FDI refers to investment made by a person residing outside India through capital instruments in either an unlisted Indian company or in at least 10% of the post-issue paid-up equity capital (on a fully diluted basis) of a listed Indian company.
- Automatic Route: A non-resident investor or an Indian company does not require any prior approval from the Government of India or the Reserve Bank of India (RBI) to invest. The investor only needs to inform the RBI within a specified timeframe after the transaction.
- Government Route: Prior approval from the government is mandatory. The respective administrative Ministries/Departments consider proposals. The Foreign Investment Facilitation Portal (FIFP) acts as the single-window clearance mechanism.
Sectors with FDI Prohibitions
- Lottery Business (including Government/private lottery, online lotteries, etc.)
- Gambling and Betting (including casinos)
- Chit funds and Nidhi companies
- Trading in Transferable Development Rights (TDRs)
- Real Estate Business or Construction of Farm Houses (Note: Development of townships, roads, bridges, and educational institutions is permitted and does not fall under this prohibition)
- Manufacturing of cigars, cheroots, cigarillos, and cigarettes, of tobacco or of tobacco substitutes
- Sectors/activities not open to private sector investment (e.g., Atomic Energy and Railway Operations other than permitted infrastructure projects).
Source: The Hindu