How to Obtain RBI Approval for Cross‑border Merger in India, Step‑by‑step (2026 Update)

Last updated: 24 July 2026

Any company planning a cross‑border merger involving an Indian entity must understand how to get RBI approval for a cross‑border merger in India before the scheme can be sanctioned by a tribunal or implemented under the fast‑track route. The Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (“CBM Regulations”), issued under the Foreign Exchange Management Act, 1999 (FEMA), govern the foreign‑exchange aspects of every such transaction, while Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”) prescribes the corporate‑law framework, including the requirement for prior RBI approval.

In June 2026, the RBI amended the CBM Regulations to broaden the categories of cross‑border merger schemes that qualify for deemed approval, particularly those processed under the fast‑track route prescribed by Section 233 of the Companies Act, 2013, significantly changing the sequencing calculus for general counsel, private equity sponsors and foreign acquirers. This guide sets out the eligibility criteria, step‑by‑step procedure, required documents, realistic timelines, indicative costs and common pitfalls for the cross‑border merger process in India as it stands in mid‑2026.

Overview of the Cross‑Border Merger Process and Who It Applies To

A cross‑border merger under Indian law is a scheme of merger, amalgamation or arrangement between an Indian company and a foreign company. The statutory gateway is Section 234 of the Companies Act, 2013, read with Rule 25A of the CAA Rules and the CBM Regulations. These provisions apply to every merger or amalgamation in which at least one party is a company incorporated outside India, regardless of whether the Indian entity is listed, unlisted, private or public.

Under the CBM Regulations, any transaction undertaken in accordance with those regulations is deemed to have the prior approval of the Reserve Bank of India as required under Rule 25A. This means the RBI does not issue a separate approval letter for every transaction; instead, compliance with the regulations themselves satisfies the statutory approval condition. However, where a transaction falls outside the scope of the CBM Regulations, for instance, because the foreign jurisdiction is not permitted or a sectoral FDI cap is breached, express RBI approval must be sought.

Types of cross‑border mergers

The cross‑border merger process in India covers three principal structures:

• Inbound merger. A foreign company merges into an Indian company, which is the surviving entity.
• Outbound merger. An Indian company merges into a foreign company incorporated in a permitted jurisdiction listed in the annexure to Rule 25A.
• Reverse / flip merger. A foreign holding company merges into its Indian wholly‑owned subsidiary, a structure commonly used by start‑ups re‑domiciling to India.

Which regulators have jurisdiction

Multiple regulators may be involved depending on the deal structure:

• Reserve Bank of India (RBI). Oversees FEMA compliance; grants deemed or express approval via the CBM Regulations.
• National Company Law Tribunal (NCLT). Sanctions the scheme under Sections 230–232 of the Companies Act, 2013, or the Regional Director (RD) approves it under the fast‑track route (Section 233).
• Securities and Exchange Board of India (SEBI). Listed companies must comply with SEBI’s master circulars on listing obligations and obtain SEBI observations or no‑objection before the NCLT filing.
• Competition Commission of India (CCI). Merger‑control notification is required if the statutory thresholds under the Competition Act, 2002, are met.
• Sectoral regulators. Insurance, banking, telecom and other regulated sectors may require additional approvals.

Eligibility and Prerequisites for RBI Approval in a Cross‑Border Merger

Before approaching the RBI, or relying on the deemed‑approval route, applicants must confirm that the proposed transaction satisfies the requirements for a cross‑border merger in India.

Eligibility matrix

• Jurisdictional eligibility. For outbound mergers, the foreign company must be incorporated in a jurisdiction specified in the annexure to Rule 25A. For inbound mergers, there is no jurisdictional restriction on the merging foreign entity, but the resulting Indian company must comply with all FEMA and FDI regulations.
• Sectoral FDI compliance. The post‑merger shareholding pattern of the Indian entity must conform to applicable FDI sectoral caps and conditions under the Consolidated FDI Policy and the FEMA (Non‑Debt Instruments) Rules, 2019.
• Valuation. Rule 25A mandates that valuation be carried out by a registered valuer (for the Indian company) and by a recognised professional in the foreign jurisdiction (for the foreign company). The Regional Director can reject an application if the valuation is conducted by a person who is not a registered valuer.
• Listed‑company overlay. If an Indian listed entity is involved, SEBI’s listing‑obligation requirements must be satisfied. These include shareholder approvals, scheme‑related disclosures, and the filing of a draft scheme with SEBI and the stock exchanges before the NCLT.
• Fast‑track eligibility (2026). The 2026 FEMA amendments extend deemed RBI approval to schemes approved under Section 233 of the Companies Act, the fast‑track route, provided the scheme otherwise complies with the CBM Regulations.

