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Monthly DNA
12 Dec, 2021
10 Min Read
Paper | Topics | Subject |
---|---|---|
GS-III | FDI Reforms | Economic Issues |
There are three routes through which Foreign direct investment flows into India. They are described in the following table:
Category 1 |
Category 2 |
Category 3 |
100% FDI permitted through Automatic Route |
Up to 100% FDI permitted through Government Route |
Up to 100%, FDI permitted through Automatic + Government Route |
Automatic Route FDI
In the automatic route, the foreign entity does not require the prior approval of the government or the RBI
Examples:
Under the government route, the foreign entity should compulsorily take the approval of the government. It should file an application through the Foreign Investment Facilitation Portal, which facilitates single-window clearance. This application is then forwarded to the respective ministry or department, which then approves or rejects the application after consultation with the DPIIT
Examples:
There are some sectors where any FDI is completely prohibited. They are:
Union Cabinet on Wednesday approved 100% Foreign Direct Investment in direct tohome (DTH) services, an extension of the licence period from 10 years to 20, and a reduced licence fee.
Source: PIB
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