Your Gateway to Global Expansion
Overseas Direct Investment (ODI) enables Indian entrepreneurs and businesses to expand beyond domestic markets, establish overseas operations, access global technology and participate in international business opportunities.
With increasing globalisation, Indian businesses are exploring international markets through overseas subsidiaries, joint ventures and strategic investments.
At GKS & Associates, we assist businesses in understanding the regulatory framework governing overseas investment under FEMA and the applicable RBI regulations.
From selecting an appropriate overseas structure to managing reporting and post-investment compliance, our approach focuses on maintaining regulatory discipline throughout the investment lifecycle.
Understanding Overseas Investment
Under the overseas investment framework, international investments by Indian residents and entities are broadly classified into Overseas Direct Investment and Overseas Portfolio Investment.
Overseas Direct Investment (ODI)
ODI generally involves investment in an overseas entity through specified equity participation, acquisition or other permitted forms of financial commitment under the applicable regulations.
Overseas Portfolio Investment (OPI)
OPI generally covers overseas investments in securities that do not qualify as ODI under the applicable overseas investment framework.
Modes of Overseas Business Setup
Indian businesses may structure their international presence through different forms depending on ownership, control, business objectives and regulatory considerations.
Joint Venture (JV)
A Joint Venture involves an overseas entity in which the Indian investor holds an interest alongside one or more foreign partners.
Wholly Owned Subsidiary (WOS)
A Wholly Owned Subsidiary allows the Indian investor or eligible Indian entity to establish an overseas company with the permitted ownership structure.
Routes of Investment
Overseas investments are subject to the applicable regulatory route depending on the nature, amount, sector and circumstances of the proposed investment.
Automatic Route
Certain permitted overseas investments may be undertaken without obtaining prior approval from the Reserve Bank of India, subject to prescribed conditions and reporting requirements.
Financial Commitment
The applicable financial commitment may include equity investment, loans, guarantees and other permitted forms of financial support, subject to the regulatory framework.
Approval Route
Transactions falling outside the permitted automatic route may require prior regulatory approval depending on the facts and applicable RBI requirements.
Professional Assistance
GKS & Associates assists with documentation, transaction analysis, feasibility assessment and preparation of information required for applicable regulatory processes.
Eligibility & Investment Restrictions
The overseas investment framework permits several categories of Indian investors, while specific restrictions may apply depending on the nature and destination of the investment.
Indian Companies
Eligible private and public companies may undertake permitted overseas investments subject to FEMA, RBI and other applicable requirements.
LLPs & Partnership Firms
Eligible LLPs and registered partnership firms may explore permitted overseas investment opportunities subject to the applicable conditions.
Resident Individuals
Resident individuals may make permitted overseas investments subject to the Liberalised Remittance Scheme and applicable regulatory limits.
Prohibited & Restricted Activities
Certain activities and structures may be restricted or prohibited under the overseas investment framework. A transaction should therefore be reviewed before funds are remitted outside India.
- Real Estate Activities: Certain overseas real estate activities and transactions involving transferable development rights may be restricted.
- Gambling & Betting: Investments in prohibited gambling, betting and lottery-related activities may not be permitted.
- Restricted Financial Activities: Certain financial-sector activities may require additional regulatory approval or may be subject to specific restrictions.
- Regulatory Review: Each proposed transaction should be assessed based on the current FEMA and RBI framework.
Key Compliance Requirements
Before making an overseas investment, the Indian investor should review the applicable valuation, reporting, ownership and regulatory requirements.
- Valuation Report: Applicable transactions may require valuation of the foreign securities by an appropriately qualified professional.
- Financial Commitment: Equity, loans, guarantees and other permitted commitments should be evaluated against the applicable regulatory limits.
- Subsidiary Structure: The proposed overseas structure should be reviewed against applicable rules relating to subsidiary and step-down subsidiary structures.
- No-Objection Requirements: Additional permissions or NOCs may be required in certain circumstances involving lenders or regulatory authorities.
- AD Bank Coordination: Required reporting and remittance formalities are generally coordinated through the authorised dealer bank.
Our Step-by-Step ODI Execution Process
GKS & Associates provides coordinated assistance from transaction planning through remittance and applicable post-investment reporting.
Transaction Assessment
We understand the proposed overseas investment, ownership structure, destination country, business activity and financial commitment.
Regulatory Documentation
We assist in preparing the required documentation and information for the proposed overseas investment and applicable reporting.
UIN & AD Bank Coordination
Where applicable, we coordinate with the authorised dealer bank for identification, reporting and remittance-related formalities.
Remittance & Investment Proof
After completion of the applicable formalities, we assist in maintaining and submitting the required evidence of investment and remittance.
Post-Investment Compliance
We assist with applicable annual reporting and continuing FEMA-related compliance requirements connected with the overseas investment.
Post-Investment Compliance
Overseas investment compliance continues even after the initial transaction. Timely reporting and maintenance of supporting records are important for continued regulatory compliance.
Annual Performance Report
Where applicable, the Annual Performance Report provides information about the performance and financial position of the overseas entity.
FLA Reporting
Applicable Indian entities may need to report foreign assets and liabilities through the prescribed RBI reporting mechanism.
Repatriation of Dues
Dividends, interest, royalties and other receivables from overseas investments must be handled in accordance with applicable FEMA requirements.
Record Maintenance
Proper records of investment, remittance, ownership and supporting documents should be maintained for future reporting and compliance.
Taxation & DTAA Considerations
International investments may create tax obligations in both the foreign jurisdiction and India. Proper tax planning can help investors understand and manage the impact of cross-border taxation.
DTAA
Double Taxation Avoidance Agreements may provide relief from double taxation subject to the treaty provisions and applicable domestic tax laws.
Foreign Tax Credit
Eligible foreign taxes paid may potentially be considered for foreign tax credit in India subject to applicable tax rules and documentation.
Cross-Border Tax Planning
The ownership structure, source of income, withholding tax and repatriation mechanism should be evaluated before making the investment.
Global ROI Planning
Understanding the combined Indian and foreign tax impact can help businesses make better international investment decisions.
Why Choose GKS & Associates for ODI?
Overseas expansion involves financial, regulatory and tax considerations. GKS & Associates provides structured professional assistance to help businesses navigate these requirements.
Strategic Structuring
We help evaluate whether a Joint Venture, Wholly Owned Subsidiary or another permitted structure aligns with the business objectives.
End-to-End Reporting
From transaction-level documentation to applicable annual reporting, we provide coordinated compliance assistance.
AD Bank Liaison
We assist with documentation and coordination required for communication with the authorised dealer bank.
FEMA & Tax Guidance
Our approach combines regulatory and tax considerations to help businesses make informed cross-border investment decisions.
Take Your Business Beyond Borders
Planning an overseas subsidiary, joint venture or international investment? GKS & Associates can assist with structuring, documentation, FEMA compliance, reporting and cross-border tax considerations.
Talk to Our ODI Advisors