(FLA Return) under FEMA 1999

CS Yash Pareek has tried to compile some key points and extracts of the provisions of Foreign Exchange

Management Act (FEMA), The Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2017 & FAQ/instructions issued by the Reserve Bank of India
relating to Annual Return on Foreign Liabilities and Assets (FLA Return) under FEMA 1999 which are

presented below for your reading and reference:

Foreign Direct Investment (FDI):

Foreign Direct Investment (FDI) is the investment through capital instruments by a
person resident outside India

(a) in an unlisted Indian company; or

(b) in 10 percent or more of the post issue paid-up equity capital on a fully diluted basis
of a listed Indian company

If the Indian company has issued the shares to non-resident entities under the FDI
scheme in India, then it should be reported under the Foreign Direct Investment in India
(Liabilities), Section III of the return Annual Return on Foreign Liabilities and Assets (FLA
Return) under FEMA 1999.

Overseas Direct Investment Scheme (ODI):

Overseas Direct Investment or ODI is an investment made outside India in a Joint
Venture (JV) or Wholly Owned Subsidiary (WOS) either under Automatic Route or
Approval Route. The investment is made by contribution to capital, subscription to
memorandum of a foreign company, or acquisition of existing shares of a foreign entity
by market purchase, private placement or stock exchange.