Form ODI is the main RBI reporting form for Overseas Direct Investment (ODI) by Indian residents in foreign joint ventures and subsidiaries. It captures who is investing, where, how much, and how the overseas entity is performing over time.
What is Overseas Direct Investment (ODI)?
Overseas Direct Investment (ODI) means a direct investment made by a person resident in India into a foreign entity by way of equity capital, compulsorily convertible instruments, or other eligible financial commitments, usually in a joint venture (JV) or wholly owned subsidiary (WOS). The foreign entity must be engaged in a bona fide business activity, and the investment is regulated under FEMA (Overseas Investment) Rules, 2022 and related Regulations and Directions.
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ODI vs FDI
ODI is outward investment from India into a foreign company, while Foreign Direct Investment (FDI) is inward investment from non‑residents into Indian companies. In ODI, an Indian entity or resident individual becomes shareholder or owner abroad; in FDI, a foreign investor takes a stake in an Indian business.
Legal framework for overseas investment
ODI today is governed mainly by:
- FEMA, 1999
- FEMA (Overseas Investment) Rules, 2022 issued by the Central Government
- FEMA (Overseas Investment) Regulations, 2022 and Directions issued by RBI
RBI also issues A.P. (DIR Series) circulars that give practical instructions on forms, online reporting, late submission fee, and sector‑specific conditions.
Objectives and benefits of ODI
ODI helps Indian businesses expand markets, access technology, raw materials, and brands abroad. It can also improve global branding, diversify risk across countries, and increase India’s export potential through overseas platforms.
Role of RBI in ODI
The Reserve Bank of India (RBI) is the main regulator for ODI under FEMA. RBI sets eligibility rules, financial limits, reporting formats like Form ODI / Form FC, and monitors transactions through authorised dealer (AD) banks.
Who is eligible to make ODI?
Under the Overseas Investment Rules, “person resident in India” can make ODI if conditions are met. Eligible investors include:
- Indian companies and body corporates
- LLPs and registered partnership firms
- Resident individuals, subject to Liberalised Remittance Scheme (LRS) limits and other checks
Entities classified as wilful defaulters, NPAs, or under investigation need additional clearances or may be restricted.
Automatic route vs approval route
Most ODI is now permitted under the Automatic Route if it satisfies all conditions like sector eligibility, financial commitment limits, and clean compliance history. No prior RBI approval is needed in this route, but you must follow strict post‑investment reporting and limits such as overall financial commitment up to 400% of net worth.
If the proposal does not meet automatic route conditions (for example, in restricted sectors, complex structures, or where limits are breached), prior RBI approval under the Approval Route is required. These cases undergo detailed scrutiny of business rationale, structure, and risk, and timelines are longer.
ODI rules and compliance overview
Key compliance under the ODI framework includes:
- Reporting initial financial commitment in the prescribed form through the AD bank
- Getting a Unique Identification Number (UIN) for each foreign entity
- Filing Annual Performance Report (APR) for every ODI‑linked foreign entity
- Reporting disinvestment, restructuring, guarantees, and step‑down subsidiaries within specified timelines
Non‑compliance can lead to late submission fee (LSF), restriction on further ODI, and FEMA penalties.
What is Form ODI?
Form ODI is the RBI reporting form for Indian parties and resident individuals making ODI in a foreign JV/WOS. It captures details of the Indian investor, foreign entity, type and amount of financial commitment, remittances, performance, and disinvestment.
Structure of Form ODI – Parts
Traditionally, Form ODI has four parts:
- Part I – Basic details of JV/WOS, Indian investors and financing pattern
- Part II – Details of remittances and other financial commitment certified by the AD bank
- Part III – Annual Performance Report (APR) on performance of foreign entity
- Part IV – Details at the time of disinvestment / closure
In practice, online ODI modules may combine some parts, but the same information blocks are still required.
Who must file Form ODI?
