What FEMA reporting is required when a foreign company sets up an Indian subsidiary?

Question

A foreign parent company wants to invest in a new Indian subsidiary and I want to know the FDI compliance required under Indian law. Before I spend money on it, I want to know whether Foreign Exchange Management Act 1999, Section 6 gives me a remedy here and what proof I would need. Any Section numbers I can quote when I write to them would be useful.

MyVakeel Legal Desk · Accepted Answer

Foreign Exchange Management Act 1999, Section 6, FEMA (Non-Debt Instruments) Rules 2019, Rule 4 and Companies Act 2013, Section 6 is what decides this question in India. Read it alongside the provisions named, because the relief available to you turns on the facts you can prove on paper.

Section 6 of the Foreign Exchange Management Act 1999 empowers the Reserve Bank of India to regulate foreign investment in Indian companies through capital instruments under the automatic and government approval routes.

Rule 4 of the FEMA Non-Debt Instruments Rules 2019 prescribes sector-specific caps and conditions for foreign direct investment, and investments in prohibited sectors are barred outright.

An Indian subsidiary receiving foreign investment must file Form FC-GPR through the RBI's FIRMS portal within 30 days of allotment of shares to the foreign investor.

Any subsequent transfer of shares between a resident and non-resident must be reported in Form FC-TRS, and annual reporting of foreign liabilities and assets is required through the FLA return under FEMA.

Section 6 read with Companies Act provisions on foreign company registration requires additional filings if the foreign company also establishes a place of business in India as a branch or liaison office.

Practical steps: 1) Confirm the sector is open to FDI and check applicable investment caps; 2) Complete share allotment and file Form FC-GPR within 30 days on the FIRMS portal; 3) File Form FC-TRS for any subsequent resident-to-nonresident share transfers; 4) File the annual FLA return with the Reserve Bank of India by the due date.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — remedies under Foreign Exchange Management Act 1999, Section 6 carry limitation periods, and unexplained delay weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in corporate law.