RBI Reporting of FC-GPR, FC-TRS, FLA, ODI, AND ECB to avoid ED Actions

RBI Reporting of FC-GPR, FC-TRS, FLA, ODI, AND ECB to avoid ED Actions. New Delhi, May 1, 2025 — The Enforcement Directorate (ED) has officially announced a shift in its enforcement priorities for the year 2025, placing a renewed focus on violations under the Foreign Exchange Management Act (FEMA), 1999. ED Director Rahul Navin, during the agency’s foundation day address, stated that the “next area where ED intends to focus this year is on FEMA violations,” signaling a strategic move to tighten scrutiny on cross-border financial irregularities (Source: Business standard). The ED’s increased vigilance will target many key areas, including:
1. Misuse of FDI Routes
2. Export-Import Pricing Manipulation
3. Improper External Commercial Borrowings (ECBs)
3. Unlawful Foreign Property Holdings by NRIs
3. Unauthorised Outbound Fund Transfers
4. Delay in filing FDI reporting under FCGPR, FCTRS and APR Reporting etc.
FDI Compliance for Foreign Investors in Startups and WOS 
In recent years, India has witnessed a sharp rise in foreign investments through:
1. Foreign Wholly-Owned Subsidiaries (WOS) by foreign parent companies
2. Startup equity funding from foreign VCs, angel networks, or institutional investors
3. Convertible instruments (CCPS, CCDs) structured through automatic FDI routes
While these structures are legally valid and encouraged under India’s liberalized FDI regime, the execution and compliance on the ground often leave critical gaps.
How FDI is Brought into India?
1. Foreign Company/Investor wires capital in foreign currency into an Indian company’s bank account (via AD Category-I bank)
2. Indian company allots shares or convertible instruments
3. Company files Form FC-GPR with RBI through the FIRMS portal within 30 days of allotment in form PAS-3 with MCA.
4. Parent company/startup maintains proper records:

KYC of remitter
FIRC (Foreign Inward Remittance Certificate)
Valuation report from RV OR MB 
Board resolution and issue of share certificates including stamping 
CS/CA certifications

Biggest Problem: FDI Compliance is Often Ignored
Many startups including Foreign subsidiaries or WOS and even established Indian subsidiaries with foreign investment fall into traps such as:
1. Delayed or non-filing of FC-GPR/ FCTRS/APR Filing etc
2. Improper or missing valuation reports under FEMA from a SEBI-registered Merchant Banker or a Registered Valuer are a frequent compliance lapse. In many cases, even when a report was obtained, it had a validity of only 90 days—which had expired by the time of share allotment or filing, thereby rendering the FDI compliance defective.
3. No FIRC/KYC from AD Bank due to many reasons such as not receiving 6 pointers KYC, Wrong purpose code etc.
4. Failure to issue share certificates within 60 days by the companies
5. Non-payment of stamp duty on share allotments
6. Not maintaining a Register of Members and default in filing MGT-7A
7. No Filing of Form FLA/Annual Return on Foreign Liabilities and Assets
9. No compounding application made even after default
Such violations under FEMA, even if not willful, are civil offences and can result in:
1. RBI Penalties & LSF payment up to 3x the investment value
2. ED notices and adjudication
3. Reputational risk for startups in the investor community
Bottleneck in Future Rounds
When a startup or WOS seeks Series A/B/C rounds, institutional investors or international funds conduct thorough legal and financial due diligence and common red flags they find include:
1. Lack of RBI acknowledgment of prior FDI
2. Shareholding mismatch in ROC and cap table
3. No proper documentation of board approvals
4. Unreported convertible instruments
5. Absence of MGT-6 and BEN-2 filings (for nominee/shareholding disclosures)
6. Pending compounding applications with RBI
How to Fix It: Strategic FDI Compliance Planning
1. File FC-GPR, FLA, and APR on time
2. Get FEMA-compliant valuation reports from SEBI-registered merchant bankers or CA as per Rule 11UA
3. Reconcile share allotment data with bank statements and MCA records
4. Prepare for due diligence readiness with a digital compliance folder
5. Seek FEMA compounding proactively if there's a delay
6. Avoid routing funds through questionable jurisdictions or layered entities
Role of Professional Advisors
Many founders think FDI compliance ends at bank receipt or credit of subscription funds or MCA filing but It doesn't, that's why Expert guidance is needed to manage:
1. RBI compliances with AD Bank communication and FEMA filings
2. Foreign investor documentation including Preparation of Declaration, projections etc
3. ROC compliances such as FC-1 Filing, BEN-2 Filing, MGT-6 Filing in case of foreign Investments and to give MCA updates from time to time.
4. Legal structuring for SAFE notes or CCPS
How Compliance Calendar LLP Can Help
At Compliance Calendar LLP, we specialize in:
1. FEMA Advisory & FDI Structuring
2. SMF-FCGPR/ FCTRS, FLA, APR, ECB Return Filing
3. FEMA Valuation Reports and CS/CA Certifications
4. RBI Compounding Applications
5. FEMA Due Diligence & Documentation Review
As ED increases its enforcement intensity, proactive compliance is no longer optional—it is mission-critical. Hence, for expert guidance and risk mitigation strategies, reach out to us at info@ccoffice.in. Firms like Compliance Calendar LLP provide end-to-end support in FDI Compliances including FDI in NBFC, ODI and all other FEMA Transactions, allowing that your startup or WOS is compliance-ready for the next round and investor-confident. Raising funds is only half the journey. Preserving investor confidence through compliance is what keeps the startup moving and with ED now actively focusing on FEMA violations, the cost of ignorance is too high—both in financial and strategic terms.