Form ODI is required when a resident Indian entity or individual:
- Sets up or acquires a foreign JV/WOS
- Makes additional equity, loans, or guarantees to an existing foreign entity under ODI
- Reports annual performance or disinvestment for that entity
Filing is routed through the designated AD Category‑I bank, which in turn reports to RBI.
Step‑by‑step: filing Form ODI online
A simple workflow is:
- Decide ODI structure
- Approach an AD Category‑I bank
- Prepare Form ODI Part I details
- Indian investor details, board resolution, KYC, foreign entity details, valuation (if required), and funding structure.
- AD bank files in RBI’s online ODI/FC portal
- Under automatic route, AD scrutinises and uploads the form, seeks UIN, and then allows remittance.
- Report remittances and other financial commitments
- Details are reported (earlier via Part II; now through online sections) as and when you send funds or extend guarantees.
- File APR (Part III) every year
- Provide audited financials or provisional numbers and key performance data via AD bank.
For complex cases, work closely with a FEMA Expert so that structure and documentation are correct from day one.
Documents required for Form ODI
Typical documents include:
- Board resolution / partner resolution approving ODI
- Incorporation documents and shareholding details of foreign entity
- Last audited financial statements of Indian investor (for net worth and 400% limit)
- Valuation certificate for acquisition where required
- KYC documents, share valuation, and any sectoral approvals, if applicable
Your AD bank may ask for extra papers depending on risk and sector.
Due dates and reporting timelines
Key timelines under the current regime are:
- Reporting financial commitment: at the time of making financial commitment or sending the outward remittance, whichever is earlier, in the prescribed form through AD bank.
- APR: on or before 31 December each year for the previous financial year for every foreign JV/WOS where ODI exists.
- Disinvestment: reporting within prescribed days from receipt of proceeds in the relevant form/section.
Delays attract late submission fee, and continuous default can lead to FEMA compounding and restrictions.
Common mistakes in Form ODI
Some frequent pitfalls are:
- Ignoring the 400% of net worth financial commitment cap across all ODI investments
- Missing APR filing for dormant or loss‑making foreign subsidiaries (APR is mandatory even if no profit)
- Incorrect sector codes or describing non‑bona‑fide activities
- Investing through multi‑layer “round‑tripping” structures that violate ODI–FDI layering restrictions
- Late reporting of supplementary investments and disinvestment
A FEMA Expert or specialised ODI consultant can help you avoid these issues.
How to set up a foreign subsidiary via ODI?
To set up a foreign subsidiary (WOS):
- Check eligibility and sector: ensure the activity is permitted and not in restricted sectors like gambling or real‑estate trading.
- Determine investment amount in line with net worth and 400% cap.
- Incorporate the foreign company as per local law and obtain charter documents.
- File Form ODI / Form FC details via AD bank and remit funds after scrutiny.
- Start business operations and maintain proper books for APR and tax purposes.
Role of AD bank in ODI
The designated AD Category‑I bank is your first regulator in practice. It verifies KYC, checks eligibility and limits, files forms in RBI’s system, allots or obtains UIN, and monitors ongoing compliance like APR and disinvestment reporting.
Post‑investment reporting and APR
Once ODI is made, you must file Annual Performance Report (APR) each year through the AD bank for every foreign JV/WOS. APR reports key financial data like turnover, profit or loss, net worth, outstanding dues, and any further investments or guarantees.
APR must be filed by 31 December for the previous financial year, even if the foreign entity has no operations or profit.
ODI disinvestment and closure
When you sell shares, liquidate the foreign entity, or write off investment, you must:
- Repatriate sale or liquidation proceeds to India within prescribed timelines
- Report disinvestment details and closure in the relevant part of Form ODI / online form
- Ensure all past APRs are filed before exit is approved
Improper or unreported disinvestment can invite FEMA non‑compliance.
Tax implications of ODI
ODI has tax angles both in India and in the host country.
- Dividends, interest, or capital gains from foreign entities are generally taxable in India, subject to DTAA relief where available.
- Transfer of shares of a foreign company by an Indian resident can trigger capital gains tax in India and sometimes in the foreign jurisdiction.
