The Foreign Direct Investment (FDI) to the permitted Indian economic sectors is facilitated both through the Government and the Automatic Routes. Exclusive information about the foreign direct investment and its routes in India is being presented in this webpage, to help foreign investors of the world over.
Today, as India is one of the major and fast-progressive economies, and top three investment destinations in the whole world, it has given secure and lucrative investment opportunities to global investors in a rather large number of economic sectors. These sectors allow FDI through the automatic route, or government route, and the combination of these both routes (especially for FDI beyond 49% and up to 74 or 100%, for investment in the majority of the Indian economic sectors). For getting fertile information about the various economic sectors open to FDI in India, please visit other relevant web-pages of this internationally reputed and reliable legal website of India.
Here, it must be noted that, under both FDI routes in different Indian economic sectors, the foreign investors are essentially required to follow strictly the FDI Policy of the Central Government of India, the directly concerned State Government, and the rules and regulations of the RBI. They may also need to satisfy the conditions and provisions given in the rules and regulations of the SEBI and FEMA.
Naturally, the easiest of the two routes for fdi in India, is the automatic route, as it does not much processing and documentations. Under this entry route for FDI in India, there is no need to acquire prior approval either from the Government of India or the RBI. The investors forming a wide variety are only required to notify the relevant regional office of RBI regarding the inward remittances and issuance of shares, within 30 days of occurrence of each of these activities. As per the extant FDI Policy of India, there are an unusually large number of economic sectors are open for FDI through this automatic route, up to 49%, and even up to 74 or 100%.
Government Approval Route
Under the Governmental Route for making FDI in India, prior approval of the governmental bodies is mandatory. The proposals of FDI in any economic sector under the government route are examined, analyzed, and then approved by the Foreign Investment Promotion Board (FIPB), and may also be presented before the Cabinet Committee on Economic Affairs (CCEA), or the Cabinet Committee on Security. The FIPB offers the single window clearance for the investment proposals (worth Rs.-2000 Crore or less) which are not permitted through the automatic route. The CCEA generally considers proposals amounting to INR-2000 Crore or more. Lastly, FDI proposals in sectors of high sensitivity and security concerns are analyzed by the Cabinet Committee on Security, for approval. According to the latest FDI Policy of India, FDIs in many major and significant sectors are possible beyond 49%, through this government route.