FDI POLICY IN

INDIA
INDIA HAS A LIBERAL POLICY ON FDI.
1. AUTOMATIC ROUTE
UNDER AUTOMATIC ROUTE, FDI IN SECTORS TO THE
EXTENT PERMITTED IN THIS CATEGORY REQUIRES NO
PRIOR APPROVAL BY THE RBI OR THE GOVT.
THE INVESTORS HAVE TO NOTIFY AND FILE THE
REQUIRED DOCUMENTS WITH THE CONCERNED
REGIONAL OFFICE OF THE RBI WITHIN 30 DAYS OF
RECEIPT OF INWARD REMITTANCES

2. GOVERNMENT APPROVAL
FDI NOT COVERED UNDER AUTOMATIC ROUTE,
REQUIRES GOVT. APPROVAL. SUCH APPROVALS,
INCLUDING PROPOSALS INVOLVING FOREIGN
COLLABORATION ARE GRANTED ON THE
RECOMMENDATION OF FOREIGN INVESTMENT
HOWEVER,
FDI BY
NRI & 100% EOU CASES
PROMOTION
BOARD
(FIPB)
ARE PRESENTED TO SECRETARIAT INDUSTRIAL
ASSISTANCE (SIA)
3. PROHIBITED
SECTORS
THE CURRENT POLICY DOES NOT PERMIT
FDI IN THE FOLLOWING CASES;

 GAMBLING AND
BETTING
LOTTERY BUSINESS
ATOMIC ENERGY
AGRICULTURE &
PLATATION
(EXCLUDING FLORICULTURE,
HORTICULTURE, DEVELOPMENT OF
SEEDS, ANIMAL HUSBANDARY,
PISICULTURE, CULTIVATION OF
VEGETABLE, MUSHROOMS.)
4. AREAS UNDER INDUSTRIAL LICENSING
INVESTMENT IN THE FOLLOWING AREAS REQUIRES
INDUSTRIAL LICENSE.
A. INDUSTRIES RESERVED FOR THE PUBLIC SECTOR
[ARMS & AMMUNITION COAL & LIGNITE, MINERAL OIL,
RAILWAY TRANSPORT]

B. INDUSTRIES RETAINED UNDER

COMPULSORY LICENSING
[ALCOHOLIC DRINKS, CIGARETTES & TOBACCO PRODUCTS,
ELECTRONIC &
DEFENCE EQUIPMEMENTS, EXPLOSIVES AND
HAZARDOUS
C. ITEMS OFPRODUCTS]
MANUFACTURE RESERVED FOR SMALL
SCALE SECTOR.
[AN INDUSTRIAL UNDERTAKING IS DEFINED AS
A SMALL SCALE UNIT, IF THE INVESTMENT IN
FIXED ASSETS AND MACHINERY DOES NOT
EXCEED
Rs.3 FOOD
Cr.]
ITEMS LIKE
& ALLIED SUCH AS PICKLE, BREAD,
WOOD PRODUCTS & FURNITURE, PAPER PRODUCTS, GLASS &
CERAMICS, PLASIC PRODUCTS, OTHER CHEMICAL ITEMS LIKE
WAX CANDLE, SAFETY MATCHES, AGARBATTIES etc. CAN NOT
BE PRODUCED BY NON- SMALL SCALE UNIT PROVIDED 50% OF
THE OUTPUT IS EXPORTED.

SMALL-SCALE UNIT IS NOT PERMITTED MORE THAN 24%

EQUITY IN ITS PAID-UP CAPITAL FROM A FOREIGN
UNDERTAKING.
D. IF PROPOSAL ATTRACTS LOCATIONAL
RESTRICTION.
INDUSTRIAL UNDERTAKING SHOULD BE AT LEAST 25
KMS. AWAY FROM THE STANDARD URBAN AREA (WITH
POPULATION MORE THAN 1 MILLION AS PER 1991
CENSUS.)
- HOWEVER, NON-POLLUTING INDUSTRIES SUCH
AS ELECTRONICS, COMPUTER SOFTWARE,
PRINTING etc. ARE EXEMPTED
- EVEN SMALL-SCALE UNITS ARE
EXEMPTED.

5. ENVIRONMENTAL
CLEARANCE
AS PER THE ENVIRONMENT (PROTECTION ACT 1986, FOR
SETTING UP AN INDUSTRIAL PROJECT LISTED BY THE
MINISTRY OF ENVIRONMENT AND FORESTS,
ENTREPRENEURS ARE REQUIRED TO OBTAIN STATUTORY
CLEARANCES RELATING TO POLLUTION CONTROL AND
ENVIRONMENT
THIS LIST INCLUDES PETROCHEMICALS COMPLEXES,
PETROLEUM REFINERIES, CEMENT, THERMAL POWER
PLANTS, BULK DRUGS etc.