Routes to India through FDI?

The entrance of FDI into India by foreign national/ non residents is regulated.

Through automatic route and through approval route.

Automatic route

The automatic route is aimed for those sectors and levels of investment that are not as much of restriction. Company/ Investors does not require any approval from the RBI or GoI for FDI.

Approval Route 

In the case of approval route, government agencies regulate and inspect FDI while approving it. The approval route FDI is allowable in all sectors and activities specified under the consolidated FDI policy. The investor or the company should take prior approval of the GoI agencies or bodies specified.

Proposals for FDI in approval route as laid down in the FDI policy are considered by either FIPB or Cabinet Committee on Economic Affairs or Cabinet Committee on Securities. In certain cases, the Department of Economic Affairs (DEA) or Department of Industrial Policy & Promotion are also assisting the above approving agencies. The FIPB considers those investments up to Rs 5000 crores for approval. Above this limit, approval will be made by CCEA.

Body or agency has to give the approval for a specific FDI proposal depends upon the sector and nature of investment specified under the consolidated policy on FDI. For example, as per the new FDI policy on defense sector, FDI more than 49% and also that involves more than Rs 2000 crores investment is to be approved by the Cabinet Committee on Securities.