Pre‑filing due‑diligence checklist

• FEMA compliance review. Map the post‑merger capital structure against FEMA pricing guidelines, reporting obligations and downstream investment restrictions.
• FDI / sectoral screening. Verify that the resulting entity’s ownership structure does not breach any sectoral cap or condition (automatic vs. government route).
• Anti‑money‑laundering (AML). Confirm KYC and AML compliance for the foreign entity’s beneficial owners under RBI directions.
• Foreign‑jurisdiction approvals. Identify any overseas regulatory consents that the foreign entity requires in its home jurisdiction.

Step‑by‑Step Procedure to Obtain RBI Approval for a Cross‑Border Merger

The following numbered steps represent the core procedure for securing RBI sign‑off, whether through deemed approval under the CBM Regulations or by express application, and implementing the scheme under the Companies Act.

Step 1, Pre‑transaction planning and internal approvals

The board of directors of each merging entity considers and approves the proposed scheme. Key actions at this stage include:

1. Engage a registered valuer (for the Indian entity) and an equivalent professional in the foreign jurisdiction to prepare independent valuation reports.
2. Draft the Scheme of Arrangement or Merger in compliance with Sections 230–232 (NCLT route) or Section 233 (fast‑track route) of the Companies Act, 2013, and Rule 25A of the CAA Rules.
3. Pass board and, where required, shareholder resolutions approving the scheme and authorising officers to file regulatory applications.
4. Prepare supporting corporate documents: memorandum and articles of association, share capital details, financial statements and ownership charts.

Step 2, Determine regulatory sequencing: RBI, SEBI, NCLT and CCI

The correct sequencing of regulatory filings is critical. As a general Rule 25A procedure, prior RBI approval, or confirmed compliance for deemed approval, must precede the NCLT or Regional Director filing. Where a listed Indian entity is involved, SEBI observation must also be obtained before the NCLT application is submitted. If the CCI notification thresholds are triggered, applicants should file with the CCI in parallel to avoid holding up the timeline.

The 2026 CBM Regulation amendments introduce an important procedural shift: for inbound schemes processed under the fast‑track route (Section 233), compliance with the CBM Regulations is now sufficient for deemed RBI approval, eliminating the need to await a separate RBI clearance letter in those cases. Counsel should confirm at this stage whether the fast‑track cross‑border merger 2026 pathway applies or whether express RBI approval is required.

Step 3, Prepare and submit the RBI / FEMA application

Where deemed approval applies, there is no separate RBI application to file, compliance is demonstrated as part of the NCLT or RD filing, supported by a Rule 25A compliance certificate.

Where express RBI approval is required (for example, because the transaction falls outside the scope of the CBM Regulations), the applicant prepares and files the following with the RBI through the authorised dealer bank or the RBI’s designated portal:

1. Completed RBI / FEMA application form(s), as prescribed by the applicable notification.
2. A copy of the draft Scheme of Arrangement, certified by counsel.
3. Board and shareholder resolutions.
4. Valuation reports from the registered valuer and the foreign‑jurisdiction professional.
5. Certified ownership structure charts and KYC documents for the foreign entity’s beneficial owners.
6. Audited financial statements of both entities for the preceding three financial years.
7. A certificate from the applicant’s counsel confirming compliance with FEMA, the FDI policy and Rule 25A (including the jurisdictional annexure, where relevant).
8. SEBI observation letter and stock‑exchange filings, if a listed entity is involved.
9. CCI clearance or evidence that notification is not required.

