Foreign Direct Investment (FDI) Advisory
When a non-resident invests in the equity of an Indian company, the clock starts running the moment shares are allotted or transferred, not when someone gets around to the paperwork. We structure the investment, confirm the route and the pricing, and file correctly with the RBI within the deadline, before it becomes a compliance gap that costs more to fix than it would have to get right.
Illustrative recent outcomes. Every case turns on its own facts.
When people come to us
A funding round is closing, route unconfirmed
Whether the sector allows automatic route, or needs government approval first, needs an answer before the round closes.
Fresh shares, or buying from an existing shareholder
Two different transactions with two different filing forms, treating them the same is a common, avoidable error.
Pricing needs to meet FEMA's fair value requirements
The issue or transfer price isn't a negotiating point, it's a compliance requirement with a specific methodology.
Investment from a land-border country
This triggers mandatory government approval regardless of sector, catching people who assumed sector alone decided the route.
A filing deadline was missed
The moment shares were allotted or transferred, a clock started, and it's already run out.
Structuring, pricing, and filing inbound investment
Foreign Direct Investment is what happens when a non-resident invests in the equity or convertible instruments of an Indian company. It's governed by the FEMA (Non-Debt Instruments) Rules, 2019, alongside the sector-specific FDI policy, with reporting to the RBI through the FIRMS portal.
We help structure the investment, the entry route, the pricing, and the sectoral position, and make sure it's reported correctly and on time, whether that's a fresh share issuance, a transfer between resident and non-resident shareholders, or a downstream investment by a company that has already received foreign funding itself.
The clock on your filing deadline starts the moment shares are allotted or transferred, not when the paperwork gets organized. Missing it can hold up your next funding round.
The land-border rule, clarified in 2026
The land-border-country approval requirement, introduced by Press Note 3 of 2020, has been eased and clarified through Press Note 2 of 2026, issued by the DPIIT in March 2026. The core rule hasn't disappeared: investment from a country sharing a land border with India, or where beneficial ownership traces back to such a country, still triggers mandatory government approval regardless of sector.
The specific mechanics of the 2026 clarification are still being confirmed before being stated as settled guidance. What hasn't changed: the land-border trigger itself remains real, and it's independent of the sector your business operates in.
Who needs this
Raising Capital
Indian companies raising capital from VC or PE funds, strategic investors, or a promoter's overseas relatives.
Investing In India
Foreign companies or individuals investing in an Indian subsidiary or joint venture.
Startups Fundraising
Startups doing a funding round with foreign investor participation.
Share Transfers
Companies undertaking share transfers between resident and non-resident shareholders.
Which form, which route?
Two separate decisions need answering before anything gets filed, and they're often confused with each other.
Which form: FCGPR or FCTRS?
Fresh shares or convertible instruments issued to a non-resident, a primary issuance. Filed within 30 days of allotment.
Existing shares transferred between a resident and a non-resident, a secondary transaction. Generally filed within 60 days of transfer.
Which route: automatic or approval?
Covers most sectors by default, no prior government approval needed, just correct reporting within the deadline.
Applies where the sector requires it, or, regardless of sector, wherever the investment originates from a land-border country.
The 60-day rule most people don't know about
There's a deadline that comes before the FCGPR filing deadline, and it's the one that actually catches people off guard. Once a foreign investor's funds are received, the shares themselves must be issued within 60 days of that receipt. If they aren't, the company is required to refund the money to the investor within 15 days after that window closes.
This means the real clock starts at the moment the money arrives, not the moment someone decides to formalize the allotment.
Our process, start to finish
Determine the Route
Automatic or government approval, based on sector and the investor's country of origin.
Advise on Pricing
Fair valuation under an internationally accepted methodology, for unlisted companies specifically.
File FCGPR or FCTRS
Fresh allotment or share transfer, whichever applies, prepared and filed on the FIRMS portal.
Coordinate with the AD Bank
KYC, reporting, and any escrow or holding requirements the transaction calls for.
File Within the Timeline
Generally 30 days of allotment for FCGPR, 60 days of transfer for FCTRS.
Advise on Downstream Reporting
Where the Indian company has further foreign investment implications for its own subsidiaries.
Pricing guidelines are non-negotiable. Get the valuation done properly before finalizing the investment amount, not after.
Book a ConsultationDocuments required
- Board and shareholder resolutions approving the investment or allotment
- Valuation report from a SEBI-registered merchant banker or chartered accountant
- Foreign Inward Remittance Certificate (FIRC) and KYC report from the AD bank
- Share certificate, statutory auditor's certificate, incorporation and shareholding documents
- FCGPR or FCTRS forms and annexures on the FIRMS portal
- Sectoral approval documentation, where the government route applies
The exact document list depends on whether this is a fresh issuance or a transfer, and whether government approval is required. We confirm the specific requirements once we've reviewed your transaction.
Mistakes that create risk
Missing the FCGPR/FCTRS Deadline
The most commonly missed deadline in FDI compliance, and the most commonly compounded violation as a result.
Pricing Shares Incorrectly
Below fair value for a fresh issue, or above fair value for a transfer, both violate pricing guidelines regardless of intent.
Not Checking the Entry Route Upfront
Automatic versus government approval needs confirming before the round closes, not discovered mid-transaction.
Overlooking the Land-Border Rule
Applies regardless of sector, and it's easy to miss if only the sector was checked.
Treating Downstream Investment as Exempt
If the Indian company invests further using foreign-funded capital, that's a separate reporting event.
The exposure compounds the longer it sits
- Penalty exposure under FEMA, up to three times the amount involved, plus a daily penalty for a continuing contravention
- Your AD bank may refuse to process the inward remittance, or any subsequent transaction
- A compounding application becomes necessary, an added cost timely filing would have avoided
- Delays or complications in future funding rounds
- Investor due diligence in a later round surfaces the gap, complicating negotiations
It doesn't end at filing
FCGPR or FCTRS filing isn't the end of the compliance picture. Companies that have received foreign investment also need to file an annual Foreign Liabilities and Assets (FLA) return, due 15 July each year, a recurring obligation that applies even to dormant companies that received FDI in a prior year and have had no activity since.
Pricing and route confirmed before the round closes
We have hands-on experience structuring funding rounds for startups and established businesses alike, and we coordinate closely with AD banks and valuers to keep the FIRMS portal filing on schedule rather than catching problems after a deadline has already passed.
Where past non-compliance already exists, we have a real track record of regularizing it through compounding, rather than treating it as a dead end.
Reviewed by Cash Stream Advisors, 6+ years advising on FDI and FEMA compliance.
Case studies
Filed Within RBI Timelines
A startup closing a Series A round with a foreign VC fund was guided through valuation, FCGPR filing, and downstream investment reporting for its own subsidiary, all within RBI timelines.
Read the complete case studyContravention Avoided
A secondary share transfer to an overseas family member was guided through FCTRS filing and pricing compliance, avoiding a contravention an earlier informal transfer had nearly caused.
Read the complete case studyFrequently Asked Questions
Closing a Round, or Handling a Transfer?
We confirm the route, get the pricing right, and file within the deadline, start to finish.
Book a Consultation