🚢 FEMA & EXIM

FEMA & EXIM Knowledge Guide

Foreign Direct Investment

FDI Compliance Framework

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Automatic Route

Most sectors allow FDI up to 100% under automatic route without prior government approval. Industries include manufacturing, IT, infrastructure, and services.

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Approval Route

Certain sectors like defence (>74%), media, and multi-brand retail require prior FIPB/Government approval. Application through DPIIT.

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FC-GPR Filing

Form FC-GPR must be filed on the RBI’s FIRMS portal within 30 days of allotment of shares to foreign investors. Required for both equity and compulsorily convertible instruments.

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FC-TRS Filing

Required when shares are transferred between residents and non-residents. Filed by the transferee/transferor within 60 days of receipt of consideration.

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Valuation Requirements

Shares issued to or transferred from non-residents must be at SEBI-registered merchant banker valuation (DCF or comparable method).

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FEMA Violations

Contravention of FEMA provisions attracts penalty up to 3x the amount involved or ₹2 lakh (whichever is higher), plus compounding proceedings.

External Commercial Borrowings

ECB Guidelines

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ECB Framework

RBI’s ECB framework permits Indian companies to borrow from overseas lenders. Available under automatic and approval routes with end-use restrictions.

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Eligible Borrowers

Companies, LLPs, NBFCs, microfinance institutions, and other eligible entities as per RBI guidelines can raise ECB for permitted end-uses.

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Minimum Average Maturity

3 years for ECB up to $50 million. 5 years for amounts above $50 million. Infrastructure projects may have different MAM requirements.

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LRN & Reporting

Loan Registration Number (LRN) must be obtained before drawdown. Monthly ECB-2 returns filed with RBI through designated AD bank.

“ECB can be an effective low-cost funding source for Indian businesses, but requires careful structuring to comply with end-use restrictions, hedging requirements, and RBI reporting timelines.”

V J Desai & Co. LLP, FEMA Advisory

Export Import Policy

EXIM Policy Key Schemes

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Advance Authorisation

Allows duty-free import of inputs used in manufacture of export products. Export obligation must be fulfilled within 18 months of issue.

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EPCG Scheme

Export Promotion Capital Goods scheme allows import of capital goods at zero customs duty. Export obligation is 6x of duty saved within 6 years.

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Deemed Exports

Supply to EOU, SEZ, or government projects qualifies as deemed exports. Benefits include advance authorisation and TED refund.

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Export Oriented Units

EOUs can import goods duty-free. Must export 100% of production (with domestic tariff area sales allowed up to 50% of turnover).

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SEIS & MEIS

Service Export from India Scheme provides duty credit scrips for service exporters. Merchandise Exports replaced by RoDTEP scheme for goods exporters.

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DGFT IEC

Importer Exporter Code (IEC) from DGFT is mandatory for any import/export transaction. Online application with PAN and bank details.

Key Filings

Important FEMA Filing Reference

Form / Return	Purpose	Timeline	Filed With
FC-GPR	FDI share allotment reporting	Within 30 days of allotment	RBI (FIRMS portal)
FC-TRS	Transfer of shares to/from NR	Within 60 days	RBI (FIRMS portal)
FLA Return	Annual FDI/ODI position	15th July every year	RBI
ECB-2 (Monthly)	ECB drawdown/repayment status	7th of following month	RBI via AD Bank
Form 15CA/15CB	Overseas remittances	Before remittance	Income Tax Department
ODI Forms	Overseas direct investment	Prior approval/30-day reporting	RBI via AD Bank

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