Foreign Investment (FI)

A. Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.

B. Government route: Prior approval by government is needed via this route. The application needs to be made through foreign investment facilitation portal, which will facilitate single window clearance of FDI application under approval route. The application will be forwarded to the respective ministries, which will act on the application as per the standard operating procedure issued by the foreign investment facilitation portal (fifp.gov.in). This portal is being administered by the department for promotion of industry and internal trade (DPIIT), Ministry of commerce & industry.

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Investment by a resident outside India is prohibited in the following sectors:

• Lottery business including government/ private/ online lotteries.
• Gambling and betting, including casinos.
• Chit funds (except for investments made by NRIs and OCIs on a non-repatriation basis).
• Nidhi company (Mutual Benefit Funds Company) trading in transferable development rights (TDRs).
• Real estate business or construction of farm houses.
• Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes. The prohibition is on manufacturing of the products mentioned and foreign investment in other activities relating to these products including wholesale cash and carry, retail trading etc. will be governed by the sectoral restrictions laid down in regulation 16 of FEMA 20(R).
• Activities/ sectors not open to private sector investment viz., (i) Atomic energy and (ii) Railway operations.
• Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for lottery business and gambling and betting activities.

FDI into India requires reporting in specific forms in an online reporting system regulated by RBI. The reporting platform is hosted at firms.rbi.org.in

• Ensure entity master of target entity in place: An entity master form is the form where the details of the company and foreign investment pattern are recorded. The foreign investment details of the entity are provided on the entity master by a person authorised by the company, called the entity user.
• Register for business user: The business user is the person authorised by the company who would be reporting the FDI transactions on behalf of the company.
• Filing on single master form (SMF) on FIRMS Portal: A single master form is the master form on which the reporting for the foreign investment (FC-GPR, FC-TRS, LLP-I, LLP-II, CN, ESOP, DRR, DI, Invi) can be done.