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. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What FEMA reporting is required when a foreign company sets up an Indian subsidiary? is governed in India primarily by Foreign Exchange Management Act 1999, Section 6, FEMA (Non-Debt Instruments) Rules 2019, Rule 4 and Companies Act 2013, Section 6. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact 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.

What to do next: 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 — most remedies under Foreign Exchange Management Act 1999, Section 6 carry limitation periods, and a delay you cannot explain 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 this practice area.