The short answer
- ODI is governed by the Overseas Investment Rules and Regulations, 2022, and the RBI Master Direction (updated 1 April 2026).
- The Indian company files Form ODI through its authorised dealer bank before remitting money, and receives a unique identification number (UIN) for the investment.
- Total financial commitment is capped at 400% of the Indian entity's net worth as per its last audited balance sheet.
- A valuation is needed when buying existing shares of a foreign company. A fresh subscription in a new company does not need one.
- Every year: the Annual Performance Report by 31 December and the FLA return to the RBI by 15 July. An overdue filing blocks further investment under the same UIN.
When an Indian company sets up or buys into a Singapore company, the Indian side is an overseas direct investment (ODI). Since August 2022 the framework is the Overseas Investment Rules and Regulations, 2022, with the RBI's Master Direction setting out the procedure. Most ODI is "automatic route": no RBI approval, but the bank checks and reports everything. This guide walks through it from the board meeting to the annual filings.
When it is ODI
An Indian entity acquiring unlisted shares of a foreign company, or 10% or more of a listed one, or control, is making an overseas direct investment. Setting up a Singapore subsidiary is the most common case. Lending to the Singapore company or guaranteeing its borrowings counts as part of the same "financial commitment".
Check eligibility first
- Net worth: the total financial commitment to all foreign entities stays within 400% of the Indian entity's net worth as per its last audited balance sheet
- Clean record: the Indian entity is not on the RBI's caution list or under investigation by an enforcement agency
- Financial services: an Indian entity that is not itself in financial services can invest in a foreign entity doing financial services (other than banking or insurance) only if it has made net profits in each of the preceding three financial years
- Structure: the rules restrict structures where the foreign entity invests back into India and creates more than two layers of subsidiaries
- Pending filings: no overdue APR, FLA or share certificate on existing ODI. Banks will not process new ODI while one is outstanding
The steps
- Board resolution approving the investment, the amount, the authorised signatories and, for later rounds, the specific Singapore company.
- Valuation, if buying existing shares. When the Indian company acquires shares from existing shareholders, the price must be supported by a valuation on an internationally accepted method. A subscription to a newly incorporated company does not need one.
- Form ODI and supporting documents to the authorised dealer bank: the board resolution, a statutory auditor's or CA's certificate on net worth and compliance, the Singapore company's incorporation documents, and the valuation where needed.
- UIN. The bank reports the investment to the RBI and a unique identification number is generated. All later investment, loans, guarantees and disinvestment in that Singapore company go through the same bank under the same UIN.
- Remit the funds through the same bank.
- Evidence of investment. Submit the share certificate or other evidence of the shares issued to the bank within six months. If shares are not issued on incorporation, a deferred payment arrangement must be documented.
An example
An Indian private company has a net worth of INR 50 crore in its last audited balance sheet. Its ODI ceiling is INR 200 crore across all its foreign entities. It plans to subscribe SGD 500,000 in a new Singapore subsidiary and lend it SGD 300,000 for working capital. Both count towards the ceiling. Both go through Form ODI under the same UIN. No valuation is needed for the subscription. The loan must carry interest and terms the bank will review, and it must be reported each year in the APR.
Every year after
| Filing | When | Built on |
|---|---|---|
| Annual Performance Report (APR) | By 31 December each year | The Singapore company's financial statements. Where no statutory audit applies, the RBI directions call for certification by the Indian entity's auditor or a CA |
| Foreign Liabilities and Assets (FLA) return | By 15 July each year | The Indian entity's foreign assets as at 31 March |
| Further investment, loans, guarantees | Through the bank, as they happen | Form ODI updates |
| Disinvestment or closure | When it happens | Reported through the bank. Valuation rules apply to the exit price |
If something is late
Missed reporting can usually be regularised by paying a late submission fee through the bank, within the period the regulations allow. Beyond that, compounding with the RBI is the route, which takes longer and costs more. The practical cost of a late filing is often larger than the fee: the bank will not process further investment until it is cleared.
Watch-outs
- Layers. Check before the Singapore company invests anywhere, especially back into India.
- Year ends. The APR is easier when the Singapore company also closes on 31 March. See choosing the year end.
- Audit-exempt Singapore companies still need accounts the APR can rely on. Plan for the CA certificate.
- Changing banks means transferring the UIN, which takes time. Choose the bank with the long term in mind.
Questions people ask
When is a valuation needed for ODI?
When the Indian company buys existing shares of a foreign company. A fresh subscription to a newly incorporated Singapore company does not need one.
What annual filings follow an ODI?
The Annual Performance Report by 31 December and the FLA return to the RBI by 15 July, every year, plus reporting of further investments, loans or disinvestment through the bank.
How much can an Indian company invest abroad?
Its total financial commitment to foreign entities is capped at 400% of its net worth as per the last audited balance sheet.
Can an Indian company lend money to its Singapore subsidiary?
Yes, as part of its ODI financial commitment, within the 400% of net worth ceiling, reported through the same bank under the same UIN.
What if an APR or FLA filing is missed?
It can usually be regularised by paying a late submission fee through the bank. Until it is cleared, the bank will not process further investment under that UIN.
Talk it through with an adviser
Tell us your structure and deadlines. We reply with what applies to you and a fixed-fee proposal.
Sources
- RBI: Foreign Exchange Management (Overseas Investment) Rules, 2022
- RBI: Master Direction, Overseas Investment (updated 1 April 2026)
- Treelife: Challenges in overseas direct investment (secondary source)
General information only, last reviewed 11 November 2026. It is not advice for your situation. Laws and practice change, and the official sources linked above prevail. Speak to a qualified adviser before you act. Northwise does not file with Indian authorities; India-side work is done by independent licensed firms.
