Overview
Overseas investment by Indian residents is governed by the Foreign Exchange Management (Overseas Investment) Rules, 2022, the related Regulations and the RBI’s Master Direction. An Indian company can make Overseas Direct Investment (ODI) in a foreign entity engaged in bona fide business, within a total financial commitment limit of 400% of its net worth, through its authorised dealer bank. It must then file an Annual Performance Report (APR) by 31 December each year for as long as the investment continues.
Key Concepts
- ODI: Investment in unlisted equity of a foreign entity, or 10% or more of a listed foreign entity, or investment that gives control.
- OPI (Overseas Portfolio Investment): Investment below 10% in listed foreign securities, among other forms.
- Financial commitment: Equity, debt, guarantees and pledges, capped at 400% of the Indian entity’s net worth, as per its last audited balance sheet.
- Individuals: Invest within the Liberalised Remittance Scheme limit (currently USD 250,000 per financial year), subject to the specific conditions for ODI.
- Restrictions: No investment in real estate business, gambling, or financial products linked to the rupee without approval. There are also restrictions on structures with more than two layers of subsidiaries in certain cases.
Reporting
| Event | Form | Timing |
|---|---|---|
| Initial investment | Form ODI (through the AD bank) | At the time of remittance or investment |
| Annual Performance Report | APR | By 31 December each year |
| Restructuring or disinvestment | ODI forms / Form FC | Within the prescribed period |
| Annual FLA return | FLA | By 15 July |
Who Needs This Service?
Indian companies setting up foreign subsidiaries or joint ventures, companies acquiring overseas businesses, and resident individuals investing in foreign startups.
ODI in Chennai / Tamil Nadu
ODI filings are made through the investor’s AD bank branch. There is no Tamil Nadu-specific ODI procedure.
Direct and Portfolio Investment Overseas Compared
Overseas investment is classified by the level of control and the type of asset.
| Type | Meaning | Typical reporting |
|---|---|---|
| Overseas direct investment | Investment giving control or a lasting interest | Prescribed forms through the authorised dealer |
| Overseas portfolio investment | Investment in listed securities without control | Annual reporting where required |
| Financial commitment | Equity plus loans and guarantees | Within overall limits |
Who May Invest Overseas
Eligibility depends on the type of investor.
| Investor | Typical route |
|---|---|
| Indian company | Direct or portfolio, within the limits |
| Resident individual | Portfolio, and direct in limited cases |
| Partnership or LLP | Direct, within the prescribed conditions |
Documents Required
Board resolutions, the valuation report (for acquisitions), the audited net worth, the documents of the foreign entity, the UIN once allotted, and declarations and certificates as prescribed.
How KVA Handles Overseas Investment Compliance
Karthick Vijayakumar & Associates, Company Secretaries, supports you through each stage with a single point of contact and a clear record of what has been done.
| Step | Stage | What KVA does |
|---|---|---|
| 1 | Requirement review | We understand your entity, objective and timeline, and confirm what Overseas Investment Compliance involves for your specific facts. |
| 2 | Document checklist | You receive a clear list of documents, particulars and approvals needed, with gaps flagged early. |
| 3 | Preparation and filing | Our team prepares, reviews and files the required forms and records, and tracks each acknowledgement. |
| 4 | Completion and follow-up | We hand over final records and explain the compliance that follows, so nothing is missed afterwards. |
Fees and Timeline
The AD bank may charge fees. Late Submission Fees apply for delayed reporting. Professional fees are available on enquiry.
Why Karthick Vijayakumar & Associates
Work is handled by company secretaries who deal with statutory filings and governance every day.
Timelines for Overseas Investment Compliance are tracked so that approvals and filings do not slip.
Plain-language updates at each stage, with no guesswork about what is pending.
Organised, decision-ready documentation that supports audits, banks and future filings.
Frequently Asked Questions
Total financial commitment of up to 400% of net worth as per the last audited balance sheet, under the automatic route.
The Annual Performance Report on the foreign entity. It is due by 31 December each year, based on the foreign entity’s accounts.
Yes, within the LRS limit and subject to conditions. For example, the individual generally cannot invest in a foreign entity that has step-down subsidiaries, except in specified cases.
A structure in which Indian money goes abroad and comes back into India as foreign investment. Structures with more than two layers of subsidiaries are restricted under the ODI Rules.
Most ODI falls under the automatic route through the AD bank. Cases outside the limits or conditions need RBI or government approval.
Late Submission Fees apply, and further ODI transactions may be restricted until the reporting is regularised.
Yes. Registered partnership firms and LLPs are eligible Indian entities under the Rules.
The Unique Identification Number allotted to each overseas investment and used in all subsequent reporting.
Yes. A guarantee is counted towards the financial commitment limit.
The disinvestment must be reported within the prescribed time, and conditions apply to write-offs.
The Foreign Exchange Management (Overseas Investment) Rules, 2022 and related regulations and directions from the RBI govern Indian residents’ investments abroad.
ODI is Overseas Direct Investment in an unlisted foreign entity or with control, while OPI is Overseas Portfolio Investment, such as listed securities, with separate limits.
Indian entities such as companies, LLPs, and certain resident individuals within the framework, subject to eligibility and financial commitment limits.
The total of equity, loans and guarantees given to the overseas entity, which is tested against the limits in the rules.
Yes. Reporting through the authorised dealer bank and the online portal is required, with specific forms and timelines for each remittance and annual update.
The authorised dealer bank carries out the remittance, verifies compliance and files the reporting on the RBI portal, so a bank that is familiar with ODI should be chosen.
Yes, subject to the conditions in the overseas investment rules and the layers permitted, with reporting of each structure.
Valuation is required for certain transactions, such as share swaps and transfers from residents to non-residents, as the rules specify.
Penalties, compounding proceedings and difficulty in raising future approvals, so timely reporting is essential.
Yes, in certain cases, where an Indian entity issues its shares in exchange for foreign shares, subject to valuation and the conditions of the rules.
Planning an Overseas Investment?
Contact Karthick Vijayakumar & Associates to discuss ODI eligibility, limits and the reporting that follows.
Contact UsSpeak with Karthick Vijayakumar & Associates
Third Floor, New No. 599, Old No. 230, Konnur High Road, Ayanavaram, Chennai, Tamil Nadu, 600023, India
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