Overseas Investment (ODI) Valuation in India
By CA V. Viswanathan, FCA, ACS, CFE, IBBI Registered Valuer (IBBI/RV/03/2019/12333). V Viswanathan & Associates, Chartered Accountants, FRN 013713S. Law stated as at 13 November 2026.
An overseas investment valuation supports the price at which a person resident in India acquires or transfers shares of a foreign entity. Rule 16 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 requires that price to be at arm's length, and the authorised dealer bank checks it against a valuation made by an internationally accepted pricing methodology before it allows the remittance. On restructuring a loss-making foreign entity, Rule 18 requires a certificate from a registered valuer in specified cases. CA V. Viswanathan, IBBI Registered Valuer (IBBI/RV/03/2019/12333), prepares these reports and serves clients across India from Chennai.
What is an overseas investment valuation?
When a person resident in India invests in a foreign entity, or sells that investment, the price has to be at arm's length. Rule 16 of the Foreign Exchange Management (Overseas Investment) Rules, 2022 says so for every issue or transfer of equity capital of a foreign entity between a resident and a non-resident. The authorised dealer bank has to be satisfied of this before it puts the remittance through, taking into account a valuation under an internationally accepted pricing methodology. An overseas investment (ODI) valuation is the report that gives the bank that comfort.
When is the valuation required?
| Transaction | Rule | Valuation |
|---|---|---|
| Subscription to shares of a foreign entity | Rule 16, Overseas Investment Rules, 2022 | Arm's length price; documents as the bank's policy requires |
| Purchase of a foreign entity's shares from a non-resident | Rule 16 | Same |
| Sale or transfer of the investment to a non-resident or a resident | Rule 16 | Same |
| Price approved by a court or tribunal in a merger, demerger, amalgamation or liquidation | Overseas Investment Directions, 2022, paragraph 12 | The bank may not insist on a valuation |
| Price readily available on a recognised stock exchange | Directions, paragraph 12 | The bank may not insist on a valuation |
| Restructuring of the balance sheet of a loss-making foreign entity | Rule 18 | Certificate of the diminution in value, in the cases below |
The Rules do not name who certifies the price under Rule 16. Each bank follows a board-approved policy on the documents it will take, and in practice banks ask for a valuation report from a qualified valuer in India or in the host country. We confirm the bank's requirement before work starts, because it decides the form of the report.
When is a certificate needed on restructuring?
Under Rule 18 an Indian investor may write down its holding in a foreign entity that has been incurring losses, subject to conditions. The diminution in value has to be certified on an arm's length basis where the original investment is more than USD 10 million, or where the diminution is more than 20% of the total value of the outstanding dues towards the Indian investor. The certificate must be dated not more than six months before the transaction.
Who can sign an overseas investment valuation?
| Purpose | Registered Valuer | Merchant Banker | Chartered Accountant |
|---|---|---|---|
| Arm's length price for acquisition or transfer (Rule 16) | Not named by the Rules; accepted subject to the bank's policy | Not named by the Rules; accepted subject to the bank's policy | Not named by the Rules; accepted subject to the bank's policy |
| Diminution in value on restructuring (Rule 18) | Yes. A registered valuer under the Companies Act, 2013 | Not named | Not named in India. A certified public accountant or corresponding valuer registered in the host jurisdiction is accepted |
CA V. Viswanathan is a chartered accountant and an IBBI Registered Valuer for securities or financial assets (IBBI/RV/03/2019/12333). His registration can be checked on the IBBI register of registered valuers. He signs Rule 18 certificates as a registered valuer and Rule 16 reports in the capacity the bank asks for.
How is a foreign entity valued?
- Currency: cash flows are projected and discounted in the currency in which the entity earns them, with a discount rate built for that currency and country.
- Country risk: the cost of equity reflects the risk-free rate, equity risk premium and tax rate of the host country, not India's.
- Method: discounted cash flow for an operating business; net assets for a holding company or a newly formed entity; market multiples from the entity's own region as a cross-check.
- Step-down subsidiaries: each operating entity below the foreign entity is valued, and holding-company costs and debt are brought in at the top.
- A new entity: where the Indian investor subscribes at incorporation and no business exists yet, the report records that the subscription is at face value and why that is arm's length.
Worked example: does the restructuring need a certificate?
Illustrative figures, not real companies. Three Indian investors propose to write down their holdings in loss-making foreign entities.
| Case | Original investment | Diminution as % of total outstanding dues | Certificate under Rule 18? |
|---|---|---|---|
| 1 | USD 12 million | 10% | Yes. The original investment is more than USD 10 million |
| 2 | USD 4 million | 30% | Yes. The diminution is more than 20% of the outstanding dues |
| 3 | USD 4 million | 15% | No. Neither limit is crossed |
In cases 1 and 2 the certificate has to come from a registered valuer under the Companies Act, 2013, or from a corresponding valuer or certified public accountant registered in the host jurisdiction, and has to be dated within six months before the restructuring.
