What Is the Annual Performance Report (APR) for Overseas Investment?
The Annual Performance Report (APR) is the yearly return that a person resident in India must file with the Reserve Bank of India (RBI) for every foreign entity in which it holds Overseas Direct Investment (ODI). It is filed on the Annual Performance Report form at Annex II to Part VIII of the RBI's Master Direction – Reporting under FEMA, 1999 (the older label “Form ODI Part-II” survives in the Late Submission Fee matrix), through the investor's Authorized Dealer (AD) bank, and it reports the foreign entity's own financial performance for its most recently completed accounting year. The APR is filed once for each foreign joint venture (JV) or wholly owned subsidiary (WOS) an Indian entity holds — not once for the Indian entity as a whole — so an Indian company with three overseas subsidiaries files three separate APRs every year.
Legal Basis
APR filing sits inside India's Overseas Investment (OI) framework, which took effect on 22 August 2022 and replaced the earlier ODI regulations:
- Foreign Exchange Management (Overseas Investment) Rules, 2022 — issued by the Department of Economic Affairs
- Foreign Exchange Management (Overseas Investment) Regulations, 2022 — notified by the RBI
- Foreign Exchange Management (Overseas Investment) Directions, 2022 — RBI/2022-2023/110, A.P. (DIR Series) Circular No. 12, dated 22 August 2022
Paragraph 17 of the Directions governs reporting. Under paragraph 17(1), all ODI reporting — including the APR — is made "in accordance with regulation 10" of the OI Regulations, through the AD bank, using the forms and instructions in the Master Direction – Reporting under Foreign Exchange Management Act, 1999. Paragraph 17(3) adds the certification rule: "The Annual Performance Report (APR) shall be certified by a chartered accountant where the statutory audit is not applicable, including in case of resident individuals."
Who Must File, and How Many APRs
Every person resident in India — company, LLP, partnership firm, or resident individual — that holds ODI in a foreign entity must file an APR for that entity every year for as long as it stays invested in that foreign entity. Part VIII of the Master Direction – Reporting under FEMA, 1999 carves out three cases in which no APR is due: where the Indian party holds less than 10 per cent of the equity capital without control and has no other financial commitment; where the foreign entity is under liquidation, from the date the liquidation process starts; and for a broken period at the time of disinvestment, though transactions since the last APR must then be reported in Form FC. This applies whether the original investment went through the Automatic Route or required prior RBI approval under the RBI Approval Route. Where more than one person resident in India has made ODI in the same foreign entity, the one holding the highest stake files the APR. Where holdings are equal the APR may be filed jointly, and paragraph 17(3) of the Directions then allows either one investor to be authorised by the others or all of them to file it together.
Deadline and Accounting Period
The APR is due every year by 31 December, based on the foreign entity's own audited financial statements — not the Indian entity's own April-to-March financial year. Instruction 1 to the APR form in Part VIII of the Master Direction – Reporting under FEMA, 1999 fixes both the date and one carve-out: where the foreign entity's own accounting year ends on 31 December, that year's APR is due by 31 December of the next year, which gives those entities a full twelve months to close and audit their books. This means the reference period behind an APR can differ between foreign entities in different countries, depending on when each one's local accounting year closes.
When Unaudited Accounts Are Acceptable
The default rule is that the APR must be based on the audited financial statements of the foreign entity. Instruction 3 to the APR form allows unaudited statements only where both conditions are met:
- the person resident in India does not have ‘control’ in the foreign entity; and
- the laws of the host jurisdiction do not provide for mandatory auditing of the books of account.
Where both hold, the unaudited statements must be certified as such by the statutory auditor of the Indian entity, or by a chartered accountant where statutory audit is not applicable, including for resident individuals. The control condition is the one most often missed: a wholly owned subsidiary is by definition controlled, so a WOS can never use this route no matter what its host country's audit law says. Paragraph 17(3) of the Directions states the certification limb of the same rule.
Late Submission Fee and Consequences of Missing the Deadline
A late APR can be regularised through the RBI's Late Submission Fee (LSF) mechanism, by filing the return and paying the fee through the AD bank. The LSF option is open for up to three years from the due date; a person who neither files on time nor files with the LSF is liable to penal action under FEMA, 1999. Under paragraph 18(2) of the Directions, the LSF matrix sets the fee for "Form ODI Part-II/ APR" at a flat INR 7,500 per return, because this category of filing "does not capture flows" — unlike the LSF for Form ODI Part I, Form ODI Part III, or Form FC, which scales with the transaction amount.
The real cost of a missed APR is not the fee. Under paragraph 19 of the Directions: "AD bank shall not facilitate any outward remittance/further financial commitment by a person resident in India towards a foreign entity until any delay in reporting is regularised." In practice, every other overseas remittance the Indian entity wants to make — a fresh equity tranche to the same subsidiary, a new JV in a different country, even an unrelated ODI transaction — is blocked at the AD bank until the outstanding APR, along with its LSF, is filed and cleared.
