Foreign Investment and EU Trade Law Firm in India

A foreign investment law firm in India for European companies

A European company looking at India usually asks four questions in the same week: can we invest without approval, what kind of Indian entity should we set up, what must we report once the money arrives, and what happens if our Indian partner does not perform? A foreign investment and EU trade law firm in India answers all four, and the answers depend on each other. The sector decides the route; the route and your revenue plans decide the structure; the structure decides the filings; and the contracts decide where a dispute will be fought.

Manuja Law Partners is a firm of advocates in Delhi, with its principal chamber at the Delhi High Court. Our India Desk works with foreign and EU companies on the regulatory steps of entering India and on the commercial contracts and disputes that follow. We call ourselves a firm that can serve you well, not a “top” foreign investment firm, because no verifiable ranking exists; what we can show you is the plan, the provisions it rests on and the deadlines it sets.

Speak to our advocates: call or WhatsApp 99115 44811, or write to manujalawyers@gmail.com with the sector, the structure you have in mind and your timeline.

FDI in India: automatic route or government route

Foreign direct investment in India is governed by the Foreign Exchange Management Act, 1999, the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, the reporting regulations made by the Reserve Bank of India, and the consolidated FDI policy of the Department for Promotion of Industry and Internal Trade (DPIIT). The RBI’s Master Direction on Foreign Investment in India gathers the operational rules in one place.

• Automatic route. The investment does not require prior approval from the Central Government. Most manufacturing and services sectors are open under this route up to 100 per cent, but many carry a sectoral cap or conditions.
• Government route. The investment requires prior approval. The application is made on the Foreign Investment Facilitation Portal of DPIIT and is decided by the ministry responsible for the sector.
• Land-border rule. An entity of a country sharing a land border with India, or an investment whose beneficial owner is situated in or is a citizen of such a country, may invest only under the government route. A later change in beneficial ownership can bring an existing investment within this rule, which matters to European groups with shareholders or funds from those countries.
• Prohibited sectors. Lottery business, gambling and betting, chit funds, Nidhi companies, trading in transferable development rights, real estate business or construction of farm houses, manufacture of cigars and cigarettes of tobacco or its substitutes, and activities not open to private investment such as atomic energy.

Before any money moves, we confirm the sector classification, the cap, any conditions attached to it, and whether anyone in the ownership chain triggers the land-border rule. A wrong answer here is expensive to undo, because the reporting forms ask the same questions and the bank will check them.

Choosing how to enter India: subsidiary, joint venture, LLP, branch or liaison office

Structure	What it can do	Points to weigh
Wholly owned subsidiary (private limited company)	Carry on business in India like any Indian company, within the FDI rules for its sector	Most common choice for revenue in India; a separate Indian company with its own board, accounts and filings; at least one director must meet the Companies Act residence test
Joint venture company with an Indian partner	Same as a subsidiary, with shared ownership	Sectoral caps and pricing rules apply to every share issue and transfer; deadlock and exit terms decide how a disagreement ends
Limited liability partnership	Carry on business, but foreign investment in an LLP is allowed only in sectors where the rules permit it	Narrower than a company for foreign investors; check the sector first
Branch office	Only the activities the RBI permits for a branch, such as representing the parent and export or import	Parent needs a profit-making record in the preceding five financial years and a net worth of at least USD 100,000
Liaison office	Represent the parent and act as a communication channel; it cannot earn income in India	Parent needs a profit-making record in the preceding three financial years and a net worth of at least USD 50,000; approval is generally for three years

A branch or liaison office is applied for through an authorised dealer (AD) Category-I bank under the RBI’s master direction on the establishment of branch, liaison and project offices. Prior RBI approval is needed where the applicant’s principal business is in defence, telecom, private security or information and broadcasting, and in certain other cases, including applicants from countries that share a land border with India. Our guide to setting up in India as a foreign business compares the four routes in more detail.

If a joint venture is your route, we advise on the FEMA conditions that attach to it and on its dispute-resolution and exit clauses, working alongside your transaction counsel; we do not draft joint-venture or share-purchase agreements ourselves.

FEMA and RBI filings after the money arrives

Most enforcement trouble for foreign-owned companies in India comes from missed reporting, not from the investment itself. The main obligations are:

1. Receive the money through banking channels. The consideration comes in as an inward remittance or from a permitted account, through the company’s AD bank.
2. Issue the shares within sixty days. If equity instruments are not issued within sixty days of receiving the consideration, the money must be refunded within fifteen days after those sixty days end.
3. Price the shares correctly. For an unlisted company, shares issued to a foreign investor may not be priced below fair value worked out by an internationally accepted pricing method and certified by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant. The valuation certificate must not be more than ninety days old on the date of investment.
4. File Form FC-GPR within thirty days of issue. The Indian company reports the issue of equity instruments to the foreign investor on the RBI’s FIRMS portal through the AD bank, not later than thirty days from the date of issue.
5. Report transfers in Form FC-TRS. A transfer of shares between a resident and a non-resident is reported in Form FC-TRS, and the onus is on the resident party.
6. File the FLA return by 15 July every year. Every Indian company that has received FDI, and every LLP that has received foreign capital contribution, in the previous year including the current year, files the Annual Return on Foreign Liabilities and Assets on or before 15 July.
7. LLPs: Form LLP (I) within thirty days. An LLP receiving foreign capital contribution reports it in Form LLP (I) within thirty days of receiving the money.

