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This article is written by Atif Ahemd, pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from


Since the liberalisation of FDI policies in the early 1990s, the Indian economy has welcomed many MNCs to invest in India and has opened the door to the humongous amount of foreign investment in the future. In India, the consolidated FDI Policy is the FDI manual for the investors. The consolidated FDI Policy is a compilation of various decisions taken by the government with regard to FDI in different sectors. This is a single document that makes it quite simple and easy for the investors to understand the country’s FDI policy and rules, who would otherwise have to go through the various press notes issued by the Department for Promotion of Industry and Internal Trade (“DPIIT”), and the RBI regulations. The latest such policy is the Consolidated FDI Policy, 2020, that has been issued by the DPIIT. 

If you want to make a foreign direct investment (“FDI”) in India, then depending upon the sector that you want to make investment in, there can be two routes, i.e. automatic route or approval route. Under automatic route, no prior approval of the government is required for investment. However, under the approval route, as the name suggests, you have to obtain prior government approval before you can make investment in that sector in India. 

Earlier, the process of obtaining the government approval used to be quite cumbersome, however, with the recent changes brought by the government which has revamped the erstwhile Foreign Investment Promotion Board (FIPB) into Foreign Investment Facilitation Portal (FIFP), the entire process of obtaining the government approval has become quite simple and time efficient as everything is done online and there is no requirement of physically appearing before any department. As a matter of fact, there isn’t any charge for it and the entire process is free of cost.

In this article, we shall discuss the entire process of receiving approval from the government for making FDI in India, right from submitting of the proposal, till receiving the approval letter. 

How to receive approval for making FDI under government approval route sectors?

Following are the steps that you need to follow to obtain approval from the government for making investments in the sector/industry that require “approval route”:

  • Submit an online proposal

The first thing that you need to do is visit the website of Foreign Investment Facilitation Portal (FIFP) and register yourself. After registration, you need to login by entering your user credentials and submit the proposal of investment by filing an online application form (in the available format) and attaching requisite documents. 

Click here to visit the website of FIFP.

List of documents that needs to be attached by the investor is as follows:

Sr. No.




Certificate of Incorporation of the Investee & Investor Companies/Entities



Memorandum of Association (MOA) of the Investee & Investor Companies/Entities



Board Resolution of the Investee & Investor Companies/Entities



Audited Financial Statement of Last Financial Year of the Investee & Investor Companies/Entities



Article of Association of the Investee & Investor Companies/Entities



List of names and addresses of all foreign collaborators along with the Passport copy/Identification Proof of the Investor Company/Entity



Details of ownership and control of Investee & Investor Companies/Entities. Details of significant beneficial owners of the Investee & Investor Entities



Diagrammatic representation of the flow and funds from the original investor to the investee company and Pre and Post shareholding pattern of the Investee Company



Affidavit stating that all information provided in hard copy and online are the same and correct



Signed copy of the JV Agreement/SHA/ Technology Transfer/Trademark/Brand Assignment Agreement (as applicable), in case there are existing ventures



Board resolution of any Joint Venture (JV) company



Certificates of Incorporation and charter documents of any JV/company which is a party to the proposed transaction



Copy of reported compliances in respect of Downstream Investments



Copy of relevant past FIPB/SIA/RBI approvals, connected with the current proposal (applicable in case of amendment proposal)



Copy of Foreign Inward Remittance Certificate (FIRC) in case investment has already come in and in case of post-facto approval



In the cases of investments by entities which themselves are pooled investment funds, the details such as names and addresses of promoters, investment managers as well as all the contributors to the investment fund 



List of the existing/proposed downstream investment(s) by the Indian Investee entity along with the details of the sector(s)/activity(ies) of such downstream entity(ies)



NCLT approval order in case of a scheme of arrangement



Valuation certificate as approved by a Chartered Accountant (CA)



Non-compete clause Certificate of the investor and investee company in case of investment in pharmaceutical sector (As per Annexure 10 of Consolidated FDI Policy Circular of 2016,, and as amended from time to time)



Certificate of statutory auditors as mandated in the FDI policy (as applicable)



Letter of authorization by the applicant in favour of the person(s) filing the application



Filled-in Security Clearance Form available at FIFP where security clearance of MHA is required as per para III(3) above.


Note: The concerned ministry/department can also ask for additional documents, which the applicant needs to supply within a period of 5 days.

  • Is there any fee for submitting FDI proposals on the FIFP website?

No, there is no fee for submitting any application or proposal for making foreign direct investment (FDI) through the government approval route. 

