Approval for foreign investment

  • Act/Rule/Legislation

  • Online Link to Act/Rule/Legislation

  • Initial Setup or Ongoing Maintenance

    Initial Setup only

  • Filing and Maintenance Requirements

    Some sectors require approval of the Government through the Foreign investment Promotion Board prior to foreign investment. Some of these sectors are:

    - FDI in enterprise manufacturing items reserved for small scale sector – 100%.
    - Non-scheduled air transport service – beyond 49% and up to 74%.
    - Ground-handling services – beyond 49% and up to 74%.
    - Single brand retail – beyond 49%.
    - Pharmaceuticals – brownfield – 100%.

  • Penalty

    • The liability for violation of provisions of the FDI Policy and FDI Master Circular are governed by the FEMA and is of civil nature in the form of imposition of penalties.

    • The imposable penalty can be up to 3 (three) times the sum involved in a contravention where the amount is quantifiable.

    • For offences where the sum involved is not quantifiable, a penalty up to Rs. 200,000 (Rupees Two Hundred Thousand only) can be imposed.

    • Further, where a contravention is of continuing nature, the adjudicating authority concerned may impose an additional penalty of up to Rs. 5,000 (Rupees Five Thousand only) per day for the period of continued contravention.

    • The adjudicating authority can also order confiscation of any currency, security or any other money or property in respect of which the contravention has taken place.

    • Further, in the event of the defaulter failing to make full payment of the penalty imposed on him within a period of 90 (ninety) days from the date on which notice for payment of such penalty is served on him, such defaulter is punishable with civil imprisonment under the provisions of FEMA.

  • Application Guidelines / Responsible Persons / Comments

    Procedure under automatic route

    FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

    List of activities or items for which automatic route for foreign investment is not available, include the following:

    Banking

    NBFC's Activities in Financial Services Sector

    Civil Aviation

    Petroleum Including Exploration/Refinery/Marketing

    Housing & Real Estate Development Sector for Investment from Persons other
    than NRIs/OCBs.

    Venture Capital Fund and Venture Capital Company

    Investing Companies in Infrastructure & Service Sector

    Atomic Energy & Related Projects

    Defense and Strategic Industries

    Agriculture (Including Plantation)

    Print Media

    Broadcasting

    Postal Services



    Procedure under Government approval

    FDI in activities not covered under the automatic route, requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals of composite proposals involving foreign investment/foreign technical collaboration are also granted on the recommendations of the FIPB. Application for all FDI cases, except Non-Resident Indian (NRI) investments and 100% Export Oriented Units (EOUs), should be submitted to the FIPB Unit, Department of Economic Affairs (DEA), Ministry of Finance. Application for NRI and 100% EOU cases should be presented to SIA in Department of Industrial Policy & Promotion.