Is Inkle Incorporate compliant with Indian FEMA regulations?

FEMA, the Foreign Exchange Management Act, is the Indian law governing how Indian residents can hold foreign currency, invest abroad, or own shares in a foreign company. It matters to Indian founders incorporating in the US because how you hold your shares depends on your FEMA residency status and the structure you plan to build, and getting this wrong can result in a foreign exchange law violation.

A FEMA resident individual is generally allowed to invest directly in a foreign company, up to $250,000 per year under the Liberalised Remittance Scheme. The restriction that matters most for startups is narrower: a FEMA resident cannot hold control level stock in a foreign entity if that entity is going to have a subsidiary of its own abroad, including in India. Since most Indian founded startups eventually set up a US C-Corp with an Indian subsidiary, this specific rule is what usually makes direct ownership impractical, not a general ban on Indian individuals owning foreign shares.

For this common scenario, Inkle Incorporate supports the structure typically used to stay compliant: an Indian LLP that becomes the shareholder in the US entity, rather than the founder holding shares directly. This is a supported route for the specific case most startups are in, not a universal legal rule, since a FEMA non resident founder, or a structure without a planned Indian subsidiary, may not need the same setup.