India FDI control
Produced in partnership with AZB & Partners
India FDI control

The following Competition practice note produced in partnership with AZB & Partners provides comprehensive and up to date legal information covering:

  • India FDI control
  • 1. What is the applicable legislation?
  • 2. Which government or other body (or bodies) reviews foreign investments?
  • 3. What is the scope of the foreign investment regime? Does it only apply to specific sectors or types of investors (eg foreign or non-EU / non-WTO)? Are there specific rules for certain types of investors (eg state-owned enterprises)?
  • 4. What are the triggers or thresholds for the regime to apply? What types of transactions are caught? Is there a minimum level of shareholding or a control test that applies? Are there any other thresholds that need to be met (eg based on turnover or market shares)?
  • 5. Are there any exceptions that may apply?
  • 6. Is there any discretion to review transactions that do not meet any thresholds for review?
  • 7. What are the grounds for review, eg public or national security or other grounds?
  • 8. What level of discretion do the relevant authorities have to approve or reject transactions? Is there scope for any other body to intervene?
  • 9. Where a transaction is caught by the regime, is notification mandatory and must closing be suspended pending clearance?
  • More...

India FDI control

A conversation with Sachin Mehta, partner, Shivranjani Ralawata, lawyer, and Karthika Annamalai, lawyer at Indian law firm AZB & Partners, on key issues on foreign direct investment (FDI) control in India.

1. What is the applicable legislation?

The applicable legislations are the Foreign Exchange Management Act, 1999 (FEMA) and the Foreign Direct Investment Policy, 2017 as amended from time to