Overseas Portfolio Investment (OPI): Rules for Residents
OPI is every investment in foreign securities that is not ODI. Rule out ODI first, then apply the schedule.
Overseas Portfolio Investment (OPI) is any investment in foreign securities that is not Overseas Direct Investment (ODI). A resident buying a few Apple shares through a broker, a listed Indian company parking surplus in a foreign listed stock, a mutual fund buying overseas equities: all of these are OPI.
The framework is the Foreign Exchange Management (Overseas Investment) Rules, 2022, the OI Regulations, 2022 and the OI Directions, 2022, all effective from August 22, 2022. OPI is defined by exclusion, so the first job is always to rule out ODI.
You save ₹200 today
- 5 full-length mocks
- 553 questions, chapter by chapter
- Rate & risk calculations
One payment, no subscription · Valid for 2 months
Drawing the ODI Line First
An investment is ODI, not OPI, if it is:
- Unlisted equity
- Any acquisition of unlisted equity capital of a foreign entity, or subscription as part of its Memorandum of Association.
- 10% or more of a listed entity
- Investment in 10% or more of the paid-up equity capital of a listed foreign entity.
- Control below 10%
- Investment in a listed foreign entity below 10% that comes with control. Control means the right to appoint a majority of directors or to control management or policy decisions, including through agreements giving 10% or more of voting rights.
- Once ODI, always ODI
- An investment classified as ODI stays ODI even if the holding later falls below 10% or control is lost.
Who May Make OPI, and Under Which Schedule
Resident individual
Basis
Schedule III of the OI Rules, within the LRS limit
Notes
LRS allows up to USD 250,000 per financial year across all purposes. Shares via ESOP, sweat equity or qualification shares up to 10% without control also count as OPI.
Listed Indian company
Basis
Schedule II of the OI Rules
Notes
OPI by any Indian entity may not exceed 50% of its net worth as per the last audited balance sheet. A listed company may make OPI, including by reinvestment of OPI proceeds within the realisation period.
Unlisted Indian entity
Basis
Schedule II of the OI Rules
Notes
Within the same 50% of net worth cap, only through rights or bonus issues, capitalisation of dues, swap of securities, or a merger, demerger or similar scheme; in an IFSC it may also invest in units of a regulated investment fund.
Mutual funds, AIFs, VCFs registered with SEBI
Basis
Schedule IV of the OI Rules
Notes
Overseas investment in securities as SEBI stipulates is treated as OPI.
| Investor | Basis | Notes |
|---|---|---|
| Resident individual | Schedule III of the OI Rules, within the LRS limit | LRS allows up to USD 250,000 per financial year across all purposes. Shares via ESOP, sweat equity or qualification shares up to 10% without control also count as OPI. |
| Listed Indian company | Schedule II of the OI Rules | OPI by any Indian entity may not exceed 50% of its net worth as per the last audited balance sheet. A listed company may make OPI, including by reinvestment of OPI proceeds within the realisation period. |
| Unlisted Indian entity | Schedule II of the OI Rules | Within the same 50% of net worth cap, only through rights or bonus issues, capitalisation of dues, swap of securities, or a merger, demerger or similar scheme; in an IFSC it may also invest in units of a regulated investment fund. |
| Mutual funds, AIFs, VCFs registered with SEBI | Schedule IV of the OI Rules | Overseas investment in securities as SEBI stipulates is treated as OPI. |
What OPI Cannot Be Made In
- check_circleAny unlisted debt instrument.
- check_circleAny security issued by a person resident in India who is not in an IFSC.
- check_circleAny derivative, unless RBI permits it.
- check_circleAny commodity, including Bullion Depository Receipts (BDRs).
ODI-or-OPI classification questions, with explanations.
Edge Cases the Directions Settle
A listed holding that is later delisted stays OPI until the investor puts in fresh money; any further equity investment after delisting must be made as ODI. Units of a regulated overseas investment fund, including sponsor contributions, are OPI. Foreign securities a resident acquires by gift or inheritance under Schedule III are not counted against the LRS limit and need no LRS reporting.
Reporting runs through the AD bank. Where ESOP shares qualify as OPI, the employer files Form OPI. A late Form OPI attracts a flat Late Submission Fee of ₹7,500 per return under the OI Directions' fee matrix.
How CCFE Tests This
Classification questions dominate: a resident buys 12% of a listed US company, or 4% with the right to appoint a majority of the board, and you must say ODI or OPI. Both are ODI: the first crosses 10%, the second carries control. The second pattern is the prohibited list: unlisted bonds and BDRs look like ordinary portfolio assets, and that is exactly why they appear as distractors. Note that the syllabus phrase is "investments in securities abroad"; the 2022 framework calls the same thing OPI.
FAQs
What is overseas portfolio investment under FEMA?expand_more
Investment by a person resident in India in foreign securities that is not ODI: typically listed shares below 10% without control, units of regulated overseas funds, and similar securities.
Can a resident individual buy US stocks?expand_more
Yes, as OPI under Schedule III of the OI Rules, within the LRS limit of USD 250,000 per financial year.
Can OPI be made in unlisted foreign bonds?expand_more
No. OPI cannot be made in unlisted debt instruments, derivatives not permitted by RBI, or commodities including Bullion Depository Receipts.
Are ESOP shares of a foreign parent ODI or OPI?expand_more
OPI, if they do not exceed 10% of the foreign entity's paid-up capital and do not give control. Otherwise they are ODI.
Next steps
Take a full CCFE mock test100 questions on this exact syllabus, timed and scored.