The money arrives. Everyone celebrates. Three months later your CS asks whether the FC-GPR was filed, and the room goes quiet.
Foreign investment compliance in India is not about permission — most sectors are on the automatic route. It is about reporting: on time, in the right form, through the right bank. Get the reporting right and FEMA is invisible. Get it wrong and it follows you into every future round.
What is the 30-day clock?
When your company allots shares to a person resident outside India, you must report it in Form FC-GPR within 30 days of the allotment. The filing goes through the FIRMS portal via your authorised dealer bank — your AD bank is part of the chain, not a bystander.
Thirty days runs from the date of issue. Not from when the money hit your account. Not from when someone remembered. Miss it and you are in compounding territory — the RBI's process for regularising contraventions. It costs money, it costs time, and it creates a file that future investors will read.
Does the valuation need a valuer?
Yes, and this is non-negotiable. FEMA's pricing guidelines say shares issued to a foreign investor cannot be priced below fair value — determined by a SEBI-registered merchant banker or a chartered accountant using an internationally accepted pricing methodology, certified in a report.
Your last round's valuation is not a substitute for this certificate. The valuer's report is the document the AD bank asks for, and it is the document the RBI will want to see if questions arise later.
What about secondary transfers?
When existing shares move to or from a foreign investor, the reporting form is FC-TRS, due within 60 days of the transfer. Founders doing secondary sales in a round — taking some money off the table — trigger this. The company's CS usually files it, but the obligation sits on the transaction itself. Price it with the same valuation discipline.
What trips founders up?
Three things. First, the authorised dealer bank. Founders pick a bank for the current account and never tell it about the foreign investment. The AD bank is your filing channel — brief it before the money arrives, not after.
Second, convertible notes. Startups can issue convertible notes to foreign investors — minimum Rs 25 lakh per tranche — but the reporting and conversion mechanics have their own rules. Do not treat a note like a simple loan.
Third, downstream investment. If your company then invests into another Indian company, that can count as indirect foreign investment, with its own compliance. Map the chain before you deploy the funds.
FEMA is like airport immigration. The money has landed and is sitting in your account — but until you show the stamped paperwork within 30 days, it is not legally through. The funds are real; the form is what makes them legitimate.
What does the AD bank actually do in all this?
More than founders expect. Your authorised dealer bank is the channel for FC-GPR and FC-TRS filings on the FIRMS portal — the forms go through the bank, not around it. The bank checks your FIRC (the foreign inward remittance certificate, proof the money came from abroad through banking channels), the valuer's report, and the board resolution for the allotment before it forwards anything.
Pick your AD bank deliberately. Not every branch handles FIRMS filings well, and a branch that has never seen an FC-GPR will slow you down. Brief the relationship manager before the round closes. Hand over the valuer's report and the draft board resolution in advance. When the allotment happens, the filing is a formality instead of a fire drill.
Do you need RBI approval first?
For most sectors, no. Foreign investment up to 100% is on the automatic route — no prior approval, just reporting. The exceptions are the prohibited and restricted sectors: lottery, gambling, chit funds, real estate business, and a handful of others, plus sectoral caps in areas like media and defence. Check your sector before you sign the term sheet, not after.
Questions founders ask
From the date of allotment or issue of shares to the foreign investor — not the date the funds were received.
Late reporting is a contravention under FEMA, regularised through compounding with the RBI. The cost scales with the delay and the amount. File late rather than never.
Yes, with conditions. LLPs can receive foreign investment in sectors where 100% FDI is permitted on the automatic route, with no performance-linked conditions.
A startup can issue convertible notes to a person resident outside India — minimum Rs 25 lakh per tranche, with repayment or conversion within the permitted period. Report it; do not wing it.
NRI investments on a non-repatriation basis are treated as domestic investment. On a repatriation basis, the FEMA reporting regime applies.
Raising from abroad, or already have and never filed? We'll regularise the reporting and keep the next round clean.
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