Rules under the Foreign Exchange Management Act, 1999 (FEMA) are framed by the Central Government, and the administration powers are conferred on the Reserve Bank of India (RBI). Foreign Direct Investment (FDI) in India and Overseas Investment from India are two major aspects governed under FEMA — both requiring compliance with specific rules and sometimes prior RBI approval.
This guide by expert FEMA consultants explains how these investments are regulated and what procedures individuals or companies must follow to obtain RBI approval for foreign and overseas investment from India.
Foreign Investment in India under FEMA and NDI Rules
When a foreign investor wants to invest in India, they must adhere to FEMA (Non-Debt Instruments) Rules, 2019 (NDI Rules). These rules outline the investment limits for various Indian sectors under Schedule I.
All FDI in India exceeding the prescribed sectoral caps requires prior approval from the Central Government. Depending on the sector, this approval must be obtained from the respective ministry or department.
Streamlined Approval via NSWS
To simplify the process, the Central Government launched the National Single Window System (NSWS) for business approvals.
- The NSWS portal integrates approval systems from 32 Central Departments and 30 State Governments.
- Investors can submit applications for FDI in India through NSWS and receive guidance on regulatory requirements specific to their sector.
- Under the NDI Rules, the RBI primarily oversees reporting and compliance through Authorized Dealer (AD) Banks.
This approach ensures transparency and efficiency for foreign investment in India under FEMA compliance.
Overseas Investment from India under FEMA and ODI Rules
When a person resident in India wants to invest abroad, the transaction falls under the Foreign Exchange Management (Overseas Investment) Rules, 2022 (ODI Rules). These rules govern how Overseas Investment from India can be structured and what approvals are needed.
Investment Limits under FEMA ODI Rules
- Resident Individuals: Can invest up to USD 250,000 per financial year under the Liberalised Remittance Scheme (LRS).
- Companies and Other Entities: Can invest up to 4 times their net worth, as per their latest audited financials.
If the proposed Overseas Investment from India exceeds these limits, prior RBI approval is mandatory.
Procedure to Obtain RBI Approval
- Prepare Documentation:
The applicant must compile detailed justifications for investment beyond the prescribed FEMA limits and submit them to the Authorized Dealer Bank (AD Bank). - AD Bank Review:
The AD Bank will verify and scrutinize the documents for FEMA compliance before forwarding them to the RBI. - RBI Evaluation:
The Reserve Bank of India reviews the proposal and may grant approval with specific conditions, depending on the nature and purpose of the Overseas Investment. - Compliance Post Approval:
Once approval is granted, the investor must strictly follow the conditions and reporting requirements set by the RBI and FEMA.
Professional FEMA consultants in Hyderabad often assist businesses and individuals with documentation, regulatory liaison, and RBI correspondence to ensure smooth overseas investment approval.
Why Choose Us – FEMABIDE Advisorz
At FEMABIDE Advisorz, we specialize in FEMA consultancy services for both FDI in India and Overseas Investment from India. Our team of FEMA advisors in Telangana and Hyderabad provides complete end-to-end solutions — from documentation to RBI approvals.
Here’s why clients trust us:
- Expert FEMA Consultants: Decades of combined experience in cross-border investment, FEMA advisory, and RBI compliance.
- Personalized Guidance: Tailored consulting for each client’s investment structure, whether inbound or outbound.
- RBI & FEMA Documentation Support: We assist in preparing and filing the necessary forms, declarations, and legal documents for RBI approval.
- End-to-End Compliance: From feasibility assessment to final reporting under FEMA, we manage the entire process efficiently.
- Track Record of Success: Numerous successful Overseas Investment from India approvals and FDI in India projects guided under our supervision.
- Trusted by Entrepreneurs and Corporates: Our firm serves startups, MSMEs, and large corporates with the same diligence and attention to detail.
If you are planning to invest abroad from India or bring foreign investment into India, connect with our FEMA experts in Hyderabad to navigate the complexities of RBI and FEMA approvals with confidence.