Step 4, RBI review, queries and decision

The RBI’s FEMA department undertakes an administrative intake check and then a substantive technical review. Industry observers expect the administrative intake to take 7–14 days, after which the technical team may raise clarificatory queries on valuation methodology, ownership disclosures or FEMA compliance. Applicants should respond to RBI queries promptly; extended delays in responding can result in the application being returned or deemed withdrawn.

On completion of the review, the RBI either grants approval, requests modifications to the scheme, or declines the application with reasons. The timeline for RBI approval varies, routine inbound transactions may be completed in 2–8 weeks, while complex outbound or multi‑jurisdictional schemes can take up to 12 weeks or longer.

Step 5, Post‑RBI steps: NCLT / Regional Director filing and scheme implementation

Once RBI approval is obtained (or deemed compliance is confirmed for fast‑track schemes), the applicant files the scheme with the NCLT under Sections 230–232 of the Companies Act or with the Regional Director under Section 233. The NCLT will hold hearings, invite objections and ultimately sanction the scheme by order. The NCLT’s own timeline typically runs 6–16 weeks from admission to final order, depending on the bench’s listing and whether objections are received.

Post‑sanction, the applicant must file the NCLT order with the Registrar of Companies and comply with any post‑merger FEMA reporting and compliance obligations within prescribed deadlines.

Timeline and step summary table

Documents Needed for a Cross‑Border Merger: Complete Checklist

The following table sets out the documents needed for a cross‑border merger application under the CBM Regulations and Rule 25A. Where a document originates outside India, it will typically require apostillisation or consular legalisation and, for non‑English documents, a certified translation.

Timeline for RBI Approval and Key Deadlines

Realistic time expectations are essential for cross‑border merger planning. The overall timeline for RBI approval and scheme implementation depends on the route chosen (NCLT vs. fast‑track / RD), the complexity of the deal, whether a listed entity is involved and the responsiveness of the applicant to RBI queries.

Routine inbound, non‑listed merger (NCLT route): From initial planning to NCLT sanction order, expect a total elapsed time of approximately 4–8 months. The RBI segment (Steps 2–5) typically accounts for 4–12 weeks of that total. The NCLT filing and hearing process adds a further 6–16 weeks.

Inbound fast‑track merger under Section 233 (post‑2026 amendments): Because RBI approval is deemed (no separate application), the regulatory timeline compresses. From planning to Regional Director approval, the likely practical effect will be a total elapsed time of approximately 3–5 months.

Outbound merger: These transactions are often more complex because the foreign jurisdiction’s regulatory requirements must be satisfied in parallel. Total elapsed time: 6–12 months is not uncommon.

Listed‑entity overlay: Add 4–8 weeks for SEBI observation processes and stock‑exchange filings. SEBI’s timelines run concurrently with, but may precede, the NCLT filing.

Key deadlines and sequencing cautions:

• RBI query response. Respond within the timeframe specified by the RBI (typically 15–30 days). Failure to respond may result in the application being returned.
• NCLT filing window. File with the NCLT only after RBI approval (or confirmed deemed compliance) and, for listed entities, after SEBI observations are received.
• Post‑sanction FEMA reporting. Comply with post‑merger reporting and compliance obligations under the CBM Regulations within the deadlines specified in the RBI’s notifications.

Costs, Fees and Tax Considerations

The cost profile for a cross‑border merger in India spans several categories. The following table provides indicative ranges; all figures should be verified with counsel before budgeting.

Stamp duty can be a material cost, particularly where immovable property or high‑value share transfers are involved. Early tax structuring advice, including transfer‑pricing analysis and capital‑gains treatment, is essential to avoid surprises.

What Changes in 2026: The Fast‑Track Cross‑Border Merger Amendments

The most significant development in the cross‑border merger process in India in 2026 is the RBI’s amendment to the CBM Regulations, effective 5 June 2026. This amendment, read with MCA’s earlier expansion of Rule 25A to permit inbound mergers through the fast‑track route under Section 233 of the Companies Act, 2013, reshapes the approval landscape.

Deemed / automatic approval, who qualifies

Under the original CBM Regulations, deemed RBI approval extended only to cross‑border merger schemes sanctioned by the NCLT under Sections 230–232 of the Companies Act. The 2026 amendment broadens this: schemes approved by any authority competent under the Companies Act and the rules thereunder, including the Regional Director under the fast‑track route (Section 233), now qualify for deemed RBI approval, provided the scheme otherwise complies with all conditions of the CBM Regulations.