How the APR Differs from the FLA Return
The APR is easy to confuse with the FLA Return, and an Indian entity with both ODI and inbound FDI must file both. The APR reports one foreign entity's own operating performance into the RBI's ODI reporting system through the AD bank, by 31 December. The FLA Return separately reports the Indian entity's aggregate stock of foreign assets and liabilities to the RBI's statistics department on the FLAIR portal at flair.rbi.org.in, on or before 15 July each year, for an April-to-March year. Filing one does not substitute for the other — an Indian entity with an overseas subsidiary owes both returns, on two different portals, on two different dates.
Practical Example
Meridian Tools Pvt Ltd, an Indian manufacturer, holds a wholly owned subsidiary in Vietnam (accounting year ending 31 December) and a 40 per cent joint venture in the United States, without control, whose accounting year ends 31 March. Meridian files two separate APRs through its AD bank. The US JV's year ended 31 March, so its APR is due by 31 December of the same calendar year. The Vietnam subsidiary's year ends 31 December, so its APR is not due until 31 December of the following year. Vietnamese company law requires an audit, and in any case the Vietnam entity is a controlled WOS, so that APR must rest on audited accounts. For the US JV, Meridian has no control, so if the JV's home state does not mandate an audit, Meridian's statutory auditor can certify the unaudited statements and the APR can go in on that basis. If Meridian later wants to remit fresh equity to either entity, or start a third JV elsewhere, its AD bank will not process any of it while either APR sits overdue.
Common Mistakes
- Filing one APR for the Indian entity instead of one per foreign entity. An Indian company with three overseas subsidiaries owes three separate APRs, not one consolidated filing.
- Assuming the APR follows India's own financial year. The APR is based on the foreign entity's own accounting year-end, which frequently is not 31 March — and a foreign entity whose year ends on 31 December gets until 31 December of the next year.
- Using the unaudited-accounts route for a controlled entity. The route needs both no control and a host jurisdiction that does not mandate an audit, so it is never open for a wholly owned subsidiary.
- Not realising a single overdue APR freezes unrelated remittances. Paragraph 19 blocks "further financial commitment" broadly — it is not limited to the specific foreign entity whose APR is late.
- Confusing the APR with the FLA Return and assuming that filing one covers the other obligation.
Key Takeaways
- The APR is filed once per foreign entity, every year, by 31 December, through the Indian entity's AD bank; a foreign entity whose accounting year ends 31 December has until 31 December of the next year
- It is based on the foreign entity's own audited financial statements, for an accounting year that need not follow India's April-March year
- Unaudited statements are acceptable only where the Indian party has no control and the host jurisdiction does not mandate an audit, on a statutory auditor's or chartered accountant's certification
- No APR is due where the holding is under 10 per cent without control and there is no other financial commitment, where the foreign entity is in liquidation, or for a broken period on disinvestment
- The Late Submission Fee for a delayed APR is a flat INR 7,500 per return, available for up to three years from the due date
- An overdue APR blocks all further outward remittance and financial commitment by the Indian entity until it is regularised — the freeze is the real cost, not the fee
- The APR is separate from, and does not substitute for, the FLA Return
Frequently Asked Questions
Do we file one APR per foreign subsidiary, or one for the whole company?
One per foreign entity. If an Indian entity holds ODI in more than one foreign JV or WOS, it must file a separate APR for each one every year. The 31 December deadline is common, except that a foreign entity whose own accounting year ends on 31 December is reported by 31 December of the following year.
What if our overseas subsidiary's home country doesn't require an audit?
Unaudited statements are allowed only where you do not have control in the foreign entity and the host jurisdiction does not mandate an audit. Both conditions must hold, and the statements must be certified as unaudited by your statutory auditor, or by a chartered accountant where statutory audit does not apply. A wholly owned subsidiary is controlled by definition, so the route is never open for one.
Can one investor file the APR on behalf of a joint venture's other Indian shareholders?
The investor holding the highest stake in the foreign entity is the one required to file. Where holdings are equal the APR may be filed jointly, and in that case one investor can be authorised by the others or all of them can file it together, instead of each filing an overlapping separate return.
What happens if we miss the 31 December deadline?
You can regularise the delay by filing the APR late and paying the Late Submission Fee, a flat INR 7,500 per return, through your AD bank. That option is open for up to three years from the due date; miss it and you are exposed to penal action under FEMA, 1999. Until you do, the AD bank will not process any further outward remittance or financial commitment for that Indian entity, even towards an unrelated foreign entity.
Is the APR the same as the FLA Return?
No. The APR reports one foreign entity's own performance into the RBI's ODI reporting system by 31 December. The FLA Return separately reports the Indian entity's total foreign asset and liability stock to the RBI's statistics department, on the FLAIR portal, on or before 15 July each year. An Indian entity that has made ODI owes both.
See also: ODI (Overseas Direct Investment), RBI Approval Route & ODI Reporting, and the FLA Return.
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