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ODI Compliance Guide: Net Worth Limits and Reporting
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Reserve Bank of India Notificationcorporateforeign_exchange

ODI Compliance Guide: Net Worth Limits and Reporting

October 15, 2026

FEMA Overseas Direct Investment rules updated with 400% net worth limit, RBI approval thresholds, and mandatory APR/FLA reporting. Loans and guarantees now under tighter scrutiny.

Enhanced Scrutiny on Indian Outbound Investments

The Reserve Bank of India has updated the Foreign Exchange Management (Overseas Direct Investment) Rules, 2022, introducing a cap permitting Indian companies to invest up to 400% of their net worth in overseas joint ventures and wholly-owned subsidiaries. Investments beyond prescribed thresholds require prior RBI approval under the approval route.

The framework mandates strict adherence to reporting obligations, including Annual Performance Report (APR) and Foreign Liabilities and Assets (FLA) returns, to ensure monitoring of capital outflows. Provisions governing financial commitments such as loans, guarantees, and share swaps have been tightened to prevent round-tripping and unauthorised fund flows.

Corporate legal teams must conduct thorough due diligence before structuring outbound investments. The guidelines reinforce compliance discipline in overseas expansion strategies and align with broader anti-money laundering and FEMA enforcement priorities.

Citations

  • FEMA (Overseas Direct Investment) Rules, 2022
Practice Areas:corporateforeign_exchange

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