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| POLICY ON FOREIGN DIRECT INVESTMENT (FDI) |
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| India’s foreign investment regulations are based on the following principles: |
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Foreign investment is prohibited in |
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Retail Trade (except Single Brand/ product retailing); |
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Lottery business; |
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Gambling and betting; and |
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Atomic Energy |
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In some sectors, foreign investment is allowed only in specified activities subject to sector-specific equity limits and/or other conditions.The list of sectors, the type of approval and the sector-specific foreign shareholding limits appears in the Annex. |
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In sectors/activities not listed in the Annex, foreign direct investment up to 100% is allowed through the automatic route (i.e. no prior permission is required), subject to sector rules / regulations as applicable. |
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Prior government approval is required for FDI in the following circumstances: |
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Where the sector/ activity is specified for specific approval ( e.g. investment in single brand retailing) |
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where applications are from entities already having an existing previous joint venture/technology transfer/royalty agreement in the same field in India; |
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Where more than 24% foreign equity is proposed to be inducted for manufacture of items reserved for the Small Scale sector. |
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| Procedures for Applications |
For applications eligible for automatic approvals, details of the foreign collaborator, details of shares allotted, are to be filed within 30 days of the issue and export of share certificates to the foreign investor/ collaborator, along with a copy of the foreign collaboration agreement, the original foreign inward remittance certificate and other specified information. These details are to be sent in a prescribed form to the regional office of the Reserve Bank of India. For further details, please refer to the Exchange Control Manual or the RBI website www.rbi.org.
Applications covered under the Specific Approval route can be made to the Foreign Investment Promotion Board (FIPB), Ministry of Finance, on plain paper or in a form downloadable from the official website (www.dipp.gov.in), providing all details of the proposed activities and justification for approvals. No fee is payable. Applications can be tracked online by feeding the application registration number.
Companies having foreign investment approval through Foreign Investment Promotion Board (FIPB) route do not require any further clearance from RBI for receiving inward remittance and issue of shares to the foreign investors. The companies are required to notify the concerned Regional office of the RBI of receipt of inward remittances within 30 days of such receipt and within 30 days of issue of shares to the foreign investors or non-resident Indians. |
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ICREON