Laws on Indirect Foreign Investments in India: Lawyers Advice for Foreign Investors for their Investments in India

When an Indian company having foreign investment is owned or controlled by a foreign entity, invests in another Indian company then such investment is called Indirect Foreign Investment or Downstream Investment. Foreign entities are permitted to invest in India either directly by way of Foreign Direct Investment (FDI) or indirectly by Indirect Foreign Investment. Such Indirect Foreign Investment can be carried out as an alternative to Foreign Direct Investment (FDI). Such investments must comply with the Foreign Exchange Management Act (FEMA) and the Securities and Exchange Board of India (SEBI) guidelines and must notify the Reserve Bank of India (RBI).