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

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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