  • Does the application need to be digitally signed?

Although it is not mandatory for an application to be digitally signed, however it is highly advisable to do so, in order to save time and hassle, because if the applicant submits an application which is not digitally signed, he will have to courier the signed physical copy of the application form to the concerned ministry/department.

After submitting the online application to the Department for Promotion of Industry and Internal Trade (DPIIT), DPIIT would itself send an online communication to the applicant and ask him to forward a signed physical copy of the application along with duly authenticated copy of requisite documents to the Nodal Officers of the concerned ministry/department, within a period of 5 days. In case, the applicant does not send the required physical copy within a period of 7 days, then a period of additional 7 days would be given to the applicant to submit the same. After this period, in case no physical copy is received from the applicant, his application will be treated as closed.

Click here to view the contact details of the Nodal Officers of different ministries/departments (updated as of November 03, 2020).

  • E-transfer of proposal

Once you submit the online application by attaching the requisite documents on the website of FIFP, the Department for Promotion of Industry and Internal Trade (DPIIT) will itself e-transfer your application to the concerned ministry/department for its consideration, within a period of 2 days from the date of filing of the online application.

However, if you have not submitted a digitally signed application, then DPIIT will e-transfer the application within a period of 2 days from the date of filing of the physical application.

  • Which are the competent authorities/departments for approval?

The following are the competent authorities for grant of approval for FDI in the sectors that require the government approval:

  • Concerned Ministry/Department 

After receiving the proposal, DPIIT will e-transfer the proposal to the concerned ministry/department within 2 days. 

In case, there is a confusion amongst the applicant in respect to selecting the ministry/department, the DPIIT will itself identify the appropriate ministry/department, and e-transfer the proposal to it.

  • Preliminary Scrutinization

The concerned ministry/department will conduct a preliminary scrutinization of the proposal and documents and ask the applicant for any additional documents or information that might be required. All this will be done within a span of 1 week and through electronic medium (for example email). 

In case, the applicant does not respond to the query within 1 week, he shall be reminded by the concerned ministry/department to expedite and send response within the next 7 days. Failing this, another reminder of 7 days would be sent to the applicant. After this, if no response has been received from the applicant, his application will be closed.

  • What will the concerned ministry/department take into consideration while examining the proposal?

The concerned ministry/department will examine the proposal by taking into consideration the present FDI Policy, Press Notes, FEMA/RBI Notifications or Guidelines issued from time to time. 

The concerned ministry/department should also take into consideration the sectoral requirements and policies for receiving FDI into the concerned industry/sector. 

Additional Referrals

  • Cabinet Committee on Economic Affairs (CCEA)

In the cases where the proposals of FDI involve an amount of more than INR 5,000 Crore, the concerned ministry/department shall place the proposal for consideration before the Cabinet Committee on Economic Affairs, which shall issue the approval letter within a period of one week.

  • Other Ministries/Departments

There can be situations where the concerned ministry/department has to consult with other ministries/departments in respect of certain aspects of the proposal. In such cases, the consulted ministries/department will provide the required information with full justification by uploading their comments on the online portal within 4 weeks from the online receipt of the proposal. 

In case the comments of consulted ministries/departments are not received within the stipulated time, it would be presumed that they have no comments to offer. 

  • Security Clearance from MHA

The FDI proposals for investing in the sectors that require the security clearance, would mandatorily be referred to the Ministry of Home Affairs (MHA) for their comments.

The following proposals will require the security clearance from the Ministry of Home Affairs (MHA):

  1.  The investments in Broadcasting, Telecommunication, Satellites (establishment and operation), Private Security Agencies, Defence, Civil Aviation and Mining & Mineral separation of titanium bearing minerals and ores, its value addition and integrated activities. 
  2.  The investments from an entity of a country which shares the land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country. 
  3.  The transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly resulting in the beneficial ownership in any of the countries with which India shares the land border.

The comments by the Ministry of Home Affairs (MHA) on such proposals would be provided to the concerned ministry/department, within a period of six weeks from the online receipt of such proposal. 

In cases where the MHA is unable to provide its comments within a period of six weeks, it will intimate the concerned ministry/department about the expected time frame within which it would be able to provide its comments.

  • Referral to DPIIT

If the concerned ministry/department requires the clarification from the view point of FDI policy, then such an issue shall be referred to DPIIT for its clarification.

The DPIIT will provide the said clarification on the specific issues pertaining to FDI policy, within a period of 15 days. 

