Foreign Investment in India – FDI

As India’s government eases FDI restrictions, more investment is flowing into the country. Here is a short summary of FDI received in the last few months.

Summary

- The total FDI inflow received is US$ 35.73 bn from April to August 2020.
- FDI equity inflow received from April to August 2020 is US$ 27.10 bn.

Foreign direct investment is allowed in most sectors, and the sectoral lists for FDI falling under

  1. Automatic route
  2. Prior approval route
  3. Automatic + Prior approval route
  4. Prohibited Sectors

These lists are revised on a regular basis by the Government

1. Automatic route

Under the Automatic Route, the non-resident or Indian company does not require any approval from the Govt of India.

2. Prior approval route

Whereas, under the Prior approval route, approval from the Government of India is required prior to investment. Proposals for foreign investment under the prior approval route are considered by the respective Administrative Ministry/Department.

3. Automatic + Prior approval route

In the Automatic + Prior approval route, to some extend govt allows the investment in an automatic route, and if the investment share is crossing the limit then the company will need to apply for government approval.

4. Prohibited Sectors

Foreign Direct Investment is not allowed in few sectors, such as Lottery Business, Gambling, and Betting including casinos, Chit Funds, Nidhi Company, Trading in Transferable Development Rights (TDR), Real Estate Business or Construction of farmhouses, Manufacturing of cigars, cheroots, cigarillos, and cigarettes, of tobacco or of tobacco substitutes, atomic energy, railway operations (other than permitted activities mentioned under the Consolidated FDI policy).

% of FDI Allowed in different sectors in India

SL. NO.INDUSTRY/SECTORFDI CAPAUTOMATIC ROUTEGOVERNMENT APPROVAL
1Air Transport Services (non-scheduled and other services under civil aviation sector)100%100%-
2Air Transport Services (Scheduled air transport services, regional air transport services)100%Up to 49% (NRI-100%)Above
49%
3Airports (Greenfield & Brownfield)100%100%-
4Auto components 100%100%-
5Automobiles100%100%-
6Biotechnology (Brownfield)100%Up to 74%Above 74%
7Broadcast Content Services (Up-linking of Non- ‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels100%100%-
8Broadcasting Carriage Services100%100%-
9Broadcasting Content Services49%-49%
10Capital Goods100%100%-
11Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs)100%100%-
12Chemicals100%100%-
13Coal & Lignite100%100%-
14Construction Development: Townships, Housing, Built-up Infrastructure100%100%-
15Construction of Hospitals100%100%-
16Defense100%Up to 74%Above 74%
17Digital Media26%-26%
18Duty Free Shops100%100%-
19E-commerce activities100%100%-
20Electronic Systems100%100%-
21Food Processing100%100%-
22Food Products Retail Trading100%-100%
23Gems & Jewelry (Manufacturing)100%100%-
24Healthcare (Brownfield)100%74%Above 74%
25Healthcare (Greenfield)100%100%-
26IT and BPM100%100%-
27Leather100%100%-
28Medical Devices100%100%-
29Mining and Exploration of metal and non-metal ores100%100%-
30Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities100%-100%
31Multi Brand Retail Trading51%-51%
32Other services under Civil Aviation sector (Maintenance and Repair organizations; flying training institutes; and technical training institutions.)100%100%-
33Other services under Civil Aviation sector (Ground Handling Services subject to sectoral regulations and security clearance)100%100%-
34Petroleum & Natural Gas100%100%-
35Petroleum Refining (by PSUs)49%49%-
36Pharmaceuticals (Brownfield)100%Up to 74%Above 74%
37Pharmaceuticals (Greenfield)100%100%-
38Ports and Shipping100%100%-
39Print Media (Publication/ printing of scientific and technical magazines/specialty journals/ periodicals and facsimile edition of foreign newspapers)100%-100%
40Print Media (Publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news and current affairs)26%-26%
41Railway Infrastructure100%100%-
42Renewable Energy100%100%-
43Roads & Highways100%100%-
44Single Brand Product Retail Trading100%100%-
45Telecom Services100%Up to 49%Above 49%
46Textiles & Garments100%100%-
47Thermal Power100%100%-
48Tourism & Hospitality100%100%-

Note:

(i) All the information pertaining to the sectors as stated above, is in line with the extant Consolidated Foreign Direct Investment (FDI) Policy issued by DPIIT as amended from time to time.

(ii) In sectors/ activities not listed above, FDI is permitted up to 100% on the automatic route, subject to applicable laws/regulations; security, and other conditionalities.

(iii) A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defense, space, atomic energy and sectors/activities prohibited for foreign investment.

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