A Russian parent funds an Indian subsidiary through equity (the usual route), compulsorily convertible preference shares, or an external commercial borrowing that meets RBI conditions. Money goes through an authorised dealer bank. Shares must be allotted within 60 days of receipt, Form FC-GPR is due within 30 days of allotment, and the annual FLA return is due by 15 July. A sale of shares to a non-resident cannot be below fair value, and a purchase from a non-resident cannot be above it. For Russian parents the extra step is the route: the remitting bank and any intermediary must be acceptable to the Indian bank, and the Russian outbound clearance must be in place first.
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Key facts
| Routes | Equity; compulsorily convertible preference shares; ECB; permitted loans |
|---|---|
| Allotment | Within 60 days of receipt of funds, otherwise refund or regularise |
| Reporting | Form FC-GPR within 30 days of allotment; FC-TRS for transfers; FLA return by 15 July |
| Pricing | Issue of shares to a non-resident: not below fair value. Transfer from resident to non-resident: not below fair value. From non-resident to resident: not above fair value |
| ECB | Registered with the RBI; rules on lender eligibility, tenor, cost and end use |
| Banking | Funds should come from the Russian parent's own account through a bank the Indian bank accepts |
| Russian clearance | Bank of Russia threshold and approval before remitting |
| Currency | Funds can arrive in a permitted foreign currency and are converted to rupees |
Equity and preference shares
- Equity shares are the simplest instrument and are fully repatriable as dividends.
- Compulsorily convertible preference shares count as equity for FDI. Optionally convertible or redeemable preference shares are treated as debt under the rules.
- Price at or above fair value, supported by a valuation certificate from a chartered accountant or merchant banker, for an issue to a non-resident.
- ₹10 lakh is about RUB 845,000 at an indicative ₹1.18 per rouble (27 October 2026 market rate; check the live rate before remitting).
Receiving and reporting the funds
- Clear the Russian side and agree the route with the Indian bank. See sanctions and payments.
- The Russian parent remits through its bank with clear remittance purpose and the Indian company's details.
- The Indian bank issues a foreign inward remittance certificate and KYC of the remitter.
- Allot shares within 60 days; hold the board meeting and issue share certificates.
- File Form FC-GPR on the RBI FIRMS portal within 30 days of allotment with the valuation, the certificate and the bank's KYC.
- File the annual FLA return by 15 July for the previous financial year.
Loans and external commercial borrowing
| Item | Position |
|---|---|
| Lender | A recognised non-resident lender; a Russian group company can lend if the lender conditions are met and sanctions checks are clear |
| Registration | Loan Registration Number from the RBI through the authorised dealer bank |
| End use | Restricted for some purposes such as real estate and investing in capital markets |
| Cost and tenor | Subject to all-in cost ceilings and minimum average maturity |
| Withholding tax | Interest is subject to Indian Withholding Tax; the treaty rate is 10% with the paperwork |
| Transfer pricing | Interest on related-party loans must be at arm's length |
Transfers of shares
- A sale of shares by a resident to a Russian investor cannot be below fair value; a purchase from a non-resident cannot be above it.
- Report on Form FC-TRS within 60 days, with the bank and valuation certificate.
- Deferred consideration and escrow are allowed within RBI limits.
Common errors
- Late allotment or late FC-GPR, which leads to compounding applications and penalties.
- Sending money through a bank or intermediary the Indian bank will not accept, so that funds are stuck or returned.
- Pricing below fair value on an issue to the Russian parent.
- Routing the money through a third-party account or an unrelated entity.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Federal Tax Service (Russia), Bank of Russia and the Ministry of External Affairs (India).
Frequently asked questions
How can a Russian company fund its Indian subsidiary?
By equity, compulsorily convertible preference shares or a compliant external commercial borrowing, always through a bank.
How soon must shares be allotted?
Within 60 days of receiving the money.
When is FC-GPR due?
Within 30 days of allotment of shares.
What is the FLA return?
An annual return on foreign liabilities and assets filed by 15 July with the RBI.
Is there a pricing rule?
Yes. An issue or sale of shares to a non-resident cannot be below fair value, and a purchase from a non-resident cannot be above it.
Can money come from any Russian bank?
It should come from the parent's own account through a bank the Indian bank accepts. Sanctions and correspondent banking constraints can limit the choice.
Can a Russian group company lend to the Indian subsidiary?
Yes if it meets the external commercial borrowing conditions, passes sanctions screening and the loan is priced at arm's length with Withholding Tax on interest.
Can money come from a third party?
No. It should come from the Russian parent's own account to avoid KYC and reporting problems.
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Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Russian rules change often; confirm current requirements before acting.