New Delhi, May 1, 2025 — The Enforcement Directorate (ED) has officially announced a shift in its enforcement priorities for the year 2025, placing a renewed focus on violations under the Foreign Exchange Management Act (FEMA), 1999. ED Director Rahul Navin, during the agency’s foundation day address, stated that the “next area where ED intends to focus this year is on FEMA violations,” signaling a strategic move to tighten scrutiny on cross-border financial irregularities (Source: Business standard). The ED’s increased vigilance will target many key areas, including:

1. Misuse of FDI Routes

2. Export-Import Pricing Manipulation

3. Improper External Commercial Borrowings (ECBs)

3. Unlawful Foreign Property Holdings by NRIs

3. Unauthorised Outbound Fund Transfers

4. Delay in filing FDI reporting under FCGPR, FCTRS and APR Reporting etc.

FDI Compliance for Foreign Investors in Startups and WOS

In recent years, India has witnessed a sharp rise in foreign investments through:

1. Foreign Wholly-Owned Subsidiaries (WOS) by foreign parent companies

2. Startup equity funding from foreign VCs, angel networks, or institutional investors

3. Convertible instruments (CCPS, CCDs) structured through automatic FDI routes

While these structures are legally valid and encouraged under India’s liberalized FDI regime, the execution and compliance on the ground often leave critical gaps.

How FDI is Brought into India?

1. Foreign Company/Investor wires capital in foreign currency into an Indian company’s bank account (via AD Category-I bank)

2. Indian company allots shares or convertible instruments

3. Company files Form FC-GPR with RBI through the FIRMS portal within 30 days of allotment in form PAS-3 with MCA.

4. Parent company/startup maintains proper records:

KYC of remitter
FIRC (Foreign Inward Remittance Certificate)
Valuation report from RV OR MB
Board resolution and issue of share certificates including stamping
CS/CA certifications

Biggest Problem: FDI Compliance is Often Ignored

Many startups including Foreign subsidiaries or WOS and even established Indian subsidiaries with foreign investment fall into traps such as:

1. Delayed or non-filing of FC-GPR/ FCTRS/APR Filing etc

2. Improper or missing valuation reports under FEMA from a SEBI-registered Merchant Banker or a Registered Valuer are a frequent compliance lapse. In many cases, even when a report was obtained, it had a validity of only 90 days—which had expired by the time of share allotment or filing, thereby rendering the FDI compliance defective.

3. No FIRC/KYC from AD Bank due to many reasons such as not receiving 6 pointers KYC, Wrong purpose code etc.

4. Failure to issue share certificates within 60 days by the companies

5. Non-payment of stamp duty on share allotments

6. Not maintaining a Register of Members and default in filing MGT-7A

7. No Filing of Form FLA/Annual Return on Foreign Liabilities and Assets

9. No compounding application made even after default

Such violations under FEMA, even if not willful, are civil offences and can result in:

1. RBI Penalties & LSF payment up to 3x the investment value

2. ED notices and adjudication

3. Reputational risk for startups in the investor community

Bottleneck in Future Rounds

When a startup or WOS seeks Series A/B/C rounds, institutional investors or international funds conduct thorough legal and financial due diligence and common red flags they find include:

1. Lack of RBI acknowledgment of prior FDI

2. Shareholding mismatch in ROC and cap table

3. No proper documentation of board approvals

4. Unreported convertible instruments

5. Absence of MGT-6 and BEN-2 filings (for nominee/shareholding disclosures)

6. Pending compounding applications with RBI

How to Fix It: Strategic FDI Compliance Planning

1. File FC-GPR, FLA, and APR on time

2. Get FEMA-compliant valuation reports from SEBI-registered merchant bankers or CA as per Rule 11UA

3. Reconcile share allotment data with bank statements and MCA records

4. Prepare for due diligence readiness with a digital compliance folder

5. Seek FEMA compounding proactively if there's a delay

6. Avoid routing funds through questionable jurisdictions or layered entities

Role of Professional Advisors

Many founders think FDI compliance ends at bank receipt or credit of subscription funds or MCA filing but It doesn't, that's why Expert guidance is needed to manage:

1. RBI compliances with AD Bank communication and FEMA filings

2. Foreign investor documentation including Preparation of Declaration, projections etc

3. ROC compliances such as FC-1 Filing, BEN-2 Filing, MGT-6 Filing in case of foreign Investments and to give MCA updates from time to time.

4. Legal structuring for SAFE notes or CCPS

How Compliance Calendar LLP Can Help

At Compliance Calendar LLP, we specialize in:

1. FEMA Advisory & FDI Structuring

2. SMF-FCGPR/ FCTRS, FLA, APR, ECB Return Filing

3. FEMA Valuation Reports and CS/CA Certifications

4. RBI Compounding Applications

5. FEMA Due Diligence & Documentation Review

As ED increases its enforcement intensity, proactive compliance is no longer optional—it is mission-critical. Hence, for expert guidance and risk mitigation strategies, reach out to us at info@ccoffice.in. Firms like Compliance Calendar LLP provide end-to-end support in FDI Compliances including FDI in NBFC, ODI and all other FEMA Transactions, allowing that your startup or WOS is compliance-ready for the next round and investor-confident. Raising funds is only half the journey. Preserving investor confidence through compliance is what keeps the startup moving and with ED now actively focusing on FEMA violations, the cost of ignorance is too high—both in financial and strategic terms.