Foreign Direct Investment (FDI) Reporting

• When a foreign parent company invests in an Indian subsidiary, the investment must be reported to the RBI.
  
• The initial reporting of inward remittance must be made through an Authorized Dealer (AD) bank using an Advance Remittance Form.
  
• The Indian subsidiary must file Form FC-GPR (Foreign Currency-Gross Provisional Return) within 30 days of share allotment.
  
• The filing must include a certificate from a Chartered Accountant and a Company Secretary.
  
• The RBI assigns a Unique Identification Number (UIN) to track the investment.
  

Annual Return on Foreign Liabilities and Assets (FLA)

• Every Indian subsidiary receiving foreign investment must file an FLA Return annually.
  
• The return must be submitted by 15th July each year to report foreign assets and liabilities as of 31st March.
  
• It must be filed even if there is no fresh FDI or outward investment during the year.
  
• Filing is done online on the RBI’s FLAIR (Foreign Liabilities and Assets Information Reporting) portal.
  
• Non-filing attracts penalties under FEMA regulations.
  

External Commercial Borrowings (ECB) Reporting

• If a subsidiary raises funds via ECB from its foreign parent, it must file Form ECB with RBI through the AD bank.
  
• The initial return is submitted using Form ECB and then updated monthly using ECB-2 Return.
  
• The reporting includes loan details, repayment terms, and utilization.
  
• Non-compliance may restrict future borrowing and attract penalties.
  
• Changes in loan terms must be reported promptly through revised filings.
  

Single Master Form (SMF)

• RBI mandates filing of FDI details through the Single Master Form on the FIRMS portal.
  
• This consolidated filing includes FDI, rights issue, bonus issue, and share transfer information.
  
• Subsidiaries must register on FIRMS and file Entity Master Form to begin the process.
  
• SMF filing must be completed within prescribed timelines from the date of transaction.
  
• Proper documentation like share certificates, remittance proofs, and board resolutions are required.
  

Transfer of Shares and Exit Reporting

• Any transfer of shares between resident and non-resident entities must be reported in Form FC-TRS.
  
• It applies when a foreign parent acquires or sells shares in its Indian subsidiary.
  
• Filing must be done within 60 days from the date of transfer.
  
• RBI approval is required if the transfer involves pricing beyond prescribed limits.
  
• Non-compliance can result in reversal of transactions and financial penalties.