Cross-Border Structures-India FAQs
- What holding structure options are available for foreign investment into India?
The most common inbound structures are: a direct wholly owned subsidiary; an intermediate holding company in India; an ADGM or DIFC entity holding Indian shares as a foreign direct investor; or a direct shareholding by the foreign parent. The choice affects FDI route eligibility, sector cap compliance, dividend repatriation, and exit mechanics — and depends on the investor’s domicile, the sector, and the intended exit pathway.
- Can a UAE or GCC investor hold Indian shares through an ADGM or DIFC entity?
Yes. An ADGM or DIFC entity holding shares in an Indian company is treated as a foreign direct investor and its investment is subject to FEMA inbound investment rules. The structure requires genuine substance in the UAE holding entity, FEMA registration and reporting in India, and SEBI compliance where listed securities are involved.
- What is the FDI automatic route and when does approval route apply?
Under the automatic route, a foreign investor can invest in India without prior government approval in sectors where no cap or a 100% cap applies. The approval route applies in sensitive sectors — defence, media, insurance — where FDI is permitted subject to prior ministerial or DPIIT approval. The applicable route and any sector cap must be verified against current DPIIT consolidated FDI policy.
- What FEMA obligations arise when an Indian company invests outward?
Outbound Direct Investment by Indian companies is regulated under FEMA and the RBI’s ODI regulations. The automatic route permits ODI up to prescribed limits; investment above those limits or in certain activities requires RBI approval. Ongoing obligations include annual performance reports for the overseas entity, income repatriation within prescribed timelines, and reporting of capital changes. Errors in ODI structuring attract compounding FEMA penalties.
- What governing law should a cross-border shareholders agreement use?
Cross-border SHAs frequently designate a neutral governing law — English or Singapore law — rather than Indian law. However, provisions relating to the internal governance of an Indian incorporated company must comply with the Companies Act 2013 regardless of governing law. The dispute resolution seat is typically Singapore or London for India-international SHAs.
- How does ATB Legal’s dual India-UAE presence add value for cross-border structures?
Most cross-border structures involving India and the UAE require coordinated advice across both jurisdictions simultaneously — entity selection, FEMA compliance, ADGM or DIFC regulatory compliance, and commercial documentation enforceable on both sides. ATB Legal covers both sides from the same team, eliminating the fragmentation and cost of separate advisers in each jurisdiction.