Overview
An Indian company that is owned or controlled by non-residents is itself treated as foreign owned for FEMA purposes. When that company invests in another Indian entity, the investment is a downstream investment and must be reported and priced in line with FEMA pricing guidelines, just like direct FDI.
We assess whether your structure triggers downstream investment rules, confirm the applicable sector caps and pricing, and file the required intimation so the chain of ownership stays compliant at every level.
What's included
- Ownership & control assessment
- Sector cap and pricing check
- Downstream investment structuring advice
- Reporting/intimation filing
- Coordination with the investee company's bank
How we approach it
Frequently asked questions
What makes an investment a "downstream investment"?
When a foreign-owned or foreign-controlled Indian company invests in another Indian company, that second investment is treated as downstream investment and follows FDI-linked rules.
Does downstream investment need RBI reporting?
Yes — it must be reported and priced under the same FEMA framework that applies to direct foreign investment.
How do I know if my company is foreign owned or controlled?
This depends on the percentage of foreign shareholding and control rights in your company — we assess this as the first step.
Does downstream investment reporting apply to indirect foreign investment through multiple layers?
Yes, FEMA looks through multiple layers of Indian companies to determine if foreign ownership or control ultimately triggers downstream rules at each level.
What's the difference between 'ownership' and 'control' under FEMA?
Ownership generally refers to the percentage of equity held by non-residents, while control refers to the right to appoint a majority of directors or control management decisions — either can trigger foreign ownership/control status.
What happens if downstream investment isn't reported correctly?
It can be treated as a FEMA contravention across the entire ownership chain, which is why getting the initial structuring and reporting right matters.
Talk to us about Downstream Investment Reporting.
Rashmi K.S. & Associates · Practising Company Secretaries · Balewadi, Pune