FDI & FEMA

FDI Entry Routes & Sector Caps in India

Before you incorporate an Indian entity, confirm two things: which FDI route applies to your activity — automatic or government — and what sectoral cap and conditions attach to it.

Check Your Sector Foreign Company Setup →

In short: Most sectors in India — IT, manufacturing, most services, e-commerce marketplaces (up to 100%) — allow FDI under the automatic route with no prior approval, only post-investment FC-GPR reporting to the RBI within 30 days. Sensitive or capped sectors (defence, media, insurance, multi-brand retail) require prior government approval. A short list of activities is fully prohibited.

Automatic vs Government route

Automatic route

No prior approval. Investor incorporates the Indian entity, remits capital, allots shares and reports FC-GPR to the RBI within 30 days.

Government route

Prior approval from the administrative ministry via the National Single Window System (formerly FIFP) is mandatory before shares are issued.

Indicative sector caps

Sector policy is updated by DPIIT from time to time. As at the date of this page, the position is broadly as follows — always confirm the current FDI Policy circular and press notes before investing:

Sector	Cap	Route
IT / software / SaaS	100%	Automatic
Manufacturing (most)	100%	Automatic
E-commerce (marketplace model)	100%	Automatic
Single-brand retail	100%	Automatic
Multi-brand retail	51%	Government
Insurance	74%	Automatic (with conditions)
Defence	74% / above 74%	Automatic up to 74%; Government beyond
Print media (news)	26%	Government
Broadcasting (news)	26%	Government
Telecom	100%	Automatic up to 49%; Government beyond
Banking (private)	74%	Automatic up to 49%; Government beyond

Prohibited sectors

Lottery, gambling & betting, including casinos
Chit funds & Nidhi companies
Real-estate trading (other than construction development / townships)
Manufacture of cigars, cigarettes and tobacco products
Atomic energy & railway operations (except permitted areas)

Press Note 3 — land-border countries

Investments from countries that share a land border with India (or where the beneficial owner is situated in / a citizen of such a country) require prior government approval regardless of the sector or otherwise-applicable automatic route.

Pricing & FEMA compliance

Issue price to a non-resident must not be below the fair value under FEMA pricing guidelines
Transfer between a resident and non-resident is subject to a floor / ceiling on price
Valuation certificate by a SEBI-registered merchant banker or a Chartered Accountant is required
FC-GPR within 30 days of allotment; FC-TRS within 60 days of transfer; annual FLA return to RBI by 15 July

How we help

We confirm your sector position and route, prepare FEMA valuation, incorporate the Indian entity and file FC-GPR / FC-TRS / FLA — coordinated with our sister firm SME Advisory for ongoing FEMA / RBI compliance. See our foreign company formation service or WOS setup.

Frequently asked questions

What is the automatic route for FDI in India?

Under the automatic route, a foreign investor can invest in India up to the permitted sectoral cap without prior approval from the Government of India or the RBI. Only post-investment reporting via FC-GPR on the RBI FIRMS portal is required.

What is the government route?

The government route requires prior approval from the concerned administrative ministry / department through the National Single Window System (formerly the FIFP), for sectors that are sensitive or have a partial FDI cap.

Which sectors are prohibited for FDI?

FDI is prohibited in lottery, gambling and betting (including casinos), chit funds, Nidhi companies, real estate trading (other than construction development), tobacco manufacturing, and activities not open to private investment such as atomic energy and railway operations (excluding permitted areas).

Do investors from Press Note 3 countries need government approval?

Yes. Investments from an entity of a country that shares a land border with India, or where the beneficial owner is situated in or is a citizen of such a country, require prior government approval regardless of sector.

What is the FC-GPR filing timeline?

The FC-GPR must be filed on the RBI's FIRMS portal (Single Master Form) within 30 days of allotment of shares to the foreign investor, supported by a valuation certificate under FEMA pricing guidelines.

Reviewed by CA Regi Tom Antony, Regi Tom Antony & Associates. Last updated: July 2026. Sector caps are indicative — always confirm the current DPIIT FDI Policy circular before investing.

Not sure which FDI route applies?

Send us your sector and structure — we’ll confirm the route, cap and filings.

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