- Find and fix the gaps before the buyer does — it protects price and timetable.
- FEMA filings on past foreign investment are a common trap; regularise early.
- Prepare a clean data room and a short vendor due diligence report.
Why do vendor due diligence?
- Fewer surprises: late discoveries are what lead to price cuts, bigger escrows and tougher warranties.
- Faster deals: a prepared data room and a clear report shorten the buyer’s work.
- Time to fix: many issues — late FEMA filings, unreconciled GST, missing approvals — can be regularised before the deal, but not in the last week.
What to review before the buyer does
| Area | What to have ready |
|---|---|
| Financials | Audited accounts reconciled to management accounts; normalised EBITDA with one-offs explained; working capital trends |
| Tax | Income-tax assessments and pending demands; TDS defaults; GST returns reconciled with books; transfer-pricing files |
| FEMA / RBI | Every foreign investment, loan and remittance reported on time (FC-GPR, FC-TRS, FLA, ECB); late filings regularised before the buyer finds them |
| Company law | Share capital history, registers, board and shareholder approvals, charges and annual filings up to date on MCA |
| Related parties | List of transactions with promoter-linked entities, arm’s-length support, and plans to end or formalise them |
| Contracts and people | Key customer and supplier contracts, change-of-control clauses, ESOPs, labour compliance |
The FEMA trap
Foreign buyers pay particular attention to past foreign-investment filings, because gaps can delay closing and may need regularisation with the RBI. Check every past foreign round and transfer: was the filing made, on time, at a compliant price? See FC-GPR, FC-TRS and the draft FEMA Foreign Investment Rules 2026.
Building the data room
- Three years of audited accounts, tax returns and GST returns, with reconciliations.
- Corporate records: incorporation documents, registers, minutes, MCA filings and charges.
- FEMA filings and RBI acknowledgements for every foreign investment, loan and transfer.
- Material contracts, licences, property documents and insurance.
- A short vendor due diligence report summarising findings and how each was resolved.
The buyer’s view of the same exercise: due diligence checklist · financial red flags.
How we help
We run vendor due diligence for Indian companies preparing for a foreign buyer or investor, fix what can be fixed — FEMA regularisation, GST reconciliations, overdue filings — and help build the data room and answer the buyer’s questions. See fundraising and deal support and FEMA & RBI compliance.
Sources
Frequently asked questions
What is vendor due diligence?
Why should an Indian company do vendor due diligence before a foreign deal?
What do foreign buyers check most closely in Indian companies?
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.