Quick Answer
To establish a foreign subsidiary, an Indian entity must first determine if its Overseas Direct Investment qualifies under the automatic route according to FEMA ODI Regulations, or if it requires specific approval from the RBI or the government. The process applies to various structures, including private limited, public limited, LLP, and partnership firms.
by CA V. Viswanathan
FCA, ACS, CFE, Registered Valuer (S&FA) | Since 2012
Check if your proposed Overseas Direct Investment (ODI) qualifies under the automatic route per FEMA ODI Regulations, or requires RBI/Government approval.
The initial step is to determine if your proposed Overseas Direct Investment (ODI) qualifies for the automatic route under FEMA ODI Regulations. If it does not qualify for the automatic route, you must instead secure the necessary approval from the RBI or the government to proceed with the investment.
According to the article, the entities eligible to consider Overseas Direct Investment include private limited companies, public limited companies, limited liability partnerships (LLPs), and partnership firms. These diverse business structures must all adhere to the established FEMA ODI Regulations when planning to invest in an overseas subsidiary or venture.
Whether your Overseas Direct Investment (ODI) requires government or RBI approval depends on whether it qualifies under the automatic route as defined by the FEMA ODI Regulations. You must evaluate your proposed investment against these specific regulations to determine if an application for approval is necessary for your specific business entity.
Overseas Direct Investment (ODI) by Indian entities is governed by the FEMA ODI Regulations. These regulations define whether a specific investment qualifies under the automatic route or requires further authorization from the Reserve Bank of India or the government, serving as the primary legal framework for setting up foreign subsidiaries.
Yes, a Limited Liability Partnership (LLP) is listed as an Indian entity type eligible for Overseas Direct Investment. Like other listed entities such as private or public limited companies, an LLP must determine if its proposed investment complies with the automatic route under the governing FEMA ODI Regulations.
Setting up an Indian subsidiary of a foreign parent involves: (a) FEMA-compliant foreign investment routing under FDI policy; (b) incorporation as Pvt Ltd or wholly-owned subsidiary (WOS); (c) authorised capital and stamp duty optimisation; (d) Director appointments including the resident-director requirement under Section 149(3); (e) FC-GPR filing within 30 days of share allotment with FEMA pricing certificate; (f) GST registration, PAN/TAN, and bank account opening; (g) initial team setup with PF/ESI/PT compliance.
Sectoral consideration: most sectors permit 100% FDI under automatic route; specific sectors (defence beyond 74%, broadcasting sub-sectors) require government approval; Press Note 3 country-of-origin restrictions apply for entities from countries sharing land borders with India.
This advisor maps your foreign-parent profile and proposed Indian activity to the appropriate structure and compliance pathway. For end-to-end Indian subsidiary setup including transfer pricing planning for inter-company transactions, consult CA V. Viswanathan at +91 99622 60333.