Yes, an Indian company (owned and controlled by non-residents) investing in non-FDI compliant instruments issued by another Indian company can be considered as Indirect Foreign Investment (IFI) for the investee company, if the following conditions are met:

1. The Indian company issuing the instruments is considered an Indian entity as per the foreign exchange regulations.
2. The instruments are not in compliance with the Foreign Direct Investment (FDI) policy and regulations.
3. The investment made by the Indian company is considered as a foreign investment under the foreign exchange regulations.
4. The Indian company making the investment is owned and controlled by non-residents, and therefore qualifies as a foreign investor.

In such a scenario, the investee company must comply with the relevant regulations related to IFI, such as reporting requirements, sectoral caps, and other restrictions, as applicable. The Reserve Bank of India (RBI) has issued guidelines on the treatment of IFI, and it is advisable to consult these guidelines for further clarity on the matter.