What is reported, and when?
| Report | For | Due |
|---|---|---|
| Form FC | Overseas investment by a resident | On or before the initial remittance, through the authorised dealer bank |
| Annual Performance Report | Each foreign entity | By 31 December every year |
| FLA return | Every Indian company or LLP with foreign investment or overseas investment | By 15 July every year |
What documents are needed?
- Audited financial statements of the foreign entity for three years, or since incorporation, and management accounts to the valuation date
- Projections with assumptions, in the entity's functional currency
- Group structure chart with step-down subsidiaries
- Share subscription or purchase agreement, or the restructuring proposal
- The Indian investor's latest audited balance sheet, and earlier Form FC and Annual Performance Reports
- The authorised dealer bank's checklist for the transaction
What is the process and how long does it take?
- Scoping call, and confirmation of the bank's document requirement.
- Engagement letter with a fixed fee and document list.
- Valuation and draft report, shared with management for factual confirmation.
- Signed report or certificate with UDIN.
- Support with the bank's queries.
Reports are usually issued within 5–7 working days of complete information, and within 15 working days for complex cases. The clock starts when the last document is received, not on the date of engagement.
What does an overseas investment valuation cost?
Our fee for an overseas investment valuation starts from ₹35,000 + 18% GST. The figure depends on the number of instruments or companies to be valued, whether projections exist, and how many laws the same transaction has to satisfy. We quote a fixed fee after a first call and before any work starts. Statutory filing fees, stamp duty and any merchant banker's fee are separate.
Related valuations
Investment into India is governed by different rules: see FEMA valuation certificate for FC-GPR and FC-TRS and our FEMA valuation guide.
Every valuation report we issue, with the law behind it and the person who must sign it, is listed on our valuation services page.
About V Viswanathan & Associates
- Chartered Accountants, FRN 013713S— Practising since 2012 from G-131, Spencer Plaza, Anna Salai, Chennai.
- IBBI Registered Valuer— Securities or financial assets, CA V. Viswanathan (IBBI/RV/03/2019/12333), registered 30 September 2019.
- FCA, ACS, CFE— Member of ICAI since 2012 and Fellow since 2017; company law, tax and forensic accounting in one practice.
- Across India— Serves clients across India from Chennai through video consultations and digitally signed reports.
Frequently Asked Questions
Is a valuation mandatory for overseas direct investment?
The price must be at arm's length under Rule 16 of the Overseas Investment Rules, 2022, and the authorised dealer bank must be satisfied of it, taking into account a valuation under an internationally accepted pricing methodology. In practice banks ask for a valuation report.
Who can issue an ODI valuation report?
Rule 16 does not name a signatory. The documents are set by each bank's board-approved policy, so the bank's requirement should be confirmed first. For a restructuring under Rule 18, the certificate comes from a registered valuer under the Companies Act, 2013 or a corresponding valuer or certified public accountant in the host jurisdiction.
When can a bank dispense with the valuation?
Where the price was approved by a court or tribunal in a merger, demerger, amalgamation or liquidation, or where the price is readily available on a recognised stock exchange (Overseas Investment Directions, 2022, paragraph 12).
How old can a Rule 18 certificate be?
It must be dated not more than six months before the date of the transaction.
Is a valuation needed to incorporate a subsidiary abroad?
There is no business to value at incorporation. The report records that the shares are subscribed at face value and that this is arm's length; the bank's policy decides whether it wants a report at all.
Which form reports an overseas investment?
Form FC, submitted through the authorised dealer bank on or before the initial remittance. Each foreign entity is then covered by an Annual Performance Report by 31 December every year.
Which valuation method is used for a foreign company?
Usually discounted cash flow in the entity's own currency, with a discount rate built for the host country, cross-checked against market multiples from that region. Net assets are used for holding companies and new entities.
How long does an ODI valuation take?
Usually 5–7 working days from complete information, and up to 15 working days where there are several step-down subsidiaries.
Related Guides
FEMA Valuation Certificate for FC-GPR and FC-TRS
The certificate a bank needs before a foreign investment is reported.
Law stated as at 13 November 2026. Official sources: Overseas Investment Directions, 2022 (RBI), Master Direction on Reporting under FEMA (RBI), IBBI register of registered valuers. This page is general information, not advice on a specific transaction.
Overseas Investment Valuation
Tell us the foreign entity and the transaction and we will confirm what your bank needs.