# Overseas Direct Investment (ODI) Compliance

> Indian companies and LLPs can invest abroad under the automatic route up to 400% of their net worth (financial commitments above USD 1 billion a year need RBI approval), reporting in Form FC through their AD bank, which allots a UIN. Evidence of investment is due within six months and an Annual Performance Report by 31 December each year. Resident individuals can make ODI within their LRS limit, in operating businesses only.

Practice: FEMA & RBI Compliance — https://www.industax.com/services/fema-rbi/

The 2022 Overseas Investment framework simplified many approvals but tightened discipline: if any report is late, no further financial commitment or disinvestment is allowed until the delay is regularised with a late submission fee. A compliance calendar for each foreign entity is essential.

Structuring matters as much as reporting. Structures where a foreign entity invests back into India with more than two layers of subsidiaries are not allowed, and investments in foreign financial-services businesses have extra conditions. We review the structure before the first remittance.

## Key facts

| Item | Detail |
| --- | --- |
| Law | Overseas Investment Rules, Regulations and Directions, 2022 |
| Entity limit | Up to 400% of net worth (automatic route) |
| Large commitments | Above USD 1 billion in a year needs RBI approval |
| Evidence of investment | Within 6 months of remittance |
| APR | By 31 December each year, through the AD bank |
| Late reporting | Blocks further commitments until regularised |

## Who needs this

- Indian companies setting up subsidiaries abroad
- Founders flipping or creating a foreign holding structure
- Resident individuals investing in foreign operating companies
- Groups with overdue APRs or evidence of investment

## What's included

- Structure and eligibility review
- Form FC and UIN through the AD bank
- Evidence-of-investment and APR tracking
- Disinvestment reporting and late-fee regularisation

## Documents

- Board resolution and latest audited balance sheet
- Foreign entity incorporation and share documents
- Valuation report where required
- Foreign entity financial statements for APR

## Process

1. **Structure** — Route, limits and layering checked.
2. **Remit and report** — Form FC filed; UIN obtained.
3. **Maintain** — Evidence, APR and disinvestment reported on time.

## Also covers

- **ODI reporting** — Form FC, APR and disinvestment reporting.
- **Overseas investment compliance** — Overseas portfolio investment and round-tripping checks.

## FAQs

### When is the Annual Performance Report due?

By 31 December each year for every foreign entity in which ODI is held, based on its last completed accounting year.

### Can an individual set up a company abroad?

Yes, a resident individual can make ODI in a foreign operating company within the LRS limit, subject to conditions such as not investing in financial-services entities.

### What happens if we file the APR late?

A late submission fee applies, and no further financial commitment or disinvestment is allowed until the delay is regularised.

## Official sources

- RBI — Master Directions (Foreign Investment, Overseas Investment, LRS): https://www.rbi.org.in/Scripts/BS_ViewMasterDirections.aspx
- RBI — FIRMS portal (Single Master Form): https://firms.rbi.org.in/

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Canonical page: https://www.industax.com/services/fema-rbi/odi-compliance
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.