Manage Regulatory Due Diligence Cross-Border: Unlocking India’s CG Private Placements

India’s Consumer Goods (CG) sector is a dynamic growth engine, driven by rising incomes, shifting consumer preferences, and digital transformation. For senior leaders in fast-moving consumer goods (FMCG), direct-to-consumer (D2C), personal care, home care, and packaged foods, cross-border private placements offer a strategic pathway to global capital. However, navigating these transactions demands expertise to manage regulatory due diligence cross-border. This article, crafted from a senior hybrid consultant’s perspective spanning management, legal, financial, and technological disciplines provides actionable insights to address cross-border M&A regulatory challenges, international funding compliance in CG, and multi-jurisdiction due diligence.

Industry Context & Cross-Border Deal Trends

India’s CG sector, valued at over $200 billion, is a magnet for global investors, particularly in FMCG and D2C segments like health foods, sustainable cosmetics, and eco-friendly home care. Cross-border private placements are increasingly popular for growth-stage funding due to:

• D2C Scale-ups: Agile, digital-first brands attract venture capital (VC) and private equity (PE) from Singapore, the U.S., and Europe, drawn by high-growth potential.
• Mid-size FMCG Brands: Established players seek strategic foreign partnerships, especially with Japanese and Southeast Asian conglomerates, to access export markets and technology.

The complexity of these deals hinges on the ability to manage regulatory due diligence cross-border. Foreign Exchange Management Act (FEMA) regulations, Foreign Direct Investment (FDI) norms, sectoral caps, and multi-jurisdiction tax obligations create a complex compliance landscape. Robust due diligence is essential to avoid delays, penalties, or investor distrust.

1. Recent Developments Shaping How to Manage Regulatory Due Diligence Cross-Border (June 2025)

As of June 2025, regulatory shifts significantly influence cross-border private placements:

• Budget 2025 Updates: Increased FDI limits in food processing (100% automatic route) and tax incentives, such as reduced withholding tax for global investors, enhance India’s appeal. Compliance with these updates is critical.
• SEBI and RBI Changes: Revised Overseas Direct Investment (ODI) and Foreign Portfolio Investment (FPI) norms streamline foreign shareholding but require stricter reporting via RBI’s Foreign Investment Reporting and Management System (FIRMS).
• GST Council Rulings: Amendments to Goods and Services Tax (GST) impact cross-border transfer pricing and bundled goods taxation, necessitating updated financial models.
• ED Scrutiny: The Enforcement Directorate’s intensified focus on FDI round-tripping and FEMA violations demands forensic due diligence on fund sources.
• Global Context: OECD Pillar Two’s 15% minimum tax and tightened Anti-Money Laundering (AML) regulations post-2024, aligned with Financial Action Task Force (FATF) guidelines, add layers of complexity to international funding compliance in CG.

2. Key Challenges to Manage Regulatory Due Diligence Cross-Border

Cross-border private placements present unique hurdles that require a hybrid approach:

• Cross-Border M&A Regulatory Challenges

• Approvals: Securing clearances from the Competition Commission of India (CCI), Food Safety and Standards Authority of India (FSSAI), Department for Promotion of Industry and Internal Trade (DPIIT), and sector-specific boards (e.g., Agricultural and Processed Food Products Export Development Authority) involves complex documentation and timelines.
  
• Sectoral Caps: While food processing allows 100% FDI, multi-brand retail is capped at 51% with government approval, posing compliance risks.

• International Funding Compliance in CG

1. Global Standards: Investors must adhere to U.S. Foreign Account Tax Compliance Act (FATCA), Common Reporting Standard (CRS), Base Erosion and Profit Shifting (BEPS), and Indian Know Your Customer (KYC) norms, requiring robust data exchange.
2. AML Requirements: FATF-driven AML regulations enforced by RBI and ED mandate enhanced scrutiny of investor backgrounds and fund routing.

