Automatic Route: FDI is permitted without prior Government approval, subject to applicable sectoral limits and conditions. Government Route: FDI requires prior approval from the Government before the investment is made, along with compliance with applicable conditions.

Automatic route and Government route- Checklist

Automatic Route

How the Automatic Route Works (Step-by-Step)

Step 1: Identify Your Sector First, confirm your business sector is allowed under the automatic route and check the FDI cap (the maximum foreign ownership percentage allowed).

Step 2: Set up or invest in an Indian company (private limited, LLP, etc.) – choose a company structure, check sector rules, and follow Reserve Bank of India (RBI) and company‑law rules

Step 3: Issue Shares to Foreign Investor The Indian company issues shares to the foreign investor. The investment must come through proper banking channels—no cash transfers.

Step 4: RBI Notification (Within 30 Days) Within 30 days of share allotment, the Indian company must:

• File Form FC-GPR on the RBI’s FIRMS (Foreign Investment Reporting and Management System) portal
• Notify the RBI through an authorized Category-I bank

Step 5: Documentation Complete Once filed; the RBI records the investment. You’re done—no government ministry approvals needed.

Government Route

Sectors Requiring Government Approval

These sectors must go through the government route:

How the Government Route Works (Step-by-Step)

Step 1: File Application on FIFP Submit your FDI proposal on the Foreign Investment Facilitation Portal (FIFP) at fifp.gov.in. This is India’s single-window system for government approvals.

Step 2: Single-Window Clearance The DPIIT routes your application to the relevant ministry:

• Ministry of Defence (for defence sector)
• Ministry of Information & Broadcasting (for media)
• Ministry of Health (for multi-brand retail of pharmaceuticals)
• Ministry of Civil Aviation (for airlines)
• Other relevant ministries based on your sector

Step 3: Ministry Review (2-4 weeks) The concerned ministry reviews your proposal considering:

• Export potential
• Impact on Indian economy
• Foreign currency inflow/outflow
• Employment generation
• Technology transfer benefits
• Strategic importance

Step 4: Security Clearance (if needed) For sensitive sectors (telecom, defence, media, civil aviation), the Ministry of Home Affairs (MHA) must provide security clearance (within 6 weeks).

Step 5: Final Approval (6-10 weeks total) Once all ministries agree, you receive written approval. Only then can investment money enter India.

Step 6: Process Funds After approval, remit investment through banking channels and follow the same RBI notification process as the automatic route.