FAQ: Treasury Fx India

An India subsidiary with import/export exposure can hedge using RBI-permitted instruments like forward contracts, options, and natural hedging (matching foreign currency receivables against payables) — the right mix depends on the size and predictability of the exposure.  Read full answer →

Cash pooling and centralized global treasury structures common in other jurisdictions are constrained in India by FEMA — India doesn't freely permit cross-border automatic cash sweeps the way some regional treasury centres do, so most MNCs run day-to-day India treasury locally with a structured, RBI-compliant repatriation cadence instead.  Read full answer →

A loan from a foreign parent to its India subsidiary is typically structured and reported as an External Commercial Borrowing, requiring registration with the RBI through an authorised dealer bank and periodic reporting for the life of the loan — informal or undocumented intercompany loans create real FEMA compliance risk.  Read full answer →

Beyond dividends, common repatriation routes include royalty or technical/management fee payments for genuine services or IP use, buyback of shares, capital reduction, and intercompany loan repayments — each has its own tax withholding rate, transfer pricing scrutiny, and RBI reporting requirement.  Read full answer →

An India subsidiary can hold a foreign currency account only in specific permitted situations, such as an Exchange Earners' Foreign Currency (EEFC) account for exporters — general-purpose foreign currency accounts for routine business use are not freely available the way a rupee account is.  Read full answer →

External Commercial Borrowing lets an India subsidiary borrow directly from its foreign parent or other overseas lenders, subject to RBI limits on end-use, minimum average maturity, and an all-in-cost ceiling — it's often cheaper than local rupee borrowing but comes with its own compliance track.  Read full answer →