Schedules IX explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Two Schedules to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 deal with depository receipts in opposite directions. Schedule IX covers depository receipts issued by a foreign depository against Indian securities, so that non-residents can hold Indian company shares as receipts abroad. Schedule X covers Indian Depository Receipts (IDRs), issued in India by a company incorporated outside India. This article goes through both Schedules, rule 6(d), rules 10(2) and 12(3) that point to Schedule X, and the definitions in clauses (g), (h), (i) and (z) of rule 2.
This article states the position as per the Rules notified on 17 October 2019 (S.O. 3732(E)) as amended by the notifications named in this article; the latest amendment consulted is S.O. 4870(E) dated 2 September 2026. None of the nineteen amending notifications changes Schedule IX, Schedule X, rules 6(d), 10(2) or 12(3), or clauses (g), (h), (i) and (z) of rule 2; they stand as notified on 17 October 2019. (S.O. 3030(E) of 12 June 2026 changed the heading and sub-rule (1) of rule 12, not sub-rule (3).) The Rules rest on section 46 of the Act; see our article on section 46 of the Foreign Exchange Management Act, 1999. Amendments after 2 September 2026 should be checked in the Gazette. For a depository receipt programme or an IDR issue, our FEMA advisory service can help.
Rule 6(d) lets a person resident outside India invest in depository receipts issued by foreign depositories against eligible securities, on the terms of Schedule IX. Any security or unit a non-resident may hold under the Rules is an eligible instrument, the total issued plus already held must stay within the foreign holding limit, and the price must not be below the domestic price. A foreign company may issue IDRs in Indian rupees only under Schedule X, with issue proceeds immediately repatriated, and IDRs cannot be redeemed into underlying shares before one year from issue.
The definitions
| Clause of rule 2 | Meaning as printed |
|---|---|
| (g) "depository receipt" | A foreign currency denominated instrument, whether listed on an international exchange or not, issued by a foreign depository in a permissible jurisdiction on the back of eligible securities issued or transferred to that foreign depository and deposited with a domestic custodian; it includes a "global depository receipt" as defined in the Companies Act, 2013 |
| (h) "domestic custodian" | A custodian of securities registered with SEBI in accordance with the SEBI (Custodian of Securities) Regulations, 1996 |
| (i) "domestic depository" | A custodian of securities registered with SEBI and authorised by the issuing entity to issue Indian depository receipts |
| (z) "IDR" | Any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts |
"Permissible jurisdiction" has its own definition in rule 2(aka), inserted by S.O. 332(E) of 24 January 2024; see our article on direct listing on international exchanges. The SEBI regulations named in clause (h) are quoted as printed; check the current SEBI instrument.
Rule 6(d) and Schedule IX: depository receipts against Indian securities
Rule 6(d) says a person resident outside India may invest in depository receipts (DRs) issued by foreign depositories against eligible securities, in the manner and subject to the terms and conditions in Schedule IX. The Schedule has two paragraphs.
Paragraph (1): issue or transfer to a foreign depository
| Clause | What it says |
|---|---|
| (a) | Any security or unit in which a person resident outside India is allowed to invest under the Rules is an eligible instrument for issue of DRs "in terms of Depository Receipts Scheme, 2014 (DR Scheme, 2014)" |
| (b) | A person is eligible to issue or transfer eligible instruments to a foreign depository for issuing DRs in accordance with the DR Scheme, 2014 and guidelines issued by the Central Government |
| (c) | A domestic custodian may purchase eligible instruments on behalf of a person resident outside India for converting them into DRs under the DR Scheme, 2014 |
| (d) | The aggregate of eligible instruments issued or transferred to foreign depositories, with those already held by persons resident outside India, shall not exceed the limit on foreign holding of such instruments under the Act, rules or regulations |
| (e) | Eligible instruments shall not be issued or transferred to a foreign depository for issuing DRs at a price less than the price applicable to a corresponding mode of issue or transfer to domestic investors under applicable laws |
The Depository Receipts Scheme, 2014 is not in the texts consulted, and nothing is said here about its content.
Paragraph (2): saving
DRs issued under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 are deemed to have been issued under the corresponding provisions of DR Scheme 2014 and have to comply with the provisions specified in the Schedule.
The Master Direction - Foreign Investment in India, updated up to June 15, 2026, restates paragraph (1) and the saving in its Annex 8 (paragraphs 1.1 to 1.5 and 2.1) in the same terms. The Reserve Bank's Mode of Payment and Reporting Regulations carry no row for Schedule IX.
Rules 10(2) and 12(3) and Schedule X: IDRs
Rule 10(2) says an FPI may purchase, hold or sell IDRs of companies resident outside India and issued in the Indian capital market, in the manner and subject to the terms and conditions in Schedule X. Rule 12(3) says the same for a NRI or an OCI. Schedule X is headed "(See rule 10(2))" and "Issue of Indian Depository Receipts".
