NRI business setup
How Can an NRI Invest Money Into an Indian Company?
Before an NRI transfers money into an Indian company, the investment route, banking channel, instrument, share allotment and FEMA reporting should be planned together. A normal bank transfer is not, by itself, an investment structure.
Quick Summary
Do not send the money first and decide the FEMA route later.
An NRI investing in an Indian company should first identify whether the transaction is a fresh issue of equity instruments, a purchase of existing shares, or another permitted investment route. That decision affects the documentation, pricing, banking trail and RBI reporting.
For a fresh issue treated as FDI, RBI's current regulations require the Indian company to report the issue in Form FC-GPR within 30 days from the date of issue. For Schedule I investment, the equity instruments are generally required to be issued within 60 days from receipt of the consideration, failing which refund rules apply.
If you are still choosing the entity itself, first read our Private Limited Company vs LLP guide for NRIs.
Start here
What exactly is the NRI investing in?
The word “investment” can describe several legally different transactions. Before transferring money, identify the actual transaction.
- Subscription to newly issued shares.
- Purchase of shares from an existing shareholder.
- Investment through another permitted equity instrument.
- Capital contribution into an LLP rather than a company.
- Investment on a repatriation or non-repatriation basis.
- Additional funding into a company the NRI already owns.
Each route can create a different FEMA, pricing, reporting and documentation trail.
Fresh share issue vs purchase of existing shares
| Transaction | What happens | Typical FEMA reporting question |
|---|---|---|
| Fresh issue | The Indian company receives the investment and issues equity instruments to the non-resident investor. | If treated as FDI, FC-GPR is generally the relevant issue-reporting form. |
| Purchase from existing shareholder | The NRI acquires already-issued equity instruments from another holder. | FC-TRS can apply to specified resident/non-resident or repatriable/non-repatriable transfers. |
| Non-repatriation route | Eligible NRI/OCI investment is made on the non-repatriation basis under the applicable schedule. | The payment route and ability to take capital/appreciation abroad differ from a repatriable investment. |
Plan the exit at entry
Repatriable vs non-repatriable investment
This is one of the most important decisions for an NRI investor. RBI's current regulations distinguish investment made on a repatriation basis from NRI/OCI investment made on a non-repatriation basis.
For eligible non-repatriation-basis investment, the regulations permit payment through inward remittance or funds held in NRE, FCNR(B) or NRO accounts. However, the sale or maturity proceeds are credited to the NRO account, and the invested capital and capital appreciation are not freely repatriable abroad under that route.
How should the investment money come into India?
For Schedule I investment in equity instruments of an Indian company by a person resident outside India, RBI's current regulations provide for consideration to be paid through inward remittance from abroad through banking channels or from permitted repatriable foreign-currency or Rupee accounts maintained under the deposit regulations.
The correct source account therefore depends on the route being used. Do not assume that any transfer from any Indian or overseas account produces the same FEMA result.
Receiving the money is not the end of the process
Where the Indian company receives consideration for issuing equity instruments under Schedule I, RBI's current regulations state that the equity instruments should generally be issued within 60 days from receipt of the consideration.
If they are not issued within that period, the consideration is generally required to be refunded within the prescribed period. This is why the company should coordinate banking, corporate approvals and allotment before funds arrive.
Fresh issue
When does FC-GPR apply?
RBI's reporting regulations state that an Indian company issuing equity instruments to a person resident outside India, where the issue is reckoned as Foreign Direct Investment, must report the issue in Form FC-GPR not later than 30 days from the date of issue.
The reporting is done through RBI's foreign-investment reporting framework. The company should keep the investment documentation, allotment records, banking evidence and supporting certificates aligned before filing.
Share transfer
Buying existing shares can create a different reporting route
If the NRI is purchasing existing shares instead of subscribing to newly issued shares, FC-GPR is not automatically the correct form. RBI prescribes FC-TRS for specified transfers of equity instruments, including certain resident/non-resident transfers and certain transfers between repatriable and non-repatriable holdings.
The current regulations generally require FC-TRS within 60 days of the transfer of equity instruments or receipt/remittance of funds, whichever is earlier, for transactions that fall within the reporting rule.
