Manual on Foreign Investment Policy
The Indian Government's attitude towards foreign investment has changed significantly during the past decade. Until the 1980s, foreign investment was permitted only in cases where a desired technology was not obtainable on any other terms. With the introduction of the Statement on Industrial Policy of 1991, the government began taking a more liberal attitude. Automatic approval was granted in specified high-priority industries for up to 51 percent direct foreign investment and in trading companies engaged primarily in export activities. In 2000, the Foreign Direct Investment (FDI) policy was further liberalised and now foreign investment up to 100 percent for new and existing companies / firms, is permitted under the automatic route (i.e. without requiring prior approval) for all items/activities except for a few specific sectors.
Government Policy on Foreign Equity Investment
Foreign investment is allowed in all areas other than the following sectors in which foreign investment is prohibited:
- Retail Trading (except Single Brand Retail Trading).
- Atomic Energy.
- Lottery Business/ Gambling & Betting.
- Agriculture (excluding floriculture, horticulture, seed development, animal husbandry, pisciculture and cultivation of vegetables, mushrooms etc.).
- Plantations (excluding Tea plantation).
For all other sectors, there are two approval routes for foreign investment in India:
- Automatic route under delegated powers exercised by the Reserve Bank of India (RBI).
- Approval by the Government through the Foreign Investment Promotion Board (FIPB) under the Ministry of Finance.