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Foreign Investment Approvals

India has emerged one of the favorite countries receiving Foreign Direct Investment in almost all the sector. The approval of the foreign investment has been made easier after the globalization making India an investment friendly nation. The government investment policies have become transparent and flexible to get more investment. Foreign investments are directly approved in some while others require prior approval before investing. Investing company has to seek approval from Foreign Investment Promotion Board in the following cases.

  • Sectors that are not permitted to get FDI.
  • Sectors need industrial license.
  • Foreign investor already having collaboration with other business in the same field.
  • To acquire shares by a foreign investor in financial services in India as these are restricted according to SEBI in 1997.
  • Investment proposals other than Sectoral Policy/CAPS category.

Automatic approval of FDI
Investment can be approved automatically informing the Reserve Bank of India through bank in which shares application money has been received in the form of FC-GPR after the transfer of funds required in the business and deposit all the document within 30 days of issuing the shares to the investors.

To get automatic approval following procedure must be followed:

  • Apply in form 83 with a duplicate to the authorized dealer after certified by a company secretary or chartered accountant.
  • Form will be forwarded to the Director, Balance of Payment Statistics Division, Department of Statistical Analysis and Computer Services and Reserve Bank of India to give the loan registration number.
  • Company will be eligible to use the loan after receiving the registration number.
  • Borrower has to submit ECB-2 return to DESACS every month within the seven working days from the last day of the closing month.