Schedule VI explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Schedule VI to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 lets a person resident outside India put capital into a limited liability partnership (LLP), buy or sell its profit shares, and convert between a company and an LLP, but only where foreign investment is on the automatic route with no FDI-linked performance conditions. It also fixes a fair-price floor and ceiling and requires a valuation certificate. This article reads rule 6(b), clauses (a) to (h) of Schedule VI, and the parts of rule 23 that apply to LLPs.
This article states the position as per the Rules notified on 17 October 2019 (S.O. 3732(E)) as amended by the notifications named in this article; the latest amendment consulted is S.O. 4870(E) dated 2 September 2026. Schedule VI and rule 6(b) stand as notified: none of the nineteen amending notifications changes them. Rule 6 was amended only in clause (a), by S.O. 2174(E) of 1 May 2026, which is explained in our article on who may invest and land border countries. The Rules rest on section 46 of the Act; see our article on section 46 of the Foreign Exchange Management Act, 1999. Amendments after 2 September 2026 should be checked in the Gazette. Once the investment is made, reporting follows the Reserve Bank's regulations; see our FC-GPR reporting service page.
Under rule 6(b), a person resident outside India (other than a citizen of Bangladesh or Pakistan, or an entity incorporated there) may invest in an LLP by capital contribution or by acquiring or transferring profit shares, on the terms of Schedule VI. The LLP must operate in a sector where foreign investment up to hundred per cent is permitted under the automatic route and there are no FDI-linked performance conditions. Capital or profit share must not be priced below a fair price, supported by a valuation certificate. Conversion between a company and an LLP is on the automatic route in the same conditions.
(The Rules print the figure as 100 with a per cent sign; this article writes it in words.)
Rule 6(b): who may invest
Rule 6(b) says a person resident outside India, other than a citizen of Bangladesh or Pakistan or an entity incorporated in Bangladesh or Pakistan, may invest either by way of capital contribution or by way of acquisition or transfer of profit shares of an LLP, in the manner and subject to the terms and conditions in Schedule VI. Schedule VI itself, in clause (a), repeats the exclusion in its own words.
Schedule VI clause by clause
| Clause | What it says |
|---|---|
| (a) | A person resident outside India (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh), not being a Foreign Portfolio Investor (FPI) or a Foreign Venture Capital Investor (FVCI), may contribute to the capital of an LLP operating in sectors or activities where foreign investment up to hundred per cent is permitted under the automatic route and there are no FDI linked performance conditions |
| (b) | Investment by way of "profit share" falls under the category of reinvestment of earnings |
| (c) | Investment in an LLP is subject to compliance with the conditions of the Limited Liability Partnership Act, 2008 |
| (d) | A company having foreign investment, engaged in a sector where foreign investment up to hundred per cent is permitted under the automatic route and there are no FDI linked performance conditions, may be converted into an LLP under the automatic route |
| (e) | An LLP having foreign investment, in the same kind of sector, may be converted into a company under the automatic route |
| (f) | Investment in an LLP, by capital contribution or by acquisition or transfer of profit shares, should not be less than the fair price worked out as per any valuation norm which is internationally accepted or adopted as per market practice; a valuation certificate to that effect shall be issued by a Chartered Accountant, a practising Cost Accountant, or an approved valuer from the panel maintained by the Central Government |
| (g) | On a transfer of capital contribution or profit share from a resident in India to a person resident outside India, the consideration must be not less than the fair price; from a person resident outside India to a resident in India, it must be not more than the fair price |
| (h) | The mode of payment and other attendant conditions for remittance of sale or maturity proceeds shall be specified by the Reserve Bank |
Reading the sector test
Clause (a) allows capital contribution only in sectors where foreign investment is permitted up to hundred per cent under the automatic route and there are no FDI-linked performance conditions. Which sectors meet that test is a question for the sectoral Table of Schedule I; see our article on the automatic route and the government route. A sector with a lower cap, or with a performance condition, is outside clause (a) as printed. The Rules do not say what happens to an LLP whose sector falls outside the test; the text is silent, and the reader should not read a permission into it.
Profit shares and reinvestment
Clause (b) says investment by way of profit share is reinvestment of earnings. The Rules print no further definition, and "reinvestment of earnings" is not given a separate meaning in the Schedule.
Fair price and the valuation certificate
Clauses (f) and (g) work together:
- When the foreign investor puts in capital or acquires or takes a transfer of profit shares, the amount must not be less than the fair price.
- When a resident transfers to a non-resident, the consideration must be not less than the fair price.
- When a non-resident transfers to a resident, the consideration must be not more than the fair price.
