Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
100% allowed in most sectors
Automatic route means no prior approval — just FEMA-compliant pricing and FC-GPR reporting.
Restricted sectors
Defence, insurance, media, multi-brand retail and a few others have caps or approval requirements. Confirm your sector’s policy.
Automatic vs approval, and the sector check
India’s FDI policy works on a sector-by-sector basis, and the key distinction is the route. Under the automatic route — which covers most sectors, including IT, software, manufacturing, most services and trading — a foreign company can hold up to 100% with no prior government approval; it just has to follow FEMA pricing and reporting (banking-channel funds, FC-GPR within 30 days, the annual FLA return). Under the government (approval) route, you need clearance from the relevant ministry before investing, and some sectors carry equity caps rather than allowing a full 100%. Examples of restricted or capped sectors include defence (capped, higher levels by approval), insurance, print and broadcast media, and multi-brand retail, with a small prohibited list (such as lottery, gambling and chit funds) where FDI isn’t allowed at all. Conditions like minimum capitalisation or lock-in can attach to particular sectors. So the answer is usually yes — 100% is allowed — but the first step is always to confirm where your specific activity sits in the policy, because the route and any cap are decided by the sector, not by the size of the investment. Checking the current sector policy before committing avoids a structure that later needs approval or restructuring.