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ARTICLE · 02 JANUARY 2025

Indirect FDI And Downstream Investment

Maheshwari & Co. Advocates & Legal Consultants
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Foreign Direct Investment – way to Indian Market. A foreign investor can invest in India either directly or indirectly through another Indian entity.

IndiaGovernment, Public Sector
Karishma Jaiswal
Karishma Jaiswal

Foreign Direct Investment – way to Indian Market. A foreign investor can invest in India either directly or indirectly through another Indian entity. Direct investment by a foreign investor is termed as foreign direct investment. However, foreign investment by a foreign investor through an entity/LLP incorporated under Indian Laws is known as downstream investment or we can say as Indirect Foreign Direct Investment.

As per the extant Foreign Exchange Management Act, 1999 (FEMA), rules and regulations made hereunder, An Indian entity that has received indirect foreign investment has to comply with the entry route, sectoral caps, pricing guidelines and other attendant conditionsas applicable for foreign investment.

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