Foreign investment framework sets sectoral caps, prohibited sectors, and regulatory conditions for equity participation in Indian companies.

Foreign investment in Indian companies is regulated through entry routes, sectoral caps, prohibited sectors, payment conditions, and sector-specific conditionalities under the non-debt instruments framework. Equity instruments may be issued to persons resident outside India subject to automatic route or Government approval as applicable, with special rules for listed companies, wholly owned subsidiaries, issue against permitted remittances, and certain forms of consideration such as swap of equity, import of capital goods, pre-operative expenses, and equity capital swaps in accordance with prescribed foreign investment and overseas investment rules. Prohibited sectors include lottery, gambling and betting, chit funds, Nidhi companies, trading in transferable development rights, real estate business and farm houses.

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