What is a step-down subsidiary in an ODI structure?

A step-down subsidiary is an overseas entity held by an Indian company indirectly — through another overseas entity that the Indian parent already invests in under the ODI route. The Indian parent therefore has both a first-level overseas investment and one or more downstream layers.

Why does a step-down subsidiary review matter?

Each layer of an ODI structure carries its own reporting and compliance touchpoints — APR coverage for every JV/WOS in the chain, downstream investment notifications, FEMA and OI Rules requirements, and exposure to round-tripping and indirect-transfer scrutiny. A periodic review identifies gaps before regulators raise queries.

What does your review cover?

We map the full overseas structure, reconcile Form ODI history, APR filings, FLA Returns and downstream notifications, flag round-tripping and indirect-transfer risk, review valuation and inter-company pricing exposure, and prepare a prioritised remediation roadmap.

When should we do a step-down subsidiary review?

At least once a year alongside APR preparation, before any new downstream investment or disinvestment, when restructuring the overseas group, and ahead of any external diligence — investor, lender or acquirer.

ODI • Step-Down Subsidiary Review

Relevant for:For SMEs For Foreign Companies

Step-Down Subsidiary Review (ODI)

A step-down subsidiary is an overseas entity held indirectly by an Indian company through another overseas entity it already invests in under the ODI route. Layered structures multiply APR, FEMA/OI Rules, round-tripping and indirect-transfer risk — our review maps the full chain and gives you a clear remediation roadmap.

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What's Included

Mapping of the full overseas structure — entities, shareholding, funding flows

Form ODI history reconciliation across all layers

APR coverage check for every JV / WOS in the chain

FLA Return and downstream investment notification review

Round-tripping and indirect-transfer risk assessment

Valuation and inter-company pricing exposure review (incl. transfer pricing)

Risk register with severity rating

Prioritised remediation roadmap and timeline

Our Process

STEP 1

Information request

Collect ODI filings, APRs, FLA returns, valuation reports and group structure.

Week 1

STEP 2

Structure mapping

Build the full ODI / step-down chart with shareholding and funding flows.

Week 1–2

STEP 3

Compliance review

Test APR coverage, downstream notifications, FLA and supporting documentation.

Week 2

STEP 4

Risk assessment

Flag round-tripping, indirect-transfer, valuation and transfer pricing exposure.

Week 2–3

STEP 5

Report & roadmap

Deliver findings, risk register and prioritised remediation roadmap.

Week 3

Documents Required

Group structure chart and shareholding details for all overseas entities
Form ODI submissions (Part I / II / III) for each layer
Latest APRs for every overseas JV / WOS
Most recent FLA Return
Valuation reports and inter-company agreements

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Frequently Asked Questions

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Scope of services and important information

This page describes services offered by RTA & Associates, Chartered Accountants. It is published for general information and does not constitute tax, legal, financial or investment advice, nor an offer or solicitation to provide services in any jurisdiction where we are not qualified to do so.

Any engagement is governed by a separate written engagement letter, which sets out the scope of work, the deliverables, the fees and the limits of our responsibility. Nothing on this page forms part of that engagement or varies its terms.

Descriptions of timelines, processes, costs and outcomes are indicative and depend on your specific circumstances and on third parties — regulators, exchanges, banks and counterparties — whose timelines we do not control. Statutory and regulatory requirements change; the current position should be confirmed before you act.

We are Chartered Accountants. Where a matter requires legal advice, advice on the law of a country other than India, or a regulated investment recommendation, we will say so and you should take advice from an appropriately qualified and licensed adviser in the relevant field and jurisdiction.