Regulations 4 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.
When an Indian entity with foreign investment invests in another Indian entity, the investee may count the money as indirect foreign investment. Regulation 4(11) then requires two things within 30 days: a notice to the Secretariat for Industrial Assistance, DPIIT, and Form DI to the Reserve Bank. Regulation 5 makes delay in any report of regulation 4 liable to a late submission fee.
These are the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 (Notification No. FEMA. 395/2019-RB, October 17, 2019), as per the text on the Reserve Bank's site, amended up to June 13, 2026. Downstream investment that is indirect foreign investment must be notified to the Secretariat for Industrial Assistance, DPIIT within 30 days of the investment, even if equity instruments have not been allotted. Form DI goes to the Reserve Bank within 30 days from the date of allotment. Regulation 5 makes the responsible person liable for a late submission fee that the Reserve Bank decides in consultation with the Central Government.
Authority and what is not in the sources
The Regulations are made under "section 47 of the Foreign Exchange Management Act, 1999 ... and consequent to the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019". See the Act articles on sections 47 and 48 and section 6. The meaning of downstream investment and of "indirect foreign investment" is in the Rules, in particular the rule named in sub-regulation 4(11) as "Rule 22 of the Rules". The Rules are not in the sources consulted, so those definitions are not set out here; our guides to FDI downstream investment rules and to downstream investment under Rule 23 and the FOCC relaxations discuss them. The form's fields are not described either, since the Master Direction on Reporting is not in the sources. For reporting a downstream investment, see our downstream investment reporting service.
Regulation 4(11): two separate duties
Regulation 4(11) is headed "Downstream Investment" and has two paragraphs.
| Duty | Who | What | Time limit as printed |
|---|---|---|---|
| Notice to DPIIT | An Indian entity or an investment vehicle making downstream investment in another Indian entity which is considered as indirect foreign investment for the investee Indian entity in terms of the Rules | Notify the Secretariat for Industrial Assistance, DPIIT, "along with the modality of investment in new / existing ventures (with / without expansion programme)" | Within 30 days of such investment, even if equity instruments have not been allotted |
| Form DI | An Indian entity or an investment vehicle making the same downstream investment, in terms of Rule 22 of the Rules | File Form DI with the Reserve Bank | Within 30 days from the date of allotment of equity instruments |
The two triggers differ. The DPIIT notice runs from the investment itself, so it can fall due before any allotment. Form DI runs from the date of allotment of equity instruments. The Regulations do not say the two periods are alternatives, so a prudent reading is to treat each as its own duty. The sub-regulation does not say through whom Form DI is submitted; the general proviso to regulation 4 says that, unless specifically stated otherwise, all reporting is made through or by an Authorised Dealer bank, as the case may be, and that the format, periodicity and manner of submission are as the Reserve Bank prescribes.
Regulation 5: delays in reporting
Regulation 5 reads in substance: the person or entity responsible for filing the reports provided in regulation 4 is liable to pay a late submission fee, as may be decided by the Reserve Bank in consultation with the Central Government, for any delays in reporting. Three points follow.
- It covers every report in regulation 4. FC-GPR, FC-TRS, ESOP, DRR, the LLP forms, the LEC forms, InVI, DI and CN all fall under it, as do the FLA return and the DPIIT notice to the extent they are reports "provided in Regulation 4".
- No amount is printed. The Regulations give no formula, slab or ceiling. The fee is "as may be decided by the Reserve Bank". Do not take a figure from anywhere else as the Regulations' figure. The Reserve Bank's own framework, where relevant, should be read on its site.
- The fee is separate from compounding. The Act's power to compound contraventions is in section 15, covered in our article on section 15 of the Act. Whether a late filing is dealt with by fee alone or goes to compounding is for the Reserve Bank's framework and the Compounding Rules, not for these Regulations.
All the time limits in regulation 4 at a glance
| Report | Sub-regulation | Time limit as printed |
|---|---|---|
| FC-GPR | 4(1) | Not later than thirty days from the date of issue |
| FLA | 4(2) | On or before the 15th day of July each year |
| FC-TRS | 4(3) | Within sixty days of transfer or receipt or remittance of funds, whichever is earlier |
| ESOP | 4(4) | Within 30 days of issue |
| DRR | 4(5) | Within 30 days of close of the issue |
| LLP (I) | 4(6) | Within 30 days of receipt of consideration |
| LLP (II) | 4(7) | Within 60 days of receipt of funds |
| LEC (FII), LEC (IFI) | 4(8), 4(9) | None printed |
| InVI | 4(10) | Within 30 days of issue of units |
| DPIIT notice and Form DI | 4(11) | Within 30 days of investment; within 30 days of allotment |
| CN | 4(12) | Within 30 days of issue or of transfer |
Example
Vertex Holdings Limited, an invented Indian company with foreign investment, invests in the equity of Nimbus Packaging Private Limited on 3 September, and Nimbus allots the shares on 20 September. If the investment is considered indirect foreign investment for Nimbus under the Rules, Vertex notifies DPIIT within 30 days of 3 September and files Form DI within 30 days from 20 September. A report filed after the period exposes Vertex, as the responsible entity, to the late submission fee under regulation 5.
Our guide on reporting forms for inbound investment lists the forms together. Later amendments and circulars should be checked.
Need help with downstream investment reporting?
Downstream investment can sit across two companies, two dates and two filings. Our downstream investment reporting team checks the characterisation under the Rules and prepares the DPIIT notice and Form DI.
Key takeaways
- Downstream investment that is indirect foreign investment needs a DPIIT notice within 30 days of the investment, even before allotment.
- Form DI to the Reserve Bank is due within 30 days from the date of allotment of equity instruments.
- Regulation 5 makes the responsible person liable for a late submission fee decided by the Reserve Bank in consultation with the Central Government.
- No fee amount or formula is printed in the Regulations.
- The meaning of downstream investment is in the Rules, which are not in the sources.
Read next
- FLA return, LEC, InVI and convertible note returns: regulation 4
- Form FC-GPR, ESOP, DRR and LLP returns: regulation 4
- FDI downstream investment rules
- Late submission fee under FEMA: the RBI framework
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.