Indian Government Reduces Central Approval Process for FDI

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Feb. 17 – The Indian Cabinet Committee on Economic Affairs (CCEA) has reduced the approvals process concerning foreign direct investment into India by doubling the threshold required for prior government approval from Rs.6 billion (US$130 million) to Rs.12 billion (US$260 million).

The change has come following proposals put forward by the Department of Industrial Policy and Promotion. Investment beyond the new threshold amount will still require a recommendation from the Foreign Investment Promotion Board and the Minister of Finance.

The new policy is expected to enhance the approval process for big ticket investments into India. Fresh approval from the Finance Minister/CCEA is not needed for additional foreign investment in the following:

  • Entities whose activities were earlier under the approval route and had accordingly obtained prior approval of the FIPB/CCFI/CCEA, but such activities were subsequently placed under the automatic route
  • Entities whose activities attracted sectoral caps and had accordingly obtained approval of the FIPB/CCFI/CCEA for the initial foreign investment, but which sectoral caps were subsequently liberalized; provided that the total foreign investment complied with such revised sectoral caps
  • Where prior approval of the FIPB/CCFI/CCEA for additional foreign investment into the same entity was obtained to ensure compliance with Press Note 18 of 1998 or Press Note 1 of 2005, and prior government approval is not required for any other purpose

Companies requiring investment information, legal and tax considerations into India are advised to contact Vikas Srivastava, the legal associate for Dezan Shira & Associates in Mumbai at