India has one of the most transparent and liberal Foreign Direct Investment (FDI) regimes among emerging and developing economies. Differential treatment is limited to a few entry rules, predominantly in some Services sectors, spelling out the proportion of equity that the foreign investor can hold in an India-registered company or business-termed "sector caps". Foreign corporate and individual investment in India, termed collectively as Foreign Direct Investment (FDI) when it relates to control or ownership of a company in India, takes one of two routes:

Automatic route or Automatic Approval:
This requires no prior approval for FDI. Post-facto filing of data relating to the investment made with the Reserve Bank of India (RBI) are for record and data purposes. This route is available to all sectors or activities that do not have a "sector cap" i.e. where 100% foreign ownership is permitted, or for investments that are within a sector cap (e.g. less than or equal to 26% share of an Insurance company) and where the Automatic route is allowed.

FIPB Approval - the Foreign Investment Promotion Board (FIPB) approves investment proposals:

where the proposed shareholding is above the prescribed sector caps, or

where the activity belongs to that small list of sectors where FDI is either not allowed or where it is mandatory that proposals be routed through the FIPB (e.g. sectors that require industrial licensing)

The FIPB ensures a single-window approval for the investment and acts as a screening agency (for sensitive/negative list sectors). FIPB approvals (or rejections) are normally received in 30 days. Some foreign investors use the FIPB application route where there may be absence of stated policy or lack of policy clarity.

Please refer to the latest Consolidated Policy on Foreign Direct Investment

Foreign Direct Investment routes define when automatic entry or FIPB approval and single window clearance apply. Foreign Direct Investment is channelled via the Automatic Route, which requires no prior approval and mandates post facto Reserve Bank of India filings where full foreign ownership or investments within sector caps are permitted, or via FIPB Approval where proposed shareholding exceeds caps or the activity falls in restricted or industrially licensed sectors; the FIPB provides single window screening and clearance and is used where policy clarity is lacking.