Paragraph (1): issue of IDRs
Companies incorporated outside India may issue IDRs through a Domestic Depository, to persons resident in India and outside India, subject to these conditions:
- (a) the issue complies with the Companies (Registration of Foreign Companies) Rules, 2014 and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
- (b) an issue by financial or banking companies having presence in India, through a branch or subsidiary, requires prior approval of the sectoral regulator(s);
- (c) IDRs are denominated in Indian rupee only; and
- (d) the proceeds of the issue shall be immediately repatriated outside India by the issuing company.
Paragraph (2): purchase or sale of IDRs
An FPI or a NRI or an OCI may purchase, hold or sell IDRs, subject to:
- (a) the mode of payment and conditions for remittance of sale or maturity proceeds as specified by the Reserve Bank;
- (b) limited two way fungibility, on terms stipulated by the Reserve Bank;
- (c) IDRs not being redeemable into underlying equity shares before the expiry of one year from the date of issue; and
- (d) redemption or conversion into underlying equity shares complying with the "Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004".
Stale references to note. Paragraph (1)(a) names the 2014 Rules and the 2009 SEBI regulations as printed, and paragraph (2)(d) names the 2004 foreign security regulations, which the Overseas Investment Rules, 2022 supersede, as their preamble says. The Master Direction (Annex 9, paragraph 3.1) refers instead to the Foreign Exchange Management (Overseas Investment) Rules, 2022, and the Mode of Payment and Reporting Regulations row for Schedule X does the same. The Rules' text is quoted as printed; check the current instrument. The 2022 Rules are introduced in our article on scope and administration of the Overseas Investment Rules.
What the Master Direction adds
Annex 9 of the Master Direction states, as its own statements and not as part of the Rules: an overall cap of USD 5 billion for raising capital by IDRs by eligible foreign companies in Indian markets, monitored by SEBI (paragraph 2.3); that NRIs and OCIs may invest in IDRs out of NRE or FCNR(B) funds and an FPI out of a foreign currency or SNRR account (paragraph 2.2); and, under two way fungibility (paragraph 3.4), that listed Indian companies and Indian mutual funds registered with SEBI may sell or hold the underlying shares, while other residents including resident individuals may hold them only to sell within 30 days of conversion. For tax on IDR income and gains, see our income-tax guides.
Comparison
| Point | Schedule IX (DRs) | Schedule X (IDRs) |
|---|---|---|
| Who issues | A foreign depository, against Indian securities | A foreign company, through a Domestic Depository in India |
| Currency | Foreign currency denominated (definition in rule 2(g)) | Indian rupee only |
| Pricing | Not below the corresponding domestic price | Not addressed in the Schedule |
| Foreign holding | Aggregate within the foreign holding limit | Not addressed |
| Redemption | Under the DR Scheme, 2014 | Not before one year from issue |
A worked example
Gannet Marine Foods Limited, an Indian company, wishes its foreign shareholders to hold receipts in an overseas market. Under Schedule IX paragraph (1)(d) the shares deposited, with those already held by non-residents, must stay within the foreign holding limit for the company, and under (e) the issue price cannot be lower than the price for a corresponding domestic issue. Separately, Tuckwell Brewing Group, a company incorporated abroad, issues IDRs through a Domestic Depository. They must be in rupees, the proceeds must be sent out immediately, and no IDR can be redeemed for underlying shares before a year has passed. All names are invented.
Need help with depository receipts and IDRs?
A programme that crosses the Rules, the DR Scheme and SEBI requirements needs the order of approvals set out early. Our FEMA advisory team can map the FEMA conditions in Schedules IX and X against the structure.
Key takeaways
- Rule 6(d) and Schedule IX: DRs against any security or unit a non-resident may hold, within the foreign holding limit and not below the domestic price.
- Schedule X: IDRs by foreign companies in rupees, proceeds repatriated immediately, financial and banking companies need sectoral regulator approval.
- IDRs cannot be redeemed into shares before one year; limited two way fungibility on Reserve Bank terms.
- References to the 2004 foreign security regulations, the 2009 SEBI regulations and the 2014 Scheme are quoted as printed; check the current instruments.
Read next
- Investment vehicles: AIF, REIT and InvIT, Schedule VIII
- Investment by NRI, OCI and other individuals: rules 12 and 13
- FPI investment and transfer: rules 10 and 11
- Direct listing on international exchanges: rule 34 and Schedule XI
Disclaimer: Based on the Gazette text of the instrument this article names, as notified and as amended by the notifications named in the article (for the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 the latest amendment consulted is S.O. 4870(E) dated 2 September 2026), as consulted on 2 October 2026. There is no official consolidated text; the provisions were read with each amendment applied. Sectoral caps, entry routes, conditions, forms and time limits change by notification, press note and circular; later changes should be checked on the Gazette, DPIIT and Reserve Bank sites. This article is general information, not legal advice; check the official text before acting.