FEMA and Banking for India GCCs: Capital, Forex and Repatriation
Inbound capital, External Commercial Borrowings, foreign currency accounts and dividend repatriation under the Foreign Exchange Management Act.
The Foreign Exchange Management Act, 1999 (FEMA), administered by the Reserve Bank of India (RBI), governs every cross border money movement of an India GCC, capital injection, External Commercial Borrowing, dividend, royalty and management fee.
Foreign Direct Investment (FDI)
Information Technology and Information Technology enabled services are under the automatic route, 100 percent FDI allowed without prior approval. File Form FC-GPR with the RBI within 30 days of share allotment. Reporting on the FIRMS portal.
Equity vs External Commercial Borrowing
Most GCCs are funded through equity infusion in tranches as headcount ramps. External Commercial Borrowing (ECB) is available for working capital but capped (USD 750 million per year automatic route) and subject to all in cost ceilings. Equity is simpler for captive operations.
Exchange Earners Foreign Currency (EEFC)
A GCC earning in foreign currency can hold up to 100 percent of inflows in an EEFC account in United States Dollars, Euros, British Pounds, etc. Useful for natural hedge against rupee volatility on payroll and rent obligations that may be partially in foreign currency.
Dividend repatriation
No regulatory cap on dividend repatriation post 2014 liberalisation. Subject to Tax Deducted at Source at 20 percent (plus surcharge), reduced under Double Taxation Avoidance Agreement (typically 5 to 15 percent). Filing of Form 15CA and 15CB by a Chartered Accountant before remittance.
Authorised Dealer banking
Open accounts with an Authorised Dealer Category 1 bank for all forex transactions. The Big 4 foreign banks (Citi, HSBC, Standard Chartered, Deutsche) and large Indian private banks (HDFC, ICICI, Axis, Kotak) all qualify. Pick one with a dedicated GCC desk.
Frequently asked questions
Yes, dividends and arm’s length service invoices are freely remittable, subject to withholding tax and Chartered Accountant certification (Form 15CA / 15CB).
No. The automatic route covers GCC activities. Only post facto reporting (FC-GPR, FLA Return) is required.
More from the hub
Headline rates, the 22 percent concessional regime, Minimum Alternate Tax and what a Global Capability Centre actually pays.
Why a GCC is treated as an exporter, how to claim refunds and the Letter of Undertaking mechanism.
How a captive GCC is remunerated by its foreign parent, with the bare minimum compliance burden.
The step by step path from name reservation to operational entity, in 30 to 45 working days.
Provident Fund, Gratuity, the four Labour Codes and the real fully loaded cost of an India hire.
Need this mapped to your GCC plan?
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