ODI Rules for a Saudi Subsidiary from India

The ODI rules for setting up a subsidiary in Saudi Arabia are Indian rules, not Saudi ones. When an Indian company puts money into a company it owns abroad, the Reserve Bank of India (RBI) overseas investment framework applies, and your bank takes part in the process. This guide is for Indian founders and finance teams. It explains what to consider before and after the money leaves India, and how those steps sit beside the Saudi steps. It is a process explainer, not foreign-exchange advice.

Key takeaways

Official: an Indian company generally files a form with its bank, called Form FC, on or before its first investment, and receives a Unique Identification Number (UIN). Do this before money leaves India.

An investment limit exists on the automatic route. We do not state it, because we could not read the rule that sets it. A chartered accountant (CA) or company secretary (CS) must confirm it against the current rules.

Official: after the money is sent, reports must be filed, and a missed report can block further remittances.

Many figures online come from commentary pages and disagree. We mark every point as official or unverified.

Apex Arabia handles the Saudi side. We do not give foreign-exchange advice and we do not file Indian returns.

Reviewed by: not yet reviewed (draft, waiting for a named Indian chartered accountant or company secretary with foreign-exchange experience) · Last checked: 14 October 2026

Note: “Official” means we read the point on an RBI page on 14 October 2026. The RBI rules documents and the Form FC file could not be opened, so anything that depends on them is second-hand and tagged “(verify)”. Rules change, so confirm every point with your adviser and bank before you act. Indian income tax and transfer pricing are a separate topic and are not covered here. For the Saudi side, see our guide to setting up a business in Saudi Arabia from India.

ODI rules for setting up a subsidiary in Saudi Arabia: the short answer

Overseas direct investment (ODI) is the older Indian term for investing in a company abroad. The framework notified on 22 August 2022 calls it “overseas investment”. Older articles still say “ODI”.

Official: the framework has three documents. The Overseas Investment Rules come from the Central Government. The Regulations and the Directions come from the RBI, and the Directions are addressed to banks.

An Indian company planning a Saudi subsidiary generally needs to consider three things:

The investment route. Whether the plan fits the automatic route, which does not need RBI’s prior approval, or needs approval. A limit applies on the automatic route (see “How much can you invest?”).
The reporting steps. A form before the first remittance, evidence after it, and yearly reports after that.
The bank’s role. The money goes through an Authorised Dealer Category-I bank (AD bank), which receives your form and allows the remittance.

Your CA or CS with foreign-exchange (FEMA) experience owns these decisions. Their name belongs on them, not ours.

How the framework describes the investment

Official: three RBI terms decide how your plan is treated.

Foreign entity. An entity formed or registered outside India, with limited liability. Some strategic sectors are treated differently. Whether your chosen Saudi company type meets this test is a question for your CA.
Control. This includes the right to appoint a majority of directors, or holding 10% or more of the voting rights (verify).
Financial commitment. This is wider than shares. It covers equity, debt other than portfolio investment, and guarantees given to the foreign entity.

The RBI also issued a Master Direction on Overseas Investment dated 24 July 2024, which its page says was updated as on 1 April 2026. The 2022 Directions page is still live with the same paragraph numbers. Which one your CA cites is worth confirming (verify). The Overseas Investment Rules and Regulations themselves could not be read, so their schedules are second-hand (verify).

Who can invest

Indian companies. Commentary says an Indian company can generally set up a wholly owned foreign subsidiary through its AD bank on the automatic route (verify). The RBI pages we read do not say this in plain form, so treat the route as unconfirmed until your CA confirms it.

Resident individuals. Official: the RBI text includes a reporting rule for resident individuals, so individual investment exists. Unverified: commentary ties it to the Liberalised Remittance Scheme (LRS), with a yearly cap and a split between direct and portfolio investment (verify). A founder who wants to hold a Saudi company personally, not through an Indian company, should ask a CA first.

No-objection certificate and approval. Two official points matter early.

If your bank account is classed as a non-performing asset, you are a wilful defaulter, or you are under investigation, you need a no-objection certificate from the lender, regulator or agency before a financial commitment.
A financial commitment above USD 1 billion in a financial year needs RBI’s prior approval, even inside the automatic limit.

