If the Indian company has issued the shares to non-resident entities
under the FDI scheme in India, then it should be reported under the Foreign
Direct Investment in India (Liabilities), Section III of the return. If the
non-resident entity holds the 10 per cent or more equity plus participating
preference shares together, in the reporting Indian company, then it should be
reported under 1.b FDI of section III. However, if non-resident entity holds
less than 10 per cent of the equity plus participating preference shares
capital of reporting Indian company, then it should be reported under 2.b DI of
section III. In both the cases, the non-resident entity is called as the Direct
Investor (DI) while the reporting Indian company is called as Direct Investment
Enterprise (DIE).
If the reporting Indian company also holds the equity shares in its DI
company abroad and if its shareholding is less than 10 per cent of equity
capital of DI company, then it is called as reverse investment and same should
be reported under item 1.2 (claims on direct investor) of the respective
blocks, i.e. 1.b FDI and 2.b DI of section III.