- A valuation certificate supports the fair price. The certifier can be a Chartered Accountant, a practising Cost Accountant or an approved valuer from the Central Government's panel; for valuers under company law, see our article on section 247 of the Companies Act, 2013 on registered valuers.
The Master Direction - Foreign Investment in India, updated up to June 15, 2026, restates these in paragraphs 8.8 and 8.9, and says in its paragraph 8.11 that a valuation certificate used for the pricing guidelines must not be more than ninety days old on the date of the investment. That is the Master Direction's own statement about valuation certificates under the pricing guidelines; clause (f) of Schedule VI prints no validity period. The Master Direction's Annex 5 repeats Schedule VI and adds, as its own statement, that foreign investment was permitted in an LLP with effect from May 20, 2011.
Conversion
Clauses (d) and (e) allow a company with foreign investment to be converted into an LLP, and an LLP with foreign investment to be converted into a company, in each case under the automatic route and only if the business is in a sector where up to hundred per cent is permitted on the automatic route with no FDI-linked performance conditions. Conversion procedure under company or LLP law is not in the Rules.
Rule 23 and LLPs
Two parts of rule 23, the downstream investment rule, name LLPs:
- The Explanation to sub-rule (1) says downstream investment by an LLP that is not owned and not controlled by resident Indian citizens, or is owned or controlled by persons resident outside India, is allowed in an Indian company operating in sectors where foreign investment up to hundred per cent is permitted under the automatic route and there are no FDI-linked performance conditions.
- Sub-rule (7) says sub-rules (5) and (6) apply mutatis mutandis to an LLP. Sub-rule (5) governs transfer of equity instruments held by another Indian company that has received foreign investment and is not owned and controlled by resident Indian citizens (or is owned or controlled by non-residents): the transfer may be to a person resident outside India, subject to reporting requirements specified by the Reserve Bank; to a person resident in India, subject to the pricing guidelines; or to another such Indian company. Sub-rule (6) makes the first-level company responsible for compliance at the second level and so on, with an annual certificate from its statutory auditor, a mention in the Director's report, and notice to the Reserve Bank's regional office of a qualified report.
For the full downstream rule see our articles on downstream investment conditions and on transfers by foreign-owned companies and the auditor certificate.
Mode of payment and proceeds
Clause (h) leaves the mode of payment and remittance of proceeds to the Reserve Bank. The Master Direction's Annex 5 states that payment for capital contribution is by inward remittance through banking channels or from a repatriable foreign currency or Rupee account maintained under the Deposit Regulations, 2016, and that disinvestment proceeds can be remitted outside India or credited to such an account. The Reserve Bank's Mode of Payment and Reporting Regulations carry the matching row for Schedule VI and the reporting forms for LLPs; see our articles on payments for NRIs, LLPs, FVCIs and convertible notes and on Form FC-GPR, ESOP, DRR and the LLP returns.
A worked example
Hallam Consulting LLP is engaged in an activity open to foreign investment up to hundred per cent on the automatic route with no performance conditions. Ines Moreau, a resident of a country that does not share the exclusions in clause (a), wants to buy a profit share from an Indian partner. The consideration must be not less than the fair price, supported by a valuation certificate from a Chartered Accountant. If Ines later sold the share back to an Indian resident, the price would have to be not more than the fair price. The names are invented.
Need help with foreign investment in an LLP?
Checking the sector test, fixing the fair price and getting the certificate right are the three places an LLP deal is questioned. Our FC-GPR reporting team can help once capital has come in, and our FEMA team can review the structure beforehand.
Key takeaways
- Rule 6(b) and Schedule VI let non-residents (other than citizens or entities of Bangladesh and Pakistan) put capital into an LLP or deal in its profit shares.
- The sector must allow up to hundred per cent on the automatic route with no FDI-linked performance conditions.
- FPIs and FVCIs are outside clause (a).
- Fair price floor on entry; fair price ceiling on exit to residents; valuation certificate from a CA, Cost Accountant or approved valuer.
- Conversion either way is on the automatic route in the same conditions.
Read next
- Investment vehicles: AIF, REIT and InvIT, Schedule VIII
- Sovereign funds and venture capital investors: Schedules V and VII
- Downstream investment conditions: rule 23
- FDI in LLP: eligibility and compliance
Disclaimer: Based on the Gazette text of the instrument this article names, as notified and as amended by the notifications named in the article (for the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 the latest amendment consulted is S.O. 4870(E) dated 2 September 2026), as consulted on 2 October 2026. There is no official consolidated text; the provisions were read with each amendment applied. Sectoral caps, entry routes, conditions, forms and time limits change by notification, press note and circular; later changes should be checked on the Gazette, DPIIT and Reserve Bank sites. This article is general information, not legal advice; check the official text before acting.