How much can you invest?

A limit exists. We do not state a percentage, because we could not confirm it.

Official: the RBI pages say financial commitment must stay within “the overall limit provided in Schedule I” of the Overseas Investment Rules. They do not give the number. Commentary pages give figures, but they differ on what the limit covers and on which balance sheet the net worth is taken from (verify). Treat any number you see online as unconfirmed. Ask your CA or CS to read Schedule I of the current Rules, give you the limit and its net worth basis in writing, and ask your AD bank to accept that calculation.

Other official points that affect how you fund the subsidiary:

Point	What the RBI pages say	Status
Loans and guarantees	The Indian entity may lend only if it is eligible for ODI, has made ODI in that entity and has control. No direct loan to a step-down subsidiary.	Official
Pre-incorporation expenses	A cap of USD 100,000 per foreign entity.	Official, scope (verify)
Cash and branches	No cash for the investment, and no remittance to an overseas branch for investment.	Official

Steps before you send money to Saudi Arabia

This is a typical order of work, not a fixed legal sequence. Your CA must confirm the order (verify).

Settle the Saudi structure. Decide the activity and whether a subsidiary or branch fits, using MISA licensing types.
Check eligibility and the limit. Your CA or CS confirms you qualify, the amount is within the limit, and no no-objection condition applies.
Pass the Indian board resolution. Our typical Saudi document list also includes a board resolution for a subsidiary, so your CS can confirm whether one resolution serves both.
Choose your AD bank and ask for its checklist.
File Form FC with the AD bank. Official: this is due on or before the initial investment, and the bank issues a UIN.
Remit through the bank. Official: the bank may allow the remittance only on Form FC.
Complete the Saudi steps. Parent-company documents, MISA investment registration (MISA license), name reservation, CR and a Saudi bank account, in the order your Saudi adviser sets.
Keep proof of investment. Official: see the six-month rule below.

Where the Indian and Saudi steps meet

This is the real gap. The Indian rules want Form FC and the UIN before the first remittance, and one commentary page says to file before the foreign company exists (verify). The Saudi side needs parent documents, then MISA registration, then the CR and a bank account before capital can be deposited. We found no source that explains how the two timelines line up. Ask your CA and bank:

Can Form FC be filed before the Saudi company exists, and what proof of the foreign entity does the bank accept?
When does the first remittance go: before MISA approval, after the CR, or after the Saudi bank account is open?
If Saudi incorporation runs late, does the six-month evidence period become a risk?

On an earlier pass we read the MISA frequently asked questions, which list the foreign Commercial Registration authenticated by the Saudi Embassy and financial statements for the last fiscal year (verify). Check the current MISA list for your activity before you collect papers.

Reports after the money is sent

Report or step	What it is	Deadline	Status
Evidence of investment	Share certificate or equivalent proof	Within six months of the remittance, or the funds must be brought back within that period	Official
Annual performance report (APR)	A yearly report on the foreign entity, certified by a CA where statutory audit does not apply. Joint investors may file jointly or authorize one filer.	No date on any RBI page we read. Commentary gives one.	Report official, date (verify)
Foreign liabilities and assets (FLA) return	A yearly return named in the RBI late-fee table	Date from commentary only	Unverified (verify)
Disinvestment and restructuring reports	Reports when you sell or restructure the holding	A fixed window per commentary	Unverified (verify)
Repatriation of dues	Bringing dues from the subsidiary back to India	A period per commentary, not on the RBI pages we read	Unverified (verify)

Ask your CA for the dated list for your case. Who files the APR is also unclear: commentary says the Indian party with the highest stake, while the RBI text allows joint or authorized filing (verify).

Late filing and what it blocks

Official: a late submission fee (LSF) applies to late reports. For returns without a money flow, including the APR, FLA return and evidence of investment, the flat fee is INR 7,500. For flow returns such as Form FC, the fee also depends on the amount involved. A delay can be regularised for up to three years from the due date, and an unpaid fee advice lapses after 30 days. Confirm current amounts with your bank.

