Rule 15 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.
An International Financial Services Centre (IFSC) in India is treated as a place "outside India" for the Foreign Exchange Management (Overseas Investment) Rules, 2022. Rule 15 allows a person resident in India to make Overseas Investment in an IFSC, and Schedule V says how: by the manner of any of Schedules I to IV, with four provisos that give an IFSC investor a deemed-approval period, relief from the net profit condition, an OPI route for fund contributions, and extra room for resident individuals. This article reads rule 15, Schedule V and the related definitions.
The Rules are quoted as notified on 22 August 2022 (G.S.R. 646(E)); no amendment is in the texts consulted. Amendments after that date should be checked in the Gazette. They rest on section 46 of the Foreign Exchange Management Act, 1999; see our article on section 46 of the Act. For reporting an investment in an IFSC, our overseas direct investment reporting service covers the filings.
A person resident in India may make Overseas Investment in an IFSC "within the limits provided in these rules", in the manner laid down in Schedule I, II, III or IV. Four provisos apply: (i) the financial services regulator's approval for ODI in an IFSC is deemed given if not decided within forty-five days of a complete application; (ii) an Indian entity not in financial services that fails the net profit condition may still make ODI in an IFSC; (iii) a person may contribute to an investment fund or vehicle in an IFSC as OPI; (iv) a resident individual may make ODI in an IFSC entity, including financial services (not banking or insurance), if it has no subsidiary outside the IFSC where the individual has control. A recognised stock exchange in the IFSC is treated as one outside India.
Rule 15 and the definitions
Rule 15 says: "A person resident in India may make Overseas Investment in an IFSC in India in the manner and subject to the terms and conditions prescribed in Schedule V." The Schedule is headed "".
| Term | Meaning (rule 2(1)) |
|---|---|
| (h) Foreign entity | An entity formed, registered or incorporated outside India, "including International Financial Services Centre", that has limited liability |
| (i) Host country or host jurisdiction | The country or jurisdiction, including the IFSC, where the foreign entity is formed, registered or incorporated |
| (k) IFSC | The meaning in clause (g) of section 3 of the International Financial Services Centres Authority Act, 2019 |
So an entity in an IFSC can be a "foreign entity" and the IFSC a "host jurisdiction". See our article on ODI, OPI, financial commitment and control. Rule 4(a) takes out of the Rules and the Regulations "any investment made outside India by a financial institution in an IFSC"; "financial institution" has the meaning in the 2019 Act. So that case is outside Schedule V altogether; see our article on scope, administration and exclusions.
Paragraph 1(1): the basic permission
"Subject to the provisions of these rules and the Foreign Exchange Management (Overseas Investment) Regulations, 2022, a person resident in India may make Overseas Investment in an IFSC in India within the limits provided in these rules." The limits are those in Schedules I to IV, such as the financial commitment limit in our article on Schedule I, paragraph 3.
Paragraph 1(2): the manner, and four provisos
A person resident in India may make Overseas Investment in an IFSC "in the manner as laid down in Schedule I or Schedule II or Schedule III or Schedule IV", provided that:
| Proviso | Rule |
|---|---|
| (i) | In the case of an ODI made in an IFSC, the approval by the financial services regulator concerned, wherever applicable, shall be decided within forty-five days from the date of application complete in all respects, failing which it shall be deemed to be approved |
| (ii) | An Indian entity not engaged in financial services activity in India, making ODI in a foreign entity directly or indirectly engaged in financial services activity, except banking or insurance, who does not meet the net profit condition as required under the Rules, may make ODI in an IFSC |
| (iii) | A person resident in India may make contribution to an investment fund or vehicle set up in an IFSC as OPI |
| (iv) | A resident individual may make ODI in a foreign entity, including an entity engaged in financial services activity (except in banking and insurance), in an IFSC if such entity does not have a subsidiary or step down subsidiary outside the IFSC where the resident individual has control in the foreign entity |
Proviso (i): forty-five days
The deemed approval applies to the approval "by the financial services regulator concerned, wherever applicable". It runs from the date of an application "complete in all respects". The Rules do not name the regulator or say who is to count the days. Financial service regulator is defined in rule 2(1)(g). The Master Direction - Overseas Investment, updated as on April 01, 2026, repeats the 45 days in paragraph 21(7) for an ODI by a financial services entity in an IFSC.
Proviso (ii): net profit relief
The net profit condition is the three-year test in paragraph 2(2) of Schedule I; see our article on ODI in financial services. The proviso lets such an entity invest in an IFSC without meeting it, but only for financial services other than banking or insurance.
Proviso (iii): funds and vehicles
A contribution to an investment fund or vehicle set up in an IFSC is OPI. The Master Direction (paragraphs 1(ix)(e) and 24(1)) states that a person resident in India, being an Indian entity or a resident individual, may invest (including sponsor contribution) in units or any other instrument issued by an investment fund or vehicle set up in an IFSC as OPI, so that unlisted Indian entities, in addition to listed Indian companies and resident individuals, can make such investment. Compare the OPI route for an unlisted entity in Schedule II, explained in our article on overseas portfolio investment by an Indian entity.
Proviso (iv): resident individuals
The ordinary rule for a resident individual, in Schedule III, allows ODI in an operating foreign entity not engaged in financial services and without a subsidiary; see our article on overseas investment by resident individuals. The proviso relaxes both for an IFSC entity, but excludes banking and insurance and keeps a limit: no subsidiary or step down subsidiary outside the IFSC where the individual has control. The Master Direction (paragraph 24(2)) says the restriction of ODI only in an operating foreign entity, and the bar on financial services, do not apply to an investment in an IFSC; that the foreign entity in an IFSC may have a subsidiary in the IFSC and may have a subsidiary outside it where the individual does not have control; and that an individual who has made ODI without control shall not acquire control in a foreign entity that later acquires or sets up a subsidiary outside India. These are the Reserve Bank's statements.
Paragraph 1(3): recognised stock exchange
"A recognised stock exchange in the IFSC shall be treated as a recognised stock exchange outside India for the purpose of these rules." This matters for the "listed" tests: a listed foreign entity (rule 2(1)(m)) is one listed on a recognised stock exchange outside India, which includes one in the IFSC under this paragraph.
A worked example
Quarry Trading Private Limited, an Indian company that is not in financial services and has not posted net profits in three years, wants to buy a stake in a securities broking company in an IFSC. Ordinarily the three-year profit condition would stop it. Proviso (ii) lets it make the ODI in an IFSC, because the activity is financial services other than banking or insurance. The regulator's approval, if applicable, is deemed given if not decided within forty-five days of a complete application. The names are invented.
Need help with an IFSC investment?
An IFSC route changes the profit test, the approval clock and the choice between ODI and OPI, and each change has to be matched with the right form. Our overseas direct investment reporting team can set out the route and file for the investment.
Key takeaways
- Rule 15 and Schedule V let a resident invest in an IFSC in the manner of Schedules I to IV, within their limits.
- Regulator approval for ODI in an IFSC is deemed after forty-five days from a complete application.
- Entities failing the net profit test may still make ODI in an IFSC, not for banking or insurance.
- Contributions to IFSC investment funds or vehicles are OPI.
- A resident individual may make ODI in an IFSC entity, including financial services (not banking or insurance), if it has no subsidiary outside the IFSC where the individual has control.
Read next
- ODI in financial services: Schedule I, paragraph 2
- Overseas investment by resident individuals: Schedule III
- Funds, IFSC and immovable property abroad: paragraphs 20 and 23 to 25 of the Master Direction
- Overseas direct investment under FEMA
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.