Indian Subsidiary FDI and FEMA Reporting Requirements: Routes, FC-GPR and FLA Explained
An Indian subsidiary must report foreign investment to the RBI: Form FC-GPR within 30 days of share allotment via FIRMS, and the FLA return every 15 July. Most sectors allow 100% foreign ownership under the automatic route; some need government approval. Say Hiroshi's Japanese parent invests in a manufacturing WOS. See the Indian subsidiary registration page.
Which FDI route applies to an Indian subsidiary?
An Indian subsidiary receives foreign investment under either the automatic route, which needs no prior approval and is reported after the fact, or the government route, which needs prior approval through the Foreign Investment Facilitation Portal. Most sectors allow 100% foreign ownership under the automatic route, and a wholly owned subsidiary needs no Indian partner in those sectors.
Say Hiroshi is the CFO of a Japanese components maker. His parent invests in a manufacturing WOS in a sector open on the automatic route, so no approval is needed. He still has to report the investment to the RBI. Shunya's page notes that some sectors need the government route instead, and that you should check your sector before assuming automatic-route eligibility.
A short list of activities is closed to foreign investment altogether, including lottery, gambling and betting, chit funds, Nidhi companies, tobacco manufacturing, real estate business (as distinct from construction development) and trading in transferable development rights. The complete list and sector caps sit in the DPIIT Consolidated FDI Policy, and your CA checks the current text for your activity.
What is the land-border rule, and what changed in March 2026?
Under Press Note 3 (April 2020), investment from an entity incorporated in, or with a beneficial owner who is a citizen of or situated in, a country sharing a land border with India needs government approval. Those countries are Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal and Pakistan.
As of September 2026, Press Note 2 (2026 Series), reported by several law firms as issued in March 2026, eases part of this. Practitioner summaries describe the changes as follows:
- Beneficial ownership is tied to the threshold in the PMLA (Prevention of Money Laundering) rules, generally described as 10%.
- Investors from land-border countries with non-controlling beneficial ownership up to that threshold can use the automatic route, with reporting under a DPIIT procedure.
- Control, such as a board seat or veto right, still triggers government approval even below the threshold.
- Sensitive sectors may still need sectoral approval.
The rule was operationalised through amendments to the FEMA Non-Debt Instruments Rules in May 2026. Historically, government-route decisions under the earlier rule were reported to take far longer than the official window. This area is moving, so ask your CA to check the ownership chain of your parent before you plan the timeline. For the sequence of steps, see process and timeline.
How must the parent's money enter India?
The investment must come through an authorised dealer (AD) Category-I bank, which issues a Foreign Inward Remittance Certificate (FIRC), and shares must be allotted within 60 days of receiving the consideration. If shares are not allotted within 60 days, the money is to be refunded within 15 days after that period, as reported by practitioner sources as of September 2026.
- Channel: an AD Category-I bank, not a private transfer.
- KYC: the remitting overseas bank provides a KYC report on the non-resident investor.
- Pricing: equity issued to a non-resident must be at or above fair value, supported by a valuation certificate from a CA or a SEBI-registered merchant banker.
- Governing rules: the FEMA (Non-Debt Instruments) Rules, 2019, which replaced older FEMA regulations. Older articles may still quote outdated timelines, including a 180-day allotment period.
Have the bank account and the valuation ready before the money is remitted, so the 60-day window is not at risk. The related costs are in cost and fees.
Request a free callback and a CA will confirm whether your sector and parent ownership fit the automatic route.
Start subsidiary registration →What is Form FC-GPR, and when is it due?
FC-GPR (Foreign Currency-Gross Provisional Return) is the form that reports an allotment of shares to a foreign investor, and it is due within 30 days of allotment. It is filed on the RBI's FIRMS (Foreign Investment Reporting and Management System) portal using the Single Master Form, through your AD bank.
The 30 days run from the date of allotment, not from the date the money arrived. Both the company entity and a business user need to be registered on FIRMS before filing.
Supporting documents typically include the FIRC, the KYC report, the allotment board resolution, the valuation certificate, a Company Secretary certificate and the PAS-3 acknowledgement. The AD bank's review is often reported at about 2 to 5 working days.
