Setting up in the UAE from India: LRS, ODI and the FEMA rules that shape the structure

For Indian families and companies building in the UAE, the structure is only half the plan. Indian exchange-control law governs how money leaves India, and the wrong route can unwind a structure years later.

Resident individuals invest abroad under the Reserve Bank of India's Liberalised Remittance Scheme, capped at US$250,000 per person per financial year, and family members can pool their limits. Indian companies and LLPs invest through the Overseas Direct Investment route under the FEMA (Overseas Investment) Rules 2022. Two traps recur: Indian trusts and HUFs cannot remit under LRS, and the UAE share register, the constitutional documents and the Indian ODI filings must show the same owners in the same proportions.

Tax collected at source applies to covered LRS remittances above the prescribed threshold, and moving to the UAE does not end Indian tax residence automatically. Residential status, the family's centre of interest and where decisions are actually taken all matter, otherwise a UAE company risks being treated as managed from India under POEM. Annual performance reporting to the RBI and foreign-asset schedules in Indian returns keep the structure clean.

Source: RBI Liberalised Remittance Scheme and FEMA (Overseas Investment) Rules 2022. For guidance only; confirm against current RBI and CBDT positions.