FDI Reporting to RBI

Eligible investor:
1. Non resident entity 
2. NRIs resident in Nepal and Bhutan as well as citizens of Nepal and Bhutan
3. A company, trust and partnership firm incorporated outside India and owned and controlled by NRIs
4. Non resident OCB which are not under the adverse notice of RBI
5. (i) Foreign Institutional Investor (FII) and Foreign Portfolio Investors (FPI), A SEBI registered Foreign Venture Capital Investor (FVCI) with applicable conditions. 
6. A Non- Resident Indian investment into National Pension System with applicable conditions.

Eligible investee entities:
1.  Indian Companies
2. Limited Liability Partnerships (LLPs) with certain conditions:
i. FDI is permitted under in sector in which 100%  FDI allowed in automatic route
ii. FDI is allowed in downstream investment allowed in 100% FDI sectors under automatic route
iii. Conversion of LLP having 100% FDI in automatic route into company
iv. FDI in LLP is subject to the compliance of the conditions of LLP Act, 2008

3. Partnership Firm/Proprietary Concern with certain conditions:
A. Investment by NRI/POI on non-repatriation basis:
i. Amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account.
ii. The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business or print media sector.
B. Investments with repatriation option: NRIs/PIO may seek prior permission of Reserve Bank of India.
C. Investment by non-residents other than NRIs/PIO with the approval of RBI and not in not engaged in any agricultural/plantation or real estate business or print media sector.

4. Trusts
FDI is not permitted in Trusts other than in ‘VCF’ registered and regulated by SEBI and ‘Investment vehicle’.

5. Investment Vehicle
An entity being ‘investment vehicle’ registered and regulated under relevant regulations framed by SEBI or any other authority designated for the purpose including Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvIts), Alternative Investment Funds (AIFs).

6. Startup Companies
Start-ups can issue equity or equity linked instruments or debt instruments to FVCI against receipt of foreign remittance, as per the FEMA Regulation. In addition, start-ups can issue convertible notes to person resident outside India subject to the following conditions:
(i) A person resident outside India (other than an individual who is citizen of Pakistan or Bangladesh or an entity which is registered / incorporated in Pakistan or Bangladesh), may purchase convertible notes issued by an Indian startup company for an amount of twenty five lakh rupees or more in a single tranche.
(ii) A startup company engaged in a sector where foreign investment requires Government approval may issue convertible notes to a non-resident only with approval of the Government.
(iii) A startup company issuing convertible notes to a person resident outside India shall receive the amount of consideration by inward remittance through banking channels or by debit to the NRE / FCNR (B) / Escrow account maintained by the person concerned.
(iv) NRIs may acquire convertible notes on non-repatriation basis in accordance with provisions. 
(v) A person resident outside India may acquire or transfer, by way of sale, convertible notes, from or to, a person resident in or outside India, provided the transfer takes place in accordance with the pricing guidelines as prescribed by RBI. Prior approval from the Government shall be obtained for such transfers in case the startup company is engaged in a sector which requires Government approval.
(vi) The startup company issuing convertible notes shall be required to furnish reports as prescribed by Reserve Bank of India

Routes through which India gets FDI

Automatic route: The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.

Govt route: The government’s approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance. The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce. DPIIT will issue the Standard Operating Procedure (SOP) for processing of applications under the existing FDI policy.

Sectoral cap on investment

Sectors which come under the ‘ 100% Automatic Route’ category are

Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services, Services under Civil Aviation Services such as Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White Label ATM Operations.

Sectors which come under up to 100% Automatic Route’ category are

1. Infrastructure Company in the Securities Market: 49%
2. Insurance: up to 49%
3. Medical Devices:up to 100%
4. Pension: 49%
5. Petroleum Refining (By PSUs): 49%
6. Power Exchanges: 49%
7. Government route

Sectors which come under the ‘up to 100% Government Route’ category are

1. Banking & Public sector: 20%
2. Broadcasting Content Services: 49%
3. Core Investment Company: 100%
4. Food Products Retail Trading: 100%
5. Mining & Minerals separations of titanium bearing minerals and ores: 100%
6. Multi-Brand Retail Trading: 51%
7. Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
8. Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
9. Satellite (Establishment and operations): 100%

FDI prohibition

There are a few industries where FDI is strictly prohibited under any route. These industries are

1. Atomic Energy Generation
2. Any Gambling or Betting businesses
3. Lotteries (online, private, government, etc)
4. Investment in Chit Funds
5. Nidhi Company
6. Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, animal husbandry, etc)
7. Housing and Real Estate (except townships, commercial projects, etc)
8. Trading in TDR’s
9. Cigars, Cigarettes, or any related tobacco industry

*  Sectoral cap is subject to change as per latest notification

FDI reporting via equity investment:

FDI in Private Limited Company
An Eligible Indian Company can take foreign investment and issue shares and other convertible securities subject to the Companies Act, 2013, Foreign Exchange Management Act, 2000 and Consolidated FDI Policy.

Payment for Share and other specified securities
An India company issuing shares to a person resident outside India should receive the payment for the shares through one of the following routes:

• Inward remittance through normal banking channel.

• Debit to NRE/FCNR account of the person concerned maintained with an authorised dealer or bank in India.

RBI Compliances Post Allotment
After receipt of Money, Investee Indian Company has to call Board Meeting and allot securities as per provisions of Companies Act, 2013. Investee Indian Company has to file e-form PAS-3 with the RoC within 30 days of Allotment.

Investee Indian Company has to additionally file form FC-GPR with the RBI in firms portal of RBI. The following are the steps required for reporting of foreign investment.

1. Creation of Entity User

Investee Indian Company has to create Entity Master if they are receiving foreign investment first time. Entity User is short form required to be filed by authorized representative of Investee Indian Company with the following details:

• His / Her Full name, Address, Email Id, PAN, Mobile No;

• User Name for Investee Indian Company;

• Name of Investee Indian Company/LLP, Address and its CIN/LLPIN;

• Jurisdictional Regional office of RBI;

• Authority Letter in a specified format.

Once Entity Master form is approved, you will get user id and password in your provided e-mail id.

2. Creation of Business User

After successful filing of entity master details, Investee Indian Company has to create business user. Business User is short form required to be filed by authorized representative of Investee Indian Company with the following details:

• His/Her Full name, Address, Email Id, PAN, Mobile No;

• User Name for Investee Indian Company;

• Details of Authorized Dealer Bank to whom reporting is made;

• Name of Investee Indian Company, PAN and CIN;

• Authority Letter in a specified format.

Once Business User is created, you will get user id and password in your provided e-mail id. 

3. Filing of form FC-GPR for issue of shares

Form FC-GPR needs to be filled within 30 days from the date of issue of shares with the following documents:

1. Copy of Foreign Inward Remittance Certificate received from AD Bank
2.Copy of KYC of Foreign Investor received from AD Bank
3.Certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that:
4. All the requirements of the Companies Act, 2013 have been complied with;
5. Terms and conditions of the Government approval, if any, have been complied with;
6. The company is eligible to issue shares under these Regulations; and
7. The company has all original certificates issued by authorised dealers in India evidencing receipt of amount of consideration;
8. Certificate from Statutory Auditors or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
9. Declaration from Director/Authorized Representative of Investee Indian Company in a specified format.
10. Any other supporting documents like MOA in case of allotment towards subscription, Board / General Meeting Resolution in case of subsequent allotment etc.