Filing FC-GPR is a separate service from Shunya's incorporation fee. If you file late, a Late Submission Fee of Rs 7,500 plus 0.025% of the amount per year of delay, capped at 100%, has been reported as of September 2026. Otherwise the matter may need compounding under FEMA. Check the current figure with your CA.
What is the FLA return, and who files it?
The FLA (Foreign Liabilities and Assets) return is an annual return to the RBI that any company with outstanding foreign investment must file by 15 July each year, showing its position as of 31 March. It applies even if there was no fresh investment in the year.
It is filed on the RBI's FLAIR portal, a different system from FIRMS, where FC-GPR is filed. If your accounts are not audited by then, a provisional return can be filed and revised later; practitioner sources mention 30 September for the revision. A Late Submission Fee of Rs 7,500 is also reported for late FLA filing, with lower confidence, so confirm it with your CA.
Because the FLA repeats every year, put 15 July in your compliance calendar the day the company is incorporated. The full calendar is in Indian subsidiary compliance after incorporation.
Which other FEMA and tax rules apply to a subsidiary?
Two more rules commonly apply: FC-TRS for share transfers between residents and non-residents, and transfer pricing for transactions with your parent. Both are additions to the core FC-GPR and FLA duties.
| Requirement | Applies when | Where reported or documented |
|---|---|---|
| FC-GPR | Shares allotted to a non-resident | FIRMS portal, within 30 days of allotment |
| PAS-3 | Shares allotted | Registrar of Companies, within 30 days of allotment |
| FLA return | Any outstanding foreign investment | FLAIR portal, by 15 July |
| FC-TRS | Shares transferred between a resident and a non-resident | FIRMS portal, within the prescribed period; your CA confirms the timeline |
| Transfer pricing report | International transactions with your parent or group | Prepared by a CA; form and thresholds confirmed by your CA |
If your subsidiary charges your parent for services or pays it royalties, the price generally has to be at arm's length and documented. Shunya's page says related-party transactions with the parent may trigger transfer-pricing documentation, and this is a real trade-off worth weighing before you incorporate.
Is a subsidiary the right structure, or a branch or liaison office?
A subsidiary suits you when you want a separate Indian company with limited liability and business operations, while a liaison or branch office suits narrower, approval-based presence. The FDI reporting above is specific to the subsidiary route because you are issuing shares.
If your plan is only market research or representation, compare the options in subsidiary vs branch office vs liaison office. If you would rather have Indian founders and no foreign parent, see private limited company registration. And if you want to see who does what for a foreign parent, read shareholder and director requirements.
Rules and thresholds here are as of September 2026 and rest on law-firm and practitioner sources, so your CA should confirm current RBI and DPIIT text before you file.
Is 100% FDI allowed in an Indian subsidiary?
In most sectors, yes, under the automatic route with no prior approval, as of September 2026. Some sectors need government approval and a few are closed to foreign investment. Check your sector against the DPIIT Consolidated FDI Policy, or ask your CA on the free callback.
What is the deadline for FC-GPR?
FC-GPR must be filed within 30 days of allotting shares to the foreign investor, on the RBI's FIRMS portal through your AD bank. The 30 days run from the date of allotment, not the date funds were received.
When is the FLA return due?
The Foreign Liabilities and Assets return is due by 15 July each year, showing the position as at 31 March. It is filed on the RBI's FLAIR portal by any company with outstanding foreign investment, even if there was no new investment that year.
What is the 60-day allotment rule?
Shares must be allotted within 60 days of receiving the investment money. If they are not, the money is to be refunded within 15 days after that period, as reported by practitioner sources as of September 2026. Confirm the current text with your CA.
Does the land-border rule affect my parent company?
It can if your parent is incorporated in, or has a beneficial owner who is a citizen of, a country sharing a land border with India. March 2026 changes eased part of this for non-controlling holdings up to a threshold. Ask your CA to check your ownership chain.
What happens if I miss FC-GPR or FLA?
A Late Submission Fee applies, reported as Rs 7,500 plus a percentage-based amount for FC-GPR, with regularisation through compounding where needed. Late FLA is also reported to carry a fee. Confirm current amounts with your CA before relying on these figures.
This article is for general information only. For your specific situation, consult a practicing CA.
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