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Export proceeds must be realised and repatriated within nine months from the date of export, or fifteen months for goods sent to a warehouse abroad. AD banks may extend by six months at a time, invoice value may be reduced by up to 25%, and unrealised bills may be written off within prescribed limits.
Read Complete Guide →Inbound investment divides into non-debt instruments — FDI, FPI, NRI and OCI investment, LLPs, foreign venture capital, investment vehicles and depositary receipts — and debt instruments. Nine sectors are prohibited outright, entry is by the automatic or the government route, and each sector carries a composite cap.
Every Indian company or LLP receiving foreign investment must register on the RBI FIRMS portal in two steps — entity user registration, verified by the RBI, and business user registration, verified by the AD bank branch. The Entity Master then records paid-up capital on a fully diluted basis and all foreign investment.
Nine reporting forms sit on the FIRMS portal, each tied to a specific event — FC-GPR on issue of equity instruments to a non-resident, FC-TRS on transfer between a resident and a non-resident, LLP-I and LLP-II for LLPs, and CN, ESOP, DI, DRR and InVi for the remaining occasions.
Foreign investors may also lend. External commercial borrowings are commercial loans raised by eligible resident entities from recognised non-resident lenders, up to USD 750 million a year under the automatic route, with a 7:1 liability-equity ratio for FCY borrowings from a direct foreign equity holder.
The Overseas Investment Rules and Regulations of August 2022 replaced the 2004 regime for overseas direct investment. Total financial commitment cannot exceed 400% of net worth, RBI approval is needed above USD 1 billion in a year, a UIN is obtained on Form FC before the first remittance, and an APR is due each 31 December.
An Indian entity may make financial commitment by equity, by debt, or by non-fund based means. Guarantees, pledges and charges each count towards the limit; a resident individual may not commit by way of debt; and overseas portfolio investment by an Indian entity is capped at fifty per cent of net worth.
FEMA penalties begin with a Late Submission Fee of Rs 7,500, or Rs 7,500 plus 0.025% of the amount per year of delay, available for up to three years. Beyond that, section 13 allows a penalty of up to three times the amount involved, and section 37A offences over the threshold are not compoundable at all.
The export-import compliance year for FY 2026–27 — the annual IEC update window, LUT renewal, RCMC expiry, export obligation reporting under EPCG and Advance Authorisation, and the realisation timelines that follow every shipment.
A complete checklist for setting up and maintaining an export-import business — documents for the IEC application, the LUT and RCMC, AD code and port registration, and the recurring obligations that keep everything active.
From the first step to full compliance, get professional assistance from the TaxClue team — matched to your exact FEMA requirement.
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