image

FDI

About FDI

Facebook IconLinkedIN Icon

What is Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology.
 
Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.  
 
Where is FDI made?
 
Foreign Direct Investments are commonly made in open economies that have skilled workforce and growth prospect. FDIs not only bring money with them but also skills, technology and knowledge.
 
FDI in India
 
FDI is an important monetary source for India's economic development. Economic liberalisation started in India in the wake of the 1991 crisis and since then, FDI has steadily increased in the country. India, today is a part of top 100-club on Ease of Doing Business (EoDB) and globally ranks number 1 in the greenfield FDI ranking.
 
Routes through which India gets FDI
 
Automatic route: The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.
 
Govt route: The government's approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance. The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce. DPIIT will issue the Standard Operating Procedure (SOP) for processing of applications under the existing FDI policy.
 
Sectors which come under the ' 100% Automatic Route' category are
 
Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services, Services under Civil Aviation Services such as Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White Label ATM Operations.
 
Sectors which come under up to 100% Automatic Route' category are
 
  • Infrastructure Company in the Securities Market: 49%
  • Insurance: up to 49%
  • Medical Devices:up to 100%
  • Pension: 49%
  • Petroleum Refining (By PSUs): 49%
  • Power Exchanges: 49%
 
Government route
 
Sectors which come under the 'up to 100% Government Route' category are
 
  • Banking & Public sector: 20%
  • Broadcasting Content Services: 49%
  • Core Investment Company: 100%
  • Food Products Retail Trading: 100%
  • Mining & Minerals separations of titanium bearing minerals and ores: 100%
  • Multi-Brand Retail Trading: 51%
  • Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
  • Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
  • Satellite (Establishment and operations): 100%
 
FDI prohibition
 
There are a few industries where FDI is strictly prohibited under any route. These industries are
 
  • Atomic Energy Generation
  • Any Gambling or Betting businesses
  • Lotteries (online, private, government, etc)
  • Investment in Chit Funds
  • Nidhi Company
  • Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc)
  • Housing and Real Estate (except townships, commercial projects, etc)
  • Trading in TDR’s
  • Cigars, Cigarettes, or any related tobacco industry
 
FDI inflow
 
During the fiscal ended March 2019, India received the highest-ever FDI inflow of $64.37 billion. The FDI inflows were $45.14 billion during 2014-15 and $55.55 billion in the following year.

Latest Updates on FDI

India's insurance sector set for 'massive' growth despite risks: S&P

S&P Global Ratings said regulatory reforms, low insurance penetration and higher foreign investment will drive long-term expansion, though profitability and macroeconomic challenges remain

Updated On: 06 Aug 2026 | 1:35 PM IST

Foreign etailers told to set up separate export-only units in India

The DGFT has notified a framework requiring foreign-owned e-commerce firms to create separate legal entities for inventory-based exports of Indian-made goods under the revised FDI policy

Updated On: 05 Aug 2026 | 11:53 PM IST

Six issues impeding foreign investors in India need urgent attention

There is no single policy intervention that will alter this trajectory. We must assess the entirety of foreign firms' interaction with the Indian state

Updated On: 02 Aug 2026 | 11:25 PM IST

India okayed just one FDI proposal from China, 13 from Hong Kong in FY26

Overall, the government has approved 63 FDI (foreign direct investment) proposals worth Rs 10,292.67 crore, or $1.18 billion, during April 2025-March 2026, according to the DPIIT data

Updated On: 02 Aug 2026 | 10:31 PM IST

FDI policy change set to lift ODOP, handicraft exports via online platforms

One District One Product (ODOP) is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) for promotion of at least one product from each district of the country

Updated On: 02 Aug 2026 | 10:41 AM IST

Sectoral, destination shifts mark outward Indian FDI commitments in June

Shifting global supply chains are pushing more Indian firms to build a footprint abroad

Updated On: 31 Jul 2026 | 12:04 PM IST

Best of BS Opinion: States must reduce debt in face of redemption pressures

From mounting state debt and agricultural research to public asset monetisation, China-linked investment and Tim Berners-Lee's vision for reclaiming the open web

Updated On: 30 Jul 2026 | 6:15 AM IST

India must tread cautiously on further easing of Chinese FDI norms

The experience of Asean economies and the European Union shows Chinese investments come with serious implications for host countries

Updated On: 29 Jul 2026 | 11:46 PM IST

India must remove investment barriers, ease non-tariff measures: Report

Competere Foundation says reducing investment restrictions and addressing overseas regulatory barriers are key to boosting exports, productivity and long-term growth

Updated On: 29 Jul 2026 | 7:59 PM IST

Net FDI decline due to increased repatriation by foreign investors: Govt

FDI declined in recent years, from $27.99 billion in FY23 to $6.95 billion in FY26, due to increased repatriation by foreign investors and rising Overseas Direct Investment (ODI) outflows

Updated On: 28 Jul 2026 | 11:41 PM IST

Govt considering proposal to ease FDI norms for downstream investments

The government is considering a proposal to ease foreign direct investment (FDI) norms for downstream investments to boost overseas fund inflows and create jobs, sources said

Updated On: 28 Jul 2026 | 8:24 PM IST

Unnecessary division: A modern ecommerce policy is the need of the hour

The retail sector in India has faced multiplicity of rules for decades, and that issue should be addressed fast at a time when newer formats, such as quick commerce, are emerging as a driving force

Updated On: 27 Jul 2026 | 11:42 PM IST

Trade body calls for rollback of FDI in inventory-based ecom policy

CAIT seeks rollback of the new e-commerce FDI export policy, alleging it favours Amazon and Flipkart, while experts say clearer implementation rules are needed

Updated On: 24 Jul 2026 | 10:28 PM IST

Bupa open to raising stake in Niva Bupa

Bupa is open to increasing its stake in Niva Bupa as its India business outperforms global operations, with the insurer also focusing investments on technology and distribution

Updated On: 24 Jul 2026 | 5:14 PM IST

Govt allows Amazon and Flipkart to build inventories for exports

The DPIIT said the restrictions on inventory-based e-commerce models would no longer apply where such entities deal exclusively in exports of goods manufactured or produced in India

Updated On: 23 Jul 2026 | 10:31 PM IST

India's ambition of becoming developed economy demands policy certainty

India needs predictable tax, trade and regulatory policies to attract foreign capital, boost investment and achieve its Viksit Bharat growth ambitions

Updated On: 22 Jul 2026 | 11:44 PM IST

Foreign investors return shows renewed confidence in India: RBI bulletin

The central bank said resilient domestic activity, improving trade momentum and stronger foreign investment inflows point to a favourable outlook for the Indian economy

Updated On: 22 Jul 2026 | 11:28 PM IST

Best of BS Opinion: India's foreign exchange strategy needs stable capital

From forex inflows and examination reform to FPI policy, rupee depreciation and behavioural science, today's Best of BS Opinion examines India's key policy choices

Updated On: 22 Jul 2026 | 6:15 AM IST

What's next for insurance after 100% FDI: Governance challenges ahead

India's 100% FDI regime for insurance opens the sector to global players, but faster approvals, stronger oversight and AI safeguards will determine its long-term success

Updated On: 12 Jul 2026 | 10:47 PM IST

Why foreign-owned ecom firms' operating models are under the lens

Foreign e-commerce companies are allowed to do business through the marketplace model as opposed to the inventory-led format

Updated On: 12 Jul 2026 | 10:31 PM IST