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India is one of the world's most open FDI destinations, with over 90% of inflows arriving through the automatic route, no prior government approval required. But certain strategic sectors still require government clearance, and a handful are entirely prohibited. For any foreign national or company planning to invest or set up a business in India, understanding the sector-specific rules is essential.
This guide lays out every major sector, its FDI cap, and the applicable entry route — all in one place.
The Two Routes: Automatic vs. Government Approval
Automatic Route
No prior approval from the government or the Reserve Bank of India (RBI) is required. The foreign investor simply brings in funds, allots equity within 60 days, and files an intimation with the RBI. Faster and simpler — used in over 90% of FDI into India.
Government / Approval Route
Prior approval is mandatory from the competent authority — either a specific Ministry or the RBI. Applications are filed via National Single Window System at https://www.nsws.gov.in/ Required for sensitive or strategic sectors.
Sectors Prohibited for FDI
Investment by any person resident outside India is prohibited for certain specific sectors in India which are as follows:
- Lottery Business including Government/ private lottery, online lotteries.
- Gambling and betting including casinos.
- Chit funds
- Nidhi Company.
- Trading in Transferable Development Rights (TDRs).
- Real Estate Business or Construction of Farm Houses excluding development of townships, construction of residential/ commercial premises, roads or bridges and Real Estate Investment Trusts (REITs) registered and regulated under the SEBI (REITs) Regulations, 2014
- Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
- Activities/ sectors not open to private sector investment viz., (i) Atomic energy and (ii) Railway operations
- Foreign technology collaboration in any form including licensing for franchise, trademark, brand name, management contract is also prohibited for Lottery Business and Gambling and Betting activities
Sector Permitted in FDI
In India, 100% FDI is allowed under automatic route in most of the permitted sectors and in certain other sectors, FDI is allowed on percentage basis.
|
Activity Sector |
FDI Limit |
Entry Route |
|
|
Agriculture and Animal Husbandry
|
100% |
Automatic |
|
|
Plantation Sector
Note: Besides the above, FDI is not allowed in any other plantation sector/ activity |
100% |
Automatic |
|
|
Mining Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores |
100% |
Automatic |
|
|
Mining (Coal & Lignite) |
100% |
Automatic |
|
|
Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities |
100% |
Government |
|
|
Petroleum & Natural Gas
|
100% |
Automatic |
|
|
Petroleum & Natural Gas
|
49% |
Automatic |
|
|
MANUFACTURING Manufacturing activities may be either self-manufacturing by the investee entity or contract manufacturing in India through a legally tenable contract, whether on Principal to Principal or Principal to Agent basis. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce, without Government approval. |
100% |
Automatic Route |
|
|
retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India. |
100% |
Government Route |
|
|
Defence |
100% |
Automatic up to 74% Government route beyond 74% wherever it is likely to result in access to modern technology or for other reasons to be recorded |
|
|
SERVICE SECTOR |
|||
|
Broadcasting Carriage Services
|
100% |
Automatic |
|
|
Broadcasting Carriage Services Cable Networks (Other MSOs not undertaking up gradation of networks towards digitalization and addressability and Local Cable Operators (LCOs) |
100% |
Automatic |
|
|
Broadcasting Content Services
|
49% |
Government |
|
|
Broadcasting Content Services Uploading/Streaming of News & Current Affairs through Digital Media |
26% |
Government |
|
|
Broadcasting Content Services Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels |
100% |
Automatic |
|
|
Print Media
|
26% |
Government |
|
|
Publishing/printing of scientific and technical magazines/specialty journals/ periodicals, |
100% |
Government |
|
|
Publication of facsimile edition of foreign newspapers |
100% |
Government |
|
|
Civil Aviation- Airports
|
100% |
Automatic |
|
|
Civil Aviation- Air Transport Services
|
100% |
Automatic up to 49% (Automatic up to 100% for NRIs) Government route beyond 49% |
|
|
Civil Aviation- Air Transport Services
|
100% |
Automatic |
|
|
Construction Development: Townships, Housing, Built-up Infrastructure |
100% |
Automatic |
|
|
Industrial Parks -new and existing |
100% |
Automatic |
|
|
Satellites- Manufacturing and Operation Satellite Data Products Ground Segment and User Segment |
100% |
Upto 74%: Automatic Beyond 74%: Government Route |
|
|
Launch Vehicles and associated systems or subsystems Creation of Spaceports for launching and receiving Spacecraft |
100% |
Upto 49%: Automatic Beyond 49%: Government Route |
|
|
Manufacturing of components and systems/sub-systems for satellites, ground segment and user segment |
100% |
Upto 100%: Automatic |
|
|
Private Security Agencies |
74% |
Automatic up to 49% Government route beyond 49% and up to 74% |
|
|
Telecom Services |
100% |
Automatic |
|
|
Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs) |
100% |
Automatic |
|
|
E-commerce activities |
100% |
Automatic |
|
|
Single Brand product retail trading |
100% |
Automatic |
|
|
Multi Brand Retail Trading |
51% |
Government |
|
|
Duty Free Shops |
100% |
Automatic |
|
|
Railway Infrastructure Construction, operation and maintenance of the following:
|
100% |
Automatic |
|
|
Asset Reconstruction companies |
100% |
Automatic |
|
|
Banking- Private Sector |
74% |
Automatic up to 49% Government route beyond 49% and up to 74% |
|
|
Banking- Public Sector subject to (Acquisition Banking & Transfer of Undertakings) Acts 1970/80. This ceiling (20%) is also applicable to the State Bank of India and its associate Banks. |
20% |
Government |
|
|
Credit Information Companies |
100% |
Automatic |
|
|
Infrastructure companies in Securities Markets |
49% |
Automatic |
|
|
INSURANCE Insurance company |
100% |
Automatic |
|
|
INSURANCE Intermediaries or Insurance including insurance brokers, re insurance brokers, insurance consultants, corporate agents, third party administrator, Surveyors and Loss Assessors and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India from time to time
|
100% |
Automatic |
|
|
Pension Sector |
49% |
Automatic |
|
|
Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010 |
49% |
Automatic |
|
|
White Label ATM Operations |
100% |
Automatic |
|
|
Financial Services activities regulated by financial sector regulators viz, RBI, SEBI, IRDA, PFRDA, NHB or any other financial sector regulator as may be notified by the Government of India |
100% |
Automatic |
|
|
Pharmaceuticals (Greenfield) |
100% |
Automatic |
|
|
Pharmaceuticals (Brownfield) |
100% |
Automatic up to 74% Government route beyond 74% |
|
How to Make an FDI Investment in India
Once you've confirmed your sector is eligible, the process broadly involves:
Step 1 — Confirm the sector and route: Verify using the table above and the current FDI Policy at DPIIT's website. For Approval Route — apply via National Single Window System (NSWS).
Step 2 — Choose the right vehicle: Private limited company (most common for FDI), LLP, or branch/liaison/project office — each has different FDI rules.
Step 3 — Bring in funds via banking channels: FDI must be remitted through proper banking channels and reported to the RBI.
Step 4 — Allot shares within 60 days: The investee company must issue shares within 60 days of receiving funds.
Step 5 — File intimation/obtain approval: For Automatic Route — file ARF/FCGPR with RBI.
Step 6 — Annual reporting: Ongoing compliance including annual returns to the RBI (FLA Return) is mandatory.
Need Help Setting Up in India?
CompaniesNext specialize in helping foreign nationals and companies navigate India's FDI rules, company incorporation, and compliance — end to end.