with the relevant authority before proceeding.