Foreign investment into Indian companies sits at the intersection of company law, exchange control regulation, and sector-specific policy — and getting the structure right at the outset avoids costly restructuring later.
Investors should assess the applicable route (automatic or government approval) based on the target sector, and confirm pricing and valuation compliance under FEMA at the time of allotment or transfer.
Instrument choice — equity, compulsorily convertible instruments, or debt — carries different regulatory and repatriation consequences, and should be aligned with the investor's exit strategy from the outset.
Portfolio companies, in turn, should build FEMA compliance (including reporting to the Reserve Bank of India) into their regular corporate secretarial calendar, not just at the time of a fundraise.