A missed deadline is usually cured by paying a late submission fee within the time allowed or by compounding before the RBI. We check an existing Indian company’s filings before a new round of investment or a sale of shares, because the buyer’s lawyers will.

EU trade: cross-border contracts that hold up in India

Most European companies trade with India before they invest in it: they sell to an Indian distributor, buy from an Indian supplier, license technology or provide services. The contract decides what you can do when payment stops or goods are rejected, so we draft and review these contracts with Indian enforcement in mind:

• Distribution, agency and supply agreements with Indian counterparties: territory, exclusivity, minimum purchase, termination and what happens to stock and customer data afterwards.
• Service and licensing agreements: scope, acceptance, payment in foreign currency through banking channels, and limits of liability that an Indian court will respect.
• Payment security: advance payment, letters of credit, performance security issued by a bank, and the evidence trail that turns an unpaid invoice into a quick claim.
• Stamp duty and execution: an agreement executed or brought into India may need to be stamped before an Indian court or tribunal will act on it. We flag this before signature, not when the claim is filed.

India and the European Union have been negotiating a free trade agreement and a separate investment protection agreement. Tariff and investment-protection terms apply only once an agreement is in force, so we advise on the rules that apply on the date of your transaction and tell you when a treaty provision is relevant to your goods or investment.

Arbitration clauses that work against an Indian party

An arbitration clause is the part of a cross-border contract most often copied from a template and most often litigated. A clause that will work against an Indian counterparty states:

• The seat, not only the “venue”. The seat decides which country’s courts supervise the arbitration and set aside an award.
• The rules and the institution, for example a European or Asian institution or ad hoc arbitration, and the appointing authority if the parties cannot agree on an arbitrator.
• The number of arbitrators, the language and the governing law of the contract, stated separately.
• Interim relief. Indian courts can grant interim measures in support of an international commercial arbitration seated outside India, unless the parties have agreed otherwise, so do not exclude Indian courts by accident.

A foreign award is enforced in India under Part II of the Arbitration and Conciliation Act, 1996 (the New York Convention route) if the country of the seat is notified by India as a reciprocating country for this purpose. A foreign court judgment is a different matter: unless the country is a notified reciprocating territory, the judgment has to be sued upon afresh in India. We explain both routes in our guide to enforcing a foreign judgment or arbitral award in India. If a dispute arises, our advocates act in the arbitration and in the Delhi High Court applications around it; see our corporate law firm in Delhi and commercial dispute pages.

Buying or leasing land for an Indian project

A foreign-owned Indian company that needs a factory, warehouse or office site must check title before it pays. Agricultural land, land under acquisition proceedings and leasehold land from a development authority each carry their own risks. Our land acquisition and land due diligence page sets out the revenue-record and acquisition checks we carry out before a purchase or lease.

How we work with a foreign client

1. Introductory call. We learn the business, the sector, the intended structure, any shareholders from countries sharing a land border with India, and the timeline.
2. Written route and structure note. The entry route, the sectoral cap and conditions, the structure we recommend and the filings it creates, each with the provision it rests on.
3. Fee proposal in writing, before work begins.
4. Documents and filings. We prepare and review the board and shareholder documents for the FEMA steps, work with your chartered accountant on the valuation and with the AD bank on the reporting, and keep a compliance calendar of every FEMA deadline.
5. Contracts. We draft or review the commercial contracts and their dispute clauses.
6. Disputes. If something goes wrong, the same team advises on notice, mediation, arbitration or suit, and appears in the Indian forum.

What we do not do

We do not advise on tax, GST or transfer pricing, we do not draft mergers and acquisitions, share-purchase or fund-raising documents, and we do not handle trademark registration. When a client needs one of these, we say so at the first call and work alongside the adviser the client chooses.

Documents to send before the first call

• The group structure chart, showing every shareholder of 10 per cent or more and the ultimate beneficial owners
• A short description of the Indian business: products or services, customers, and whether you will invoice in India
• Any term sheet, draft agreement or letter from an Indian partner
• For an existing Indian company: its share register, the FC-GPR and FC-TRS acknowledgements and the last FLA return

Talk to our India Desk

Call or WhatsApp 99115 44811, or write to manujalawyers@gmail.com. Our principal chamber is at S-307, 3rd Floor, Delhi High Court, Pragati Vihar, New Delhi 110003. We meet foreign clients by video at European business hours and in person in Delhi.

This page gives general information on the law as it stands on the date shown and is not advice on a particular investment. FEMA rules change by notification, so the current position is checked for each matter. It does not promise any outcome.