With the increasing flow of foreign capital into Indian startups and private limited companies, understanding the regulatory nuances of FDI (Foreign Direct Investment) becomes essential. One area that often creates confusion is investment from NRE (Non-Resident External) accounts and the implications of Form FC-GPR under FEMA.
Let’s break it down in simple terms.
💳 What is an NRE Account?
An NRE account is a rupee-denominated bank account maintained by an NRI (Non-Resident Indian), funded from income earned abroad. Funds in this account are freely repatriable (can be sent back overseas) and are exempt from Indian taxes.
🔍 Repatriable vs. Non-Repatriable FDI
| Particulars | Repatriable FDI | Non-Repatriable FDI |
| Source of Funds | NRE / FCNR(B) A/c | NRO A/c |
| Repatriation Allowed | ✅ Yes | ❌ No |
| FDI Rules Applicable | ✅ Yes | ❌ No |
| FC-GPR Filing | ✅ Mandatory | ❌ Not Required |
| Sectoral Cap Compliance | ✅ Yes | ❌ Not Applicable |
✍ What is Form FC-GPR?
Form FC-GPR (Foreign Currency – Gross Provisional Return) is a mandatory reporting under FEMA that every Indian company must file with the RBI through the FIRMS portal when it receives foreign investment in exchange for issuing shares or other capital instruments.
It needs to be filed within 30 days of share allotment, and the following are typically required:
- FIRC & KYC from AD Bank
- Share allotment resolution
- Valuation certificate (if applicable)
- Declaration and CS/CA certificates
✅ When is FC-GPR Applicable?
If a non-resident investor sends money from their NRE account for equity investment in an Indian company, the investment is considered FDI on a repatriation basis. Hence:
➡️ FC-GPR filing is mandatory
➡️ Investment must comply with sectoral caps, pricing guidelines, and RBI norms
❗ Key Takeaways for Founders & Finance Teams
- Don’t assume that funds from an NRE account are exempt from compliance just because they are routed through an Indian bank.
- Any equity investment by an NRI (from NRE/FCNR account) is treated as repatriable FDI, requiring proper documentation and filing.
- Failure to file FC-GPR can result in penalties under FEMA.
📢 Final Thoughts
India has opened its doors wide for global capital, but it comes with a strong regulatory framework. As professionals handling cross-border investments, it’s critical to ensure that the inflow of funds — even through NRE accounts — is compliant with FEMA and RBI guidelines.
🛡️ Timely FC-GPR filing isn’t just a formality — it’s an essential compliance checkpoint for startups and businesses receiving foreign capital.