Do not forget the annual FLA return
RBI's current reporting regulations also require an Indian company that has received FDI to submit the annual Foreign Liabilities and Assets (FLA) return. The current regulation states that the return is due on or before 15 July each year.
This is separate from the transaction-level FC-GPR filing.
Avoid these
Common NRI funding mistakes
- Sending money before deciding whether it is equity, a share purchase or another route.
- Using the wrong bank account or assuming NRE and NRO funding are interchangeable.
- Ignoring whether the investment is repatriable or non-repatriable.
- Missing the share-allotment timeline.
- Filing FC-GPR when the transaction is actually a transfer of existing shares.
- Forgetting pricing, sectoral or entry-route conditions.
- Leaving FEMA reporting until months after the transaction.
- Planning repatriation only after the business becomes profitable.
Before you transfer funds
NRI investment checklist
- Confirm FEMA residency/status of the investor.
- Confirm the company's business activity and applicable foreign-investment route.
- Decide fresh issue vs purchase of existing shares.
- Decide repatriable vs non-repatriable treatment.
- Confirm permitted source account and banking channel.
- Check pricing/valuation rules where applicable.
- Coordinate share allotment and corporate approvals.
- Identify FC-GPR, FC-TRS or other reporting requirements.
- Build the FLA return into annual compliance.
- Plan how future dividends, sale proceeds or exit amounts will move overseas.
Watch the explainer
How Can an NRI Invest Money Into an Indian Company?
This CBTD video explains why the investment route should be decided before an NRI transfers money into an Indian company.
FAQs
NRI investment into an Indian company: common questions
Can an NRI invest money into an Indian private limited company?
Yes, subject to the applicable foreign-investment rules, sectoral conditions, entry route, pricing and reporting requirements. The exact FEMA treatment depends on how the investment is structured.
Can an NRI simply transfer money to the Indian company's bank account?
Not as a substitute for planning the investment. The company should first identify the permitted investment route, banking channel, instrument, allotment process and FEMA reporting that apply.
What is FC-GPR?
FC-GPR is the RBI reporting form used when an Indian company issues equity instruments to a person resident outside India and the issue is treated as Foreign Direct Investment under the applicable rules.
When is FC-GPR generally due?
Under RBI's current reporting regulations, FC-GPR is to be filed not later than 30 days from the date of issue of the equity instruments.
How soon should shares be issued after receiving foreign investment money?
For an issue under Schedule I, RBI's current payment regulations state that equity instruments should be issued within 60 days from receipt of the consideration. If not issued within that period, refund rules apply.
What is FC-TRS?
FC-TRS is a reporting form used for specified transfers of equity instruments between resident and non-resident investors or between repatriable and non-repatriable holdings. It is different from FC-GPR, which relates to a fresh issue by the company.
Can an NRI invest from an NRE or NRO account?
The permitted account depends on the investment route. Repatriable and non-repatriable investment routes have different payment and remittance consequences, so the source account should be checked before funding.
What is the difference between repatriable and non-repatriable investment?
Broadly, a repatriable investment is structured so permitted sale proceeds may be remitted abroad, subject to the applicable rules and taxes. A non-repatriable investment is treated differently and ordinarily has tighter restrictions on taking the invested capital and appreciation abroad.
Does the Indian company need to file an FLA return?
An Indian company that has received FDI is generally required to submit the annual Foreign Liabilities and Assets return to RBI by the applicable due date.
Can CBTD help before the money is transferred?
Yes. Cross Border Tax Desk can help coordinate a Chartered Accountant review of the proposed ownership, investment route, banking trail, FEMA reporting and tax implications before funds are moved.
Planning to fund an Indian company?
Fix the investment route before transferring the money.
Share your country of residence, proposed ownership, investment amount and company activity. CBTD can help coordinate the India-side FEMA, tax and reporting review with a Chartered Accountant.
Disclaimer: This guide is for general informational purposes only and is not legal, tax, FEMA, company-law, banking, accounting or professional advice. Foreign-investment treatment depends on the investor's FEMA status, business activity, instrument, ownership and transaction facts.