/ FEMA · India-side compliance

FEMA ODI for your US entity. The one filing Atlas can't do.

If you are an Indian resident sending capital to a US LLC or C-Corp you own, FEMA kicks in. The Overseas Direct Investment (ODI) framework governs how, how much, and under what reporting. Here is what you file, when, and what happens if you don't.

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/ What triggers ODI

When FEMA cares about your US entity.

FEMA Overseas Direct Investment rules apply when:

An Indian individual resident or Indian company (Indian Party) invests capital into a foreign entity, AND
The investment gives the Indian party a stake in the foreign entity's capital (equity, convertible instruments, loans with equity-like characteristics).

So if you (Indian resident) wire USD from your Indian bank account to your Wyoming LLC's Mercury account as a founder capital contribution — ODI applies. If your Indian Pvt Ltd invests in a Delaware C-Corp subsidiary — ODI applies.

If you fund the US entity entirely from USD you earned outside India (held in a US bank account you own as a non-resident, or held abroad under LRS limits already used) — FEMA may not apply directly. Facts-specific; needs a review.

/ Form ODI — the 30-day deadline

File through your AD bank, not with RBI directly.

Within 30 days of the first remittance to the US entity, you must file Form ODI through your Authorised Dealer (AD) Category-I bank — your Indian bank handling the outbound forex. The AD bank forwards the submission to RBI.

Form ODI collects: Indian Party details (your Indian company or your personal residency status), foreign entity details (US entity name, address, EIN, nature of business), investment amount, structure (equity, loan, convertible), source of funds (Indian company retained earnings, LRS, external commercial borrowings), and intended use.

Standard automatic route applies for most structures:

Indian company investments up to 400% of net worth (sum of paid-up capital and free reserves) under automatic route.
Indian individuals using LRS: USD 250,000/year/person combined for all current and capital account transactions including ODI.
Investments above these limits need prior RBI approval through the approval route.

/ Annual Performance Report (APR)

Every year, forever (or until you divest).

After the initial Form ODI filing, you must submit the APR to RBI through your AD bank by June 30 each year, covering the previous Indian financial year (April to March).

APR reports: foreign entity's audited financial statements, business update, investment valuation, any changes in capital structure, any additional investments made during the year. The APR is NOT optional and NOT dependent on whether the foreign entity made any transactions — even a dormant US entity needs an APR each year.

Common failure: founders file Form ODI at inception, launch the US entity, then forget about APR. First APR deadline passes. Second APR deadline passes. By the third year the back-reporting plus late-filing penalties start adding up materially.

/ Penalties and clean-up

What the FEMA regulator actually does.

Non-filing of Form ODI: compoundable offence under FEMA. Compounding fee typically ranges from 1% of the investment per year of non-filing to significantly higher for repeat defaults, with caps.

Non-filing of APR: separately compoundable, around INR 5,000 to INR 50,000 per missed APR depending on duration and amount.

More painful than the regulator: fundraise diligence. Every VC and every acquirer in India will have their lawyers audit your FEMA compliance. Discovering back-missed Form ODI or APRs during diligence delays the round by 2-4 months while you compound and clean up. Costs: INR 1-3 lakh for a mid-sized back-clean-up plus the time cost of a stalled fundraise.

/ Ready when you are

Funded a US entity from India — and skipped Form ODI?

If your initial Form ODI was missed or your APRs are overdue, the clean-up is straightforward but time-sensitive before your next fundraise. We assess the back-exposure, prepare the compounding application, file the overdue APRs, and get you to clean FEMA status within 60-90 days.

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FAQ

Common questions, answered.

Can I use LRS to fund my US LLC?

Yes, as an Indian individual resident. LRS allows USD 250,000 per person per financial year for permitted current and capital account transactions, including investment in overseas entities. The LRS remittance is reported through your AD bank; a Form A2 is filed. If you also need Form ODI depends on whether your stake in the US entity constitutes a reportable overseas direct investment — typically yes for founder equity.

What is the difference between ODI and OPI?

ODI (Overseas Direct Investment) applies to stakes giving control, participation in management, or substantial equity holding in a foreign operating entity. OPI (Overseas Portfolio Investment) applies to minority holdings in listed foreign securities (shares, bonds, ETFs). For a founder forming their own US LLC or C-Corp, ODI is the applicable regime because the founder controls the entity.

Can I bypass FEMA ODI by funding the US LLC from US revenue?

If the US LLC generates US-source revenue in its own US bank account and uses that revenue to fund operations, FEMA ODI does not apply to that specific flow (no Indian funds crossed the border). FEMA ODI applies at the moment of outbound remittance from India. If no outbound Indian remittance happens, there is no ODI event. However, the initial capital to open the US bank and get operational typically needs some Indian funding — and that triggers ODI.

What is the Annual Performance Report deadline?

APR for the previous Indian financial year (ending March 31) is due to RBI through your AD bank by June 30 each year. Example: for FY2025-26 (ending 31 March 2026), the APR is due by 30 June 2026. Delays are compoundable per missed year.

Does FEMA apply if I'm an NRI founder?

FEMA ODI applies to Indian residents under the Foreign Exchange Management Act. If you are a Non-Resident Indian (NRI) under FEMA, you are not an Indian resident for FEMA purposes and ODI does not apply to your outbound investment into a US entity (because the capital is not crossing India's border from an Indian resident's hands). However, Indian income tax residency can still apply even for NRIs on certain income — separate analysis.

Can BQP file the Form ODI and APR for me?

Yes — it is a standard inclusion in our US incorporation mandate for Indian clients. We handle the initial Form ODI filing within the 30-day window, prepare the APR each year, and liaise with your AD bank. If you did your US formation elsewhere (Stripe Atlas, Doola) and need just the FEMA side handled, we take on compliance-only engagements starting at INR 25,000 per year.