Offshore Cap Table (FDI Structuring)

An offshore cap table involves creating a holding company in a tax-neutral or investor-friendly jurisdiction—typically Singapore or Delaware—that owns your Indian operating company. This structure is used to simplify foreign investor onboarding, comply with Foreign Direct Investment (FDI) rules, and manage cross-border ownership cleanly.

The Indian operating entity (typically a Pvt Ltd) remains the operational arm, while the holding company acts as the parent. Founders and early investors hold shares in the holding company, not directly in India. This avoids FIPB/DPIIT approval headaches for each new foreign investor and creates a single, recognizable cap table for global VCs.

The structure became standard practice post-2015 when India tightened FDI norms under the Liberalised Remittance Scheme (LRS). Sectors like fintech, insurance tech, and multi-sided platforms face stricter FDI caps, making offshore structures essential for fundraising. A Singapore holding company avoids these sector-specific caps entirely.

This is not tax avoidance—it is a regulatory necessity. The holding company typically has no tax residence in Singapore (it is a pass-through entity), and the Indian subsidiary pays corporate tax in India as normal.

India's Foreign Direct Investment (FDI) policy restricts foreign ownership in sensitive sectors: e-commerce (51% cap with conditions), insurance (49%), and multi-level marketing (banned). An offshore cap table bypasses these restrictions by making the foreign investor hold shares in a foreign entity, not directly in the Indian company. The Reserve Bank classifies this under the Liberalised Remittance Scheme (LRS) if founders remit funds abroad, or under standard FDI if foreign institutional investors invest directly into the holding company.

DPIIT approval is not required if the holding company is foreign-incorporated and investors are non-resident individuals or foreign entities. However, the Reserve Bank of India (RBI) tracks all such structures under the External Commercial Borrowing (ECB) and foreign investment reporting norms. Indian startups typically register with the IEPF (Investor Education and Protection Fund) and file Form 61 annually.

Benchmarks: As of 2023, approximately 60–70% of VC-backed Indian startups with foreign investors use a Singapore/Delaware holding structure. Companies like Flipkart, Ola, and Paytm initially structured this way during their early rounds before scaling domestically.