Official: until a reporting delay is regularised, no further remittance or financial commitment is allowed, and penal action under the Foreign Exchange Management Act (FEMA) is possible. Penalty figures online came from search summaries, so we do not repeat them (verify).

What is restricted

Layers. Official: no more than two layers of subsidiaries, and no new layer on a structure that already has two or more.
Activities and jurisdictions. Official: banks may not facilitate dealings in activities listed under rule 19(1) of the Rules, or in jurisdictions advised under rule 9(2). We could not read either list, so we do not know whether any Saudi sector is affected (verify).

The Indian text is written around a “foreign entity” with limited liability. How a Saudi branch of an Indian company is reported is not something we confirmed (verify). Choose between branch and subsidiary on Saudi grounds first, then ask your CA how the Indian reports change.

Questions to ask your CA or CS

What is the automatic-route limit in Schedule I today, and on which net worth figure is it based?
Does our plan fit the automatic route, or is approval needed?
Which form name does the bank use now: Form FC or the older Form ODI wording?
Which reports fall due in the first two years, with dates, and who signs and files them?
Do any no-objection conditions, restricted-activity lists or layer limits apply to us?

What Apex Arabia does and does not do

Apex Arabia covers the Saudi side. Our service handles incorporation from documents through the MISA license, name reservation, CR and Articles of Association (AoA), then post-incorporation steps such as VAT, Qiwa, GOSI and the General Manager visa.

Apex Arabia does not give foreign-exchange advice. We do not file Form FC, the APR or any other Indian return. Those steps sit with your CA, CS and AD bank. Our fees and exclusions are on the pricing page, and the reasons founders choose the Kingdom are on why Saudi Arabia. We give no Indian adviser or bank fee estimates; the figures we found were unreferenced.

Common mistakes

Sending money before the bank file is complete. Official: Form FC and the UIN come on or before the initial investment. Confirm the order with your bank.
Using a limit from a blog. Commentary figures differ. Get the limit from your CA in writing.
Forgetting the six-month evidence period. If Saudi incorporation runs late, the clock still runs.
Assuming a Saudi consultancy covers Indian filings. Ours does not. Name who owns each Indian step.

Frequently asked questions

Do I need RBI approval to set up a subsidiary in Saudi Arabia from India?

It depends on your case, and we cannot confirm it for you. Commentary says a wholly owned subsidiary can generally use the automatic route through an AD bank, within a limit (verify). Official: a financial commitment above USD 1 billion in a financial year needs prior approval, and some borrower conditions need a no-objection certificate. Your CA or CS with FEMA experience should confirm the route against the current Overseas Investment Rules before you file anything.

How much can an Indian company invest in a Saudi subsidiary?

A limit exists under Schedule I of the Overseas Investment Rules. The RBI pages we read point to it without stating a figure. We do not repeat the percentages that appear online, because commentary pages disagree on what is counted and which balance sheet is used (verify). Ask your CA to read Schedule I, calculate the limit in writing and confirm it with your AD bank before you plan the amount.

What is Form FC?

Official: Form FC is submitted to your AD bank on or before the initial investment, and the bank issues a UIN. The bank may allow the remittance only on this form. Older articles call it “Form ODI”, and the RBI fee table still shows ODI part names for some returns, so ask your bank which name it uses today (verify). We could not open the form itself, so its contents are unverified.

What happens if I miss a report?

Official: a late submission fee applies, and no further remittance or financial commitment is allowed until the delay is regularised. FEMA penal action is possible if a report is neither filed nor regularised. Fee amounts depend on the type of return. Your CA should keep a dated list of reports from day one and tell you what is due before each date arrives.

Next step

Once your CA has confirmed the Indian side, we can map the Saudi steps against your timeline. Talk to our experts.

This guide is for general information and is not legal, tax or foreign-exchange advice. Requirements vary by activity and can change; confirm current rules with your chartered accountant or company secretary, your bank and the relevant authority, or speak to our team.

Updated: 19 October 2026. Reviewed by: not yet reviewed.

Sources: RBI Master Direction on Overseas Investment; RBI Overseas Investment Directions, 2022; RBI circular of 22 August 2022; MISA; MISA frequently asked questions

ODI rules for setting up a subsidiary in Saudi Arabia: the Indian-side guide