FDI Approvals

Overall Rating: star ratingstar ratingstar ratingstar ratingstar rating[0/5]Total Votes [  ]  
Rate this page:
About F. D. I. (Foreign Direct Investment) Approvals in India
The formulation of the foreign trading policy in India has been done with an aim of invitation and promotion of F. D. I. in the country. The compliance as well as the administrative aspects of the Foreign Direct Investments has been prescribed by the Reserve Bank of India (R. B. I.). The nation provides the following two kinds of options to the business operators for setting up their business in India:

  • F. D. I. under automatic route
  • F. D. I. post Government approval

Procedure for F. D. I. Under Automatic Route

Activities or sectors, which are included in the automatic route, do not necessitate any approval from the Government or the Reserve Bank of India. The investors can just notify R. B. I.’s regional office within 1 month (30 days) of receiving the inward remittances. The necessary documents are required to be filed within a month of the issuing of the shares to the investors. However, following are the items or activities for which automatic route foreign investment can not be done:

  • Activities of N. B. F. C. in financial services
  • Agriculture and plantation
  • Atomic energy as well as the other related projects
  • Banking
  • Broadcasting
  • Capital company and capital fund (Venture)
  • Civil aviation
  • Investing organizations in service and infrastructure sectors
  • Investment from people except N. R. I.s and O. C. B.s in the field of real estate and housing development
  • Petroleum including marketing, exploration and refinery
  • Postal services
  • Print media
  • Strategic and defense industries

Procedure for F. D. I. Though Government Approval

Activities that are excluded from the automatic route, are required to be approved by Government as well as to be considered by F. I. P. B. (Foreign Investment Promotion Board) before the investment is actually done. Approvals of foreign investment or technical collaboration or other composite foreign proposals are done as per the recommendations of the Foreign Investment Promotion Board. Applicants of all Foreign Direct Investments except NRI (Non-Resident Indian) investments and 100 % E. O. U.s (Export Oriented Units) need to submit their application to the Ministry of Finance’s F. I. P. B. Unit under D. E. A. (Department of Economic Affairs). However, applicants belonging to the latter two categories are supposed to submit their applications to the Department of Industrial Policy and Promotion’s S. I. A.

Sector wise directives in Foreign Direct Investments

The below mentioned table provides information about some of the specified activities under automatic route, which are subject to the following sectoral conditions and cap:

Sl. No.SectorsDivisionsCap
2Alcohol brewing and distillation….100.00%
3Air transport servicesNon-resident Indians100.00%
4Animal husbandry, horticulture and floriculture….100.00%
5Coffee, warehousing and rubber processing….100.00%
6Development and construction (Specified projects)….100.00%
7Distribution, power generation and transmission….100.00%
8Free trade and S. E. Z.’s Warehousing Zones ….100.00%
9Hazardous chemicals (Specified)….100.00%
10Industrial manufacturing (Explosives)….100.00%
12Lignite and coal mining (Specified)….100.00%
13Mining (Diamonds, precious metals and stones)….100.00%
14Natural gas and petroleum Private refining companies100.00%
Other areas100.00%
15Non banking companies (finance)….100.00%
16Private sector banking….74.00%
17TradingCash and carry (Wholesale)100.00%
Trading of exports100.00%
18TelecommunicationBasic as well as cellular services49.00%
I. S. P. with end to end bandwidth, gateways and radio paging 49.00%
I. S. P. excluding gateway (Specified)49.00%
Telecom equipment manufacturing100.00%

Some of the F. I. P. B.’s prior approvals in case of F. D. I.s, where the sectoral caps of activities are less than the investments are given below:

New investment, when a foreign investor invests in any field where the investor has already got a collaboration or joint venture with another partner, who is based in India.

New investments are to be done in the manufacturing of items, which are reserved for industries (Small scale).

The following table shows some more information about this:

Sl. No.SectorsDivisionsCap
1Asset re-construction organizations….49.00%
2Atomic minerals….74.00%
3Brand retailing….51.00%
4BroadcastingF. M. radio20.00%
Cable network49.00%
D. T. H. (Direct To Home)49.00%
Hardware facilities set up49.00%
Uplinking current affairs and news26.00%
Uplinking T. V. channel, non-news and current affairs100.00%
5Cigarette manufacturing….100.00%
6Courier services except those that are under the domain of 1898’s Indian Post Office Act….100.00%
7Defense production….26.00%
8Existing airports 74 % to 100 %
9Investment companies (Infrastructure or service sector excluding telecom)….49.00%
10Natural gas and petroleum refining (P. S. U.)….26.00%
11Print mediaPeriodicals and newspapers that deals with current affairs and news 26.00%
Publication of scientific magazines as well as special journals and periodicals100.00%
12Satellite set up and operations….74.00%
13Tea sector along with tea plantation….100.00%
14TelecommunicationAccess services (Basic and unified)49 % to 74 %
I. S. P. with end to end bandwidth, gateways and radio paging49 % to 74 %
I. S. P. with specified gateway49 % to 100 %
15Test marketing of equipments, for which a company has got manufacturing approval….100.00%
16Trading items, which are sourced from the small scale industries….100.00%

Last Updated on 1/25/2012