Every FDI transaction into India travels one of two roads. The automatic route needs no permission – invest first, report after. The government (approval) route requires the competent ministry’s sign-off before a single rupee of capital is issued. This guide explains which route applies, how the approval process actually runs under the revised DPIIT SOP of May 2026 (12-week outer timeline, digital-only filing), and the mistakes that stall applications.
Which route applies to you?
| Situation | Route |
|---|---|
| Sector allows 100% FDI with no conditions (IT, most services, manufacturing) | Automatic – no approval; FC-GPR within 30 days of allotment |
| Investment within the automatic portion of a capped sector (e.g. up to 49% in private banking) | Automatic |
| Investment beyond the automatic threshold (defence above 74%, brownfield pharma above 74%) | Government |
| Government-route sector at any level (multi-brand retail, print media) | Government |
| Investor entity or its beneficial owner (10% PMLA test) is from a land-border country, with 10%+ or controlling stake | Government – regardless of sector; see the Press Note 3 guide |
| Land-border investor below 10%, non-controlling | Automatic (since May 2026) with DPIIT reporting |
The approval process, step by step
- 1. File on NSWS – only the investor entity may apply (digitally signed, with affidavit). Attach the investment structure, beneficial-ownership chart, financials, and draft agreements;
- 2. DPIIT circulates the proposal to the competent authority plus RBI, MHA and MEA within 2 days;
- 3. Scrutiny – the competent ministry raises deficiency queries within 12 days; consulted authorities get 6 weeks to comment (silence = deemed no-comments under the 2026 SOP);
- 4. Security clearance where the sector demands it (broadcasting, telecom, space, defence, aviation, private security) and for all land-border applications;
- 5. Decision – approval letter or rejection within the SOP’s 12-week outer limit; rejections and non-standard conditions need DPIIT concurrence. Proposals above ₹5,000 crore go to the Cabinet Committee on Economic Affairs.
Conditions that ride along with approval
- Approval letters carry standard conditions (compliance with sectoral laws, reporting, no change without fresh approval where percentages move);
- An existing approval holder can raise the investment amount without fresh approval if the foreign percentage is unchanged and the total stays within ₹5,000 crore – a 30-day intimation suffices;
- Post-approval, the normal machinery applies: money in through banking channels, allotment within 60 days, FC-GPR, and the annual FLA return.
Automatic route – the checklist that replaces approval
No approval does not mean no compliance. On the automatic route the checks simply shift to the AD bank and the filings:
- Sector qualifies and cap not breached (your CS certifies this in the FC-GPR);
- Pricing per Rule 21 – a valuation certificate from a CA, merchant banker or cost accountant;
- Beneficial-ownership declaration (the land-border test now uses the 10% PMLA definition);
- Entity Master and Business User set up on FIRMS before the first filing;
- FC-GPR within 30 days; FLA every July. Miss a deadline and the LSF regime applies.
Facing the approval route?
We prepare NSWS applications, beneficial-ownership charts and the FEMA paper trail – and keep the deal timeline honest.
Talk to My Cloud AccountantFrequently asked questions
Is there a fee for FDI approval applications?
No – filing on the National Single Window System is free. The costs are professional: structuring, documentation and responding to queries.
How long does FDI approval take in India?
The 2026 SOP sets a 12-week outer limit from filing to decision, with deemed no-comments if consulted authorities stay silent. Security-clearance sectors and land-border cases can run longer; the new fast track promises 60 days for priority manufacturing investments from land-border countries.
Can I invest first and seek approval later?
No. On the government route, receiving investment without prior approval is a FEMA contravention requiring compounding, and the instruments may need unwinding. Approval always precedes allotment.
Who decides my application?
The competent ministry for the sector – DPIIT for trading/retail, DoT for telecom, Department of Financial Services for banking, MIB for media, and so on. DPIIT coordinates and must concur before any rejection.
Based on the FEM (NDI) Rules 2019, DPIIT Standard Operating Procedure dated 4 May 2026 and the Consolidated FDI Policy 2020. Last reviewed: July 2026.