FEMA is where most foreign-owned Indian companies quietly fall out of compliance.

Sixty days from the date the money is received, and the FC-GPR follows within 30 days of allotment. If the shares are not allotted inside the sixty days, the money has to be refunded to the investor within fifteen days — it cannot simply sit in the account as share application money. This is one of the most common breaches we see, and it happens for a dull reason: the money arrives before the valuation or the board paperwork is ready. Get the sequence set up before the remittance, not after.

Yes, as an external commercial borrowing, and it is a genuine alternative where the parent wants the money back rather than locked into equity. It is a framework rather than a free choice: a minimum average maturity applies, the interest is subject to an all-in-cost ceiling, the money cannot be used for certain purposes including real estate and on-lending, a loan registration number is obtained before drawdown, and monthly returns are filed for the life of the loan. A foreign shareholder above a prescribed holding can lend; interest paid out carries withholding tax.

Only into a startup recognised by the Department for Promotion of Industry and Internal Trade, and only above a minimum amount in a single tranche — currently twenty-five lakh rupees — with conversion into equity within ten years. It is a useful instrument for early rounds because it defers the valuation, but it is not a general-purpose route: an ordinary private company that is not a recognised startup cannot issue one to a non-resident. Recognition is worth obtaining before the round rather than during it.

Whether the money can leave India again. A repatriable investment is made with funds remitted from abroad or from an NRE or FCNR account, and both the capital and the gains can go back out. A non-repatriable investment is made from an NRO account or from Indian income, and the sale proceeds stay in India apart from the limited annual remittance allowance. The distinction is fixed at the moment of investment by the account the money came from, and it cannot be re-characterised later — which is why it matters far more than it first appears.

Because the account is the point where the bank takes on the compliance risk for the whole ownership chain. They verify every director and the ultimate beneficial owner, want apostilled or consularised documents in original form, run international sanctions and tax-reporting checks, and in many cases physically verify the registered office or require a signatory on a video call. Eight to twelve weeks is common where the chain is complex. It is almost never a legal obstacle, and it is much faster when the ownership chart and attested documents are assembled before the bank is approached rather than in response to each query.

FEMA sets a floor and a ceiling rather than a price. Shares issued or transferred to a non-resident must not be priced below fair value, and shares transferred from a non-resident to a resident must not be priced above it. Fair value is worked out on any internationally accepted pricing methodology on an arm's-length basis and certified by a chartered accountant, a SEBI-registered Category I merchant banker or a practising cost accountant. The certificate is obtained before the price is agreed — a price outside the guidelines is a contravention even where both sides were content with it.

Generally yes, and a transfer from one non-resident to another does not require FC-TRS. It still has to respect the sectoral cap and the entry route, and where the incoming buyer is resident in or a citizen of a country sharing a land border with India, or the transfer would give such a person a controlling or above-threshold beneficial interest, approval is needed before the transfer. A transfer between a non-resident and a resident is the one that triggers FC-TRS, within 60 days of the transfer or of the money changing hands, whichever is earlier.

Yes, and the rule changed in 2026, so older guidance on this is unreliable. Under Press Note 3 of 2020 any investment traceable to a country sharing a land border with India needed prior government approval, at any percentage. Press Note 2 of 2026 relaxed that, and the amendment to the non-debt instruments rules notified in May 2026 gave it legal effect: where the beneficial interest held in the investing entity by a person resident in or a citizen of such a country is less than 10% and confers no control — neither control of the investing entity nor ultimate effective control of the Indian company — the investment can now use the automatic route. An investor that is itself resident in or a citizen of a land-border country still needs approval. The relaxed test is a beneficial-ownership test borrowed from the money-laundering rules, so it looks through the chain rather than at the immediate shareholder, and it still bites on a later transfer that creates that ownership.

FEMA is civil law, not criminal, and an honest breach is fixable. A filing that is merely late is usually regularised by paying a Late Submission Fee, which is a fee schedule rather than a hearing. A substantive contravention is settled by applying to the RBI to compound it: you disclose it voluntarily, the RBI passes a compounding order and a monetary penalty is paid, and the matter is closed. Leaving it undisclosed is the worse option — it surfaces during diligence, at the point where you have least leverage.

No, not as an ordinary loan. Lending from India to a non-resident is restricted under FEMA. Money flows the other way instead: the parent can subscribe to shares, or lend to the Indian company as an external commercial borrowing, which has its own framework covering minimum maturity, permitted end use, a cost ceiling and monthly reporting in Form ECB-2.

Only in the specific circumstances FEMA permits — for example an office genuinely set up abroad, or an account opened for a permitted overseas investment. An Indian company cannot simply open a foreign account for convenience. Where the Indian company does invest abroad, that investment has its own regime and an annual performance report.

The Foreign Liabilities and Assets return goes to the RBI by 15 July each year, from every Indian company that has received foreign investment or invested abroad — including a company with no activity that year. It is filed separately from anything sent to the Registrar or the income tax department, and it is one of the most commonly missed filings in a foreign-owned group.