October 1, 2024 | 6:43 am

So, you’ve successfully navigated the process of setting up your business in India through FDI (Foreign Direct Investment). Congratulations! But the journey doesn’t end there. Maintaining compliance with ongoing regulations is crucial for the smooth operation and continued success of your venture. This blog dives into the essential FDI compliances you need to be aware of in India:

Annual Reporting:

• Foreign Liabilities and Assets (FLA) Return: This annual report filed with the Reserve Bank of India (RBI) details all foreign liabilities (like borrowings) and assets (like investments) of your company.

• Annual Performance Report (APR): This report submitted to the government agency that granted your FDI approval provides details of your company’s financial performance, operations, and future plans.

Maintaining Records:

• Financial Records: Maintain clear and accurate financial records in accordance with Indian accounting standards. Be prepared to present these records for audits if required.

• Transfer Pricing Documentation: If your company has transactions with related parties (e.g., a foreign parent company), maintain proper transfer pricing documentation to demonstrate arm’s length pricing for goods and services.

Corporate Governance:

• Board Meetings: Hold regular board meetings as per your company’s Articles of Association (AoA) and maintain proper records of these meetings.

• Disclosure Requirements: Comply with all stock exchange listing requirements if your company is publicly traded.

Foreign Exchange Regulations:

• Repatriation of Profits and Dividends: Follow RBI guidelines for repatriating profits and dividends earned by your Indian company back to your foreign investors.

• External Commercial Borrowings (ECBs): If your company takes on foreign currency loans, ensure compliance with ECB regulations set by the RBI.

Staying Updated:

• RBI Guidelines: RBI regularly issues notifications and updates regarding FDI regulations. Stay informed about any changes that might impact your business.

• Consult a Professional: Consider seeking guidance from a qualified professional experienced in FDI compliance to ensure you navigate the regulations effectively.

The Importance of Compliance:

Maintaining FDI compliance is not just about avoiding penalties. It demonstrates your commitment to operating ethically and transparently in India. This fosters trust with stakeholders, including investors, regulators, and customers, which is crucial for long-term success.

Embrace the Journey:

FDI compliance might seem complex at first, but with proper planning and organization, it can be efficiently managed. By adhering to these guidelines and seeking professional guidance when needed, you can ensure your FDI venture in India thrives in the years to come.