  • Circulated to RBI and MEA 

The DPIIT will also circulate the proposal online to the Reserve Bank of India (RBI) for receiving comments from Foreign Exchange Management Act, 1999 (FEMA) perspective.

Further, all proposals would be forwarded to the Ministry of External Affairs (MEA) for information. The MEA may give its comments within the stipulated time period, wherever necessary. 

All these comments will be given by RBI/MEA directly to the concerned ministry/department.

  • Acceptance or rejection of the proposal

Once the proposal is complete in all respects, the concerned ministry/department shall within the next two weeks, process the proposal for its final decision and convey the same to the applicant.

Approval/rejection letters will be sent online by the concerned ministry/department to the applicant, consulted ministries/departments and DPIIT.

However, in respect of the proposals where the concerned ministry/department proposes to reject the proposals or in cases where it wishes to put additional conditions for approval (i.e. in addition to the conditions laid down in the FDI policy or sectoral laws/regulations), concurrence of DPIIT shall be compulsorily sought by the concerned ministry/department within 10 weeks or 12 weeks (in cases where comments of MHA have been sought) from the receipt of the proposal.

The format of the approval letter is attached below:

Acquisition of Shares pursuant to Scheme of Arrangement

“How can the shares of an Indian company be acquired pursuant to a scheme of merger/demerger/amalgamation by a foreigner or a person who is not a citizen of India?” is another interesting question that is frequently wondered upon. 

The manner of acquisition of such shares pursuant to the scheme of mergers/demergers/amalgamations of companies in India is laid down in the consolidated FDI Policy, 2020 and Rule 19 of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.

In such circumstances, the approval of the National Company Law Tribunal (NCLT) as contemplated by the Companies Act, 2013, is a prerequisite and needs to be availed. It is only after obtaining the necessary approval of NCLT that the applicant can be granted approval of FDI from DPIIT.

In case, you have submitted your proposal without obtaining the approval of the NCLT in such cases, then your application will be closed and you would have to resubmit your application after obtaining the required approvals.

Additional Clarifications in the new Standard of Procedure, 2020

  • Prior approval of DPIIT is not necessary for closing the proposal for inadequate information:

It has been clarified in the new SOPs that the concerned ministry/department only needs to seek prior consultation of DPIIT for rejecting the proposal. However, if the proposal is being closed as closure will not amount to rejection of the proposal. Further, the competent authority for closing the proposal is the Secretary of the concerned ministry/department.

  • Fresh application need not be filed for amendment of an earlier Government/FIPB approval:

Wherein the FDI proposal seeks an amendment of an earlier Government/FIPB approval, the applicant shall not be asked to file a fresh application as all the information about them (except the amendment request and details connected thereto), are already available with the concerned Ministry/Department. Therefore, an application filed through FIFP seeking amendment(s) to earlier approvals is to be considered as a valid application and no fresh application is required to be filed.

  • Imposing of certain conditions by concerned ministry/department does not require the concurrence of the DPIIT:

The new SOPs clarified that: 

  1. The imposition of any penal provision for violation of FEMA rules or regulations with respect to the investee company or any of its upstream/downstream company, can be done in accordance with the provisions under FEMA.
  2. The requirement for compliance with regard to law of the land, for example sectoral laws, judicial directions and other state local laws and regulations which have been imposed by respective authorities, are also a part of FDI Policy. 

And thus, the concerned ministry/department does not require the concurrence of DPIIT for imposing such conditions.

  • Provisions with regards to contravention:

The new SOPs also clarified that the Foreign Direct Investment (FDI) is a capital account transaction and as such any violation or contravention of the FDI regulations is covered under Section 15 of the Foreign Exchange Management Act, 1999 and it also clarified that Foreign Exchange (Compounding Proceedings) Rules, 2000 provide for the compounding process of such contraventions.


After revamping the Foreign Investment Promotion Board (FIPB) into Foreign Investment Facilitation Portal (FIFP), the entire process of seeking the government approval for the FDI investment has become quite simple and time efficient. The entire process of deciding the FDI proposals and communicating the final acceptance or rejection letter shall not take more than 10 weeks or 12 weeks (where comments from MHA are sought). On top of it, the process has also become very convenient and comfortable for the investors as the entire communication takes place electronically and there isn’t any requirement of physically appearing before any department or ministry. In case, the investor is not able to figure out which is the appropriate authority/department for the sector he wants to make FDI in, the DPIIT will do that for him. The process is simple, time efficient, convenient and transparent. 

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