• Multi-Jurisdiction Due Diligence Hurdles

1. Regulatory Divergence: Reconciling U.S. Securities and Exchange Commission (SEC) or EU AML disclosures with Indian requirements can create conflicts.
2. Data Privacy: India’s Digital Personal Data Protection (DPDP) Act (2024) imposes strict consent and localisation rules, which may clash with GDPR or California Consumer Privacy Act (CCPA).
3. ESG Alignment: Global investors’ Environmental, Social, and Governance (ESG) policies require Indian firms to comply with SEBI’s ESG disclosures while meeting investor-specific benchmarks.

3. Strategic Framework to Manage Regulatory Due Diligence Cross-Border

A multi-disciplinary framework is essential to manage regulatory due diligence cross-border effectively:

• Legal & Compliance Strategy

1. Regulatory Roadmap: Develop a comprehensive checklist covering FDI/FEMA, SEBI, FSSAI, Legal Metrology, and anti-bribery laws (e.g., Prevention of Corruption Act). Include investor jurisdiction regulations.
2. Compliance Matrix: Create a dual-jurisdiction matrix to track Indian and foreign requirements, ensuring seamless coordination.
3. Contract Vetting: Review contracts for regulatory triggers, such as Rights of First Refusal (ROFR), exclusivity clauses, or indemnities tied to approvals, using legal-tech tools for efficiency.

• Financial & Tax Strategy

1. Transfer Pricing (TP) Study: Conduct a TP study to align pricing with arm’s-length principles, mitigating permanent establishment (PE) and double taxation risks.
2. Repatriation Structures: Design cash repatriation mechanisms compliant with FEMA’s Form FC-TRS and RBI pricing guidelines. Assess General Anti-Avoidance Rules (GAAR) and Place of Effective Management (POEM) impacts.
3. Tax Optimisation: Leverage Budget 2025 incentives while ensuring OECD Pillar Two compliance.

• Due Diligence Management

1. AI-Driven Tools: Use AI-powered platforms (e.g., EY Document Anomaly Analytics) to standardise and accelerate review of licenses, litigation, intellectual property (IP), and Extended Producer Responsibility (EPR) compliance.
2. Multi-Regional Teams: Coordinate multi-lingual teams to assess compliance across jurisdictions, ensuring alignment on certifications and IP registrations.

• Deal Structuring

1. Risk Mitigation: Employ escrow accounts, indemnity insurance, or deferred consideration to address unresolved regulatory exposures.
2. Staggered Funding: Tie funding tranches to compliance milestones (e.g., RBI filings, GST audits) to reduce risk.

Illustrative Case Examples

• Case A: D2C Food Export Scale-up

A millet-based D2C brand raised $12M from a Singapore VC in 2025. To manage regulatory due diligence cross-border, the legal team ensured FSSAI and APEDA licenses met export standards, while finance handled FEMA’s Letter of Reporting of Non-debt Instruments (LRN) filing. A pending EPR packaging issue delayed a tranche by 30 days. The solution involved establishing a vendor ESG audit trail and renegotiating contracts, aligning with Singapore’s sustainability standards.

• Case B: FMCG-Japan JV

An Indian FMCG firm formed a joint venture with a Japanese conglomerate. Cross-border M&A regulatory challenges included mapping Indian labeling laws, Japanese data protection clauses, and U.S. parent AML policies. Hybrid dashboards tracked regulatory gaps, enabling closure within 90 days, showcasing effective multi-jurisdiction due diligence.

Conclusion

Mastering the ability to manage regulatory due diligence cross-border is a competitive advantage for India’s CG leaders in private placements. By addressing cross-border M&A regulatory challenges, ensuring international funding compliance in CG, and navigating multi-jurisdiction due diligence, firms can build investor trust and accelerate deals. Hybrid consulting teams integrating legal, financial, technological, and compliance expertise drive success. With LawCrust’s support, CG companies can confidently attract global capital and thrive in a connected market.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

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