You should always pair FEMA planning with income‑tax and DTAA advice.
Tax on transfer of ODI shares
When an Indian investor transfers or disinvests shares of a foreign JV/WOS, capital gains must be computed as per Indian tax law, considering cost and holding period. The transaction must also be reported to RBI, and proceeds repatriated as per FEMA rules.
Penalties and late filing of Form ODI
If you delay or miss ODI or APR reporting:
- RBI can levy Late Submission Fee (LSF). For APR / ODI Part II and some returns that do not capture flows, LSF is usually a flat ₹7,500 per delayed return.
- For transactional forms like ODI Part I, Part III or Form FC, LSF is ₹7,500 plus 0.025% of the amount involved multiplied by years of delay, subject to caps.
Serious or wilful violations may face compounding or penalties up to thrice the amount involved under section 13 of FEMA.
Latest ODI updates in brief
The big change is the New Overseas Investment framework notified in August 2022, which replaced older ODI regulations and clarified concepts like ODI vs OPI, financial services investment, and round‑tripping. RBI has also standardised Late Submission Fee across FEMA reporting and moved most filings to online portals, making AD banks the main gatekeepers.
Because rules and portals keep evolving, always check the latest RBI circulars or consult a FEMA Expert before large or complex ODI.
ODI for startups and SMEs
Startups and SMEs use ODI to acquire small foreign brands, open sales offices, or set up holding companies in strategic jurisdictions. However, they must be extra careful about:
- Net worth and 400% financial commitment limit
- Cost of compliance (APR, audits, tax filings abroad)
- Substance and anti‑round‑tripping rules
Here, ongoing support from a FEMA Expert and tax advisor can save time and future penalties.
Case study: simple ODI structure
Imagine an Indian SaaS company in Bengaluru that wants to sell to US clients and decides to set up a wholly owned subsidiary in Delaware.
- The Indian company checks that its total proposed equity plus loan is within 400% of its net worth and that software services are a permitted bona fide activity.
- Its board approves ODI, it engages a FEMA Expert, and opens a file with its AD Category‑I bank.
- The AD bank files Form ODI / Form FC online, obtains UIN, and allows remittance of share capital.
- Every year, the US subsidiary’s audited accounts are shared with the AD bank, and APR is filed by 31 December.
- After a few years, if the Indian company sells the US entity, it reports disinvestment, repatriates proceeds, pays capital gains tax in India, and closes FEMA compliances.
Form ODI FAQs
1. Is ODI allowed under automatic route for most sectors?
Yes, most bona fide business activities are permitted under automatic route, subject to sectoral restrictions and overall limits; otherwise, RBI approval is required.
2. What is the current financial commitment limit for ODI?
An Indian entity’s total financial commitment (equity, loans, guarantees, etc.) in all foreign entities normally cannot exceed 400% of its net worth under the automatic route.
3. Is APR required even if the foreign company has no turnover?
Yes, APR is mandatory every year for all ODI‑linked foreign entities, even if there is no income or operations.
4. Who actually submits Form ODI to RBI?
The designated AD Category‑I bank uploads Form ODI / relevant sections in RBI’s online system based on information and documents given by the Indian investor.
5. What is the due date for APR?
APR in respect of ODI must generally be submitted by 31 December for the previous financial year.
6. How is late submission fee for APR calculated?
For APR / Form ODI Part II and some similar returns, RBI has prescribed a flat LSF of ₹7,500 per delayed return.
7. Can individuals make ODI?
Yes, resident individuals can make ODI in permitted manners, usually under Liberalised Remittance Scheme, with specific caps and additional conditions.
8. Is investing back into India through multiple layers allowed?
The new framework restricts “ODI‑FDI structures” with more than two layers of subsidiaries to curb round‑tripping.
9. Should I always involve a FEMA Expert?
For any meaningful ODI, especially where tax, valuation, or complex structures are involved, working with a FEMA Expert and cross‑border tax advisor is strongly recommended to stay compliant and penalty‑free.