Early indications suggest this change will be particularly significant for reverse / flip mergers, where a foreign parent merges into its Indian wholly‑owned subsidiary through the fast‑track route.

When express RBI approval is still required

Deemed approval applies only when the transaction fully complies with the CBM Regulations. Express RBI approval remains necessary where:

• The foreign company is incorporated in a jurisdiction not listed in the Rule 25A annexure (outbound mergers).
• The post‑merger shareholding structure would breach FEMA or FDI restrictions.
• The transaction involves a sector that requires government‑route FDI approval and such approval has not been obtained.
• The scheme does not otherwise meet all conditions prescribed in the CBM Regulations.

Practical implications

The likely practical effect of the 2026 amendments is a material reduction in the overall timeline for qualifying inbound mergers. By removing the separate RBI approval step, the elapsed time from planning to implementation can compress by 4–12 weeks. Applicants should document their compliance with the CBM Regulations meticulously, as the compliance certificate submitted with the NCLT or RD filing effectively replaces the prior approval mechanism. Any deficiency discovered post‑sanction could expose the parties to FEMA enforcement risk.

Common Pitfalls in the RBI Approval Process and How to Avoid Them

• Filing with the NCLT before securing RBI approval. Where express RBI approval is required, filing the scheme with the NCLT prematurely risks adjournment, return of the application, or an NCLT order that cannot be implemented. Confirm the RBI route and obtain approval or document deemed compliance before the NCLT filing.
• Non‑compliant valuation. Using a valuer who is not registered with the Insolvency and Bankruptcy Board of India (IBBI) for the Indian entity can result in the Regional Director or NCLT rejecting the scheme. Instruct a registered valuer at the outset and ensure the report complies with the applicable valuation standards.
• Ignoring SEBI obligations for listed entities. Failure to obtain SEBI observations before filing with the NCLT can stall the entire process. Coordinate SEBI and stock‑exchange filings in parallel with pre‑transaction planning.
• Delayed response to RBI queries. The RBI may set a response deadline of 15–30 days. Missing this window can result in the application being returned, resetting the process. Assign a dedicated team to monitor and respond to RBI communications.
• Assuming deemed approval without full CBM Regulation compliance. After the 2026 amendments, applicants may be tempted to bypass the compliance analysis. Any gap, an unpermitted jurisdiction, a sectoral cap breach, an incomplete KYC, can expose parties to FEMA penalties. Treat the Rule 25A compliance certificate as a substantive legal exercise, not a formality.
• Overlooking post‑merger FEMA reporting. Post‑sanction reporting obligations under the CBM Regulations (including filings with the authorised dealer bank and the RBI) carry their own deadlines. Non‑compliance can trigger enforcement action even after the merger is otherwise complete.

Conclusion

Understanding how to get RBI approval for a cross‑border merger in India requires a clear grasp of the interplay between FEMA, the Companies Act, Rule 25A and the regulatory roles of the RBI, NCLT, SEBI and CCI. The 2026 amendments to the CBM Regulations, extending deemed RBI approval to fast‑track schemes under Section 233, represent a meaningful simplification for qualifying inbound mergers, but they do not eliminate the need for rigorous compliance analysis. Every cross‑border merger transaction should begin with a detailed eligibility assessment, a regulatory sequencing plan and the early engagement of a registered valuer and experienced counsel.

The documents checklist, timeline table and step‑by‑step procedure set out in this guide provide the operational framework for navigating the process efficiently. For further guidance, consult the latest RBI banking and regulatory updates or use the Global Law Experts lawyer directory to connect with a cross‑border M&A specialist in India.

Sources

1. Reserve Bank of India, FEMA Notifications
2. Reserve Bank of India, Cross Border Merger (Amendment) Notification 2026
3. Directorate of Enforcement, FEMA (Cross Border Merger) Regulations, 2018
4. Ministry of Corporate Affairs, Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
5. Companies Act, 2013, India Code (Section 233)
6. SEBI, Master Circular on Listing Obligations and Disclosure Requirements
7. National Company Law Tribunal, Official Website