FDI in India: Entry Routes, Sectoral Caps & Compliance Checklist for Foreign Investors
India remains a preferred destination for cross-border investments due to its large consumer market, growing economy, and liberalized foreign direct investment (FDI) policy. However, for a foreign business or investor planning to invest in India, understanding the entry routes, sector-specific limits, and compliance procedures is crucial.
Jain Prachi & Company offers expert advisory and end-to-end regulatory assistance to help non-resident investors make compliant, tax-efficient, and strategic FDI into India.
Understanding FDI: What Is Foreign Direct Investment in India?
Foreign Direct Investment (FDI) refers to investment made by a non-resident entity or individual in the capital of an Indian company. This includes equity shares, fully and mandatorily convertible debentures, and preference shares.
The investment can be made by:
- Foreign companies
- Non-resident individuals
- Institutional investors
- NRIs/PIOs under repatriation or non-repatriation basis
FDI in India is governed under the Foreign Exchange Management Act (FEMA) and the Consolidated FDI Policy issued by the Government of India.
FDI Entry Routes in India
- Automatic Route
- No prior approval required from the Government of India or the Reserve Bank of India (RBI)
- Sectors like manufacturing, e-commerce marketplace, IT services, renewable energy, and most fintech businesses are eligible
- Reporting to RBI must still be done after the investment
- Government Approval Route
- Requires prior approval from the concerned Ministry/Department through the Foreign Investment Facilitation Portal (FIFP)
- Applicable to sensitive sectors like defence, telecom, media, and private security services
- Also applies when investing from or via countries sharing land borders with India (e.g., China)
Sectoral Caps and Restrictions
FDI is allowed in most sectors, but the percentage of foreign ownership may be capped. Some sectors also require special compliance.
Sector | FDI Limit | Entry Route |
IT Services, E-commerce B2B | 100% | Automatic |
Single Brand Retail | 100% | Up to 49% Automatic; beyond with approval |
Insurance | 74% | Automatic |
Defence | 74% | Up to 74% Automatic; beyond with approval |
Telecom | 100% | Up to 49% Automatic; beyond with approval |
Real Estate (Construction) | 100% | Automatic |
Multi-Brand Retail | 51% | Government Route |
Agriculture | 100% | Automatic |
Prohibited Sectors: FDI is not allowed in lottery, gambling, chit funds, real estate trading, tobacco manufacturing, etc.
Compliance Checklist After Receiving FDI
- Company Incorporation
- Set up a Private Limited Company or LLP (in select sectors)
- Must have a registered office and at least one Indian resident director
- FDI Reporting to RBI
Mandatory filings through the FIRMS Portal:
- Form FC-GPR: Filed within 30 days of share allotment
- Form FC-TRS: For transfer of shares between residents and non-residents
- Advance Remittance Reporting (ARF): Filed within 30 days of receipt of funds
- KYC & Documentation
- Know Your Customer (KYC) of the foreign investor through the AD Bank
- Board resolution, valuation certificate (as per FEMA), and shareholding documents required
- Pricing Guidelines
- Shares issued to foreign investors must be priced according to RBI’s valuation norms (preferably by a SEBI-registered valuer)
- Statutory Registrations
- PAN, TAN, GSTIN, and Import Export Code (IEC) if applicable
- Tax deduction at source (TDS) compliance for repatriable returns or dividends
How Jain Prachi & Company Supports FDI Investors
With hands-on experience across sectors and foreign investment structures, we streamline your FDI journey from entry to post-investment compliance.
Our Services Include:
- Sectoral analysis and entry route determination
- Company/LLP incorporation with FDI-friendly structure
- Valuation, documentation, and RBI compliance filings (FC-GPR, FC-TRS)
- Representation for Government approvals through FIFP
- Ongoing tax, FEMA, and secretarial support
- Advisory on repatriation, profit distribution, and exits
Why Choose Jain Prachi & Company for Your India Entry?
- Expertise in cross-border transactions and foreign ownership compliance
- Direct liaison with AD banks and RBI officials
- Trusted by clients from the US, Europe, UAE, Singapore, and more
- Transparent pricing with fixed compliance packages
Get Expert Guidance on FDI in India
Investing in India offers immense potential—but also regulatory complexity. Partner with us to ensure your FDI is structured to meet all legal, tax, and compliance requirements while maximizing returns.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
Book your free consultation today to discuss your FDI investment plan.
FAQs – FDI in India
Q: Can a foreign individual invest directly in an Indian company?
Yes, a foreign individual can invest under the automatic route in most sectors, subject to FEMA and KYC norms.
Q: Is RBI approval needed for all foreign investments?
No, investments under the automatic route only require post-investment reporting, not prior approval.
Q: How long does it take to process FDI filings with RBI?
Generally, 2–3 weeks after all documents are submitted correctly. Delays may occur if KYC or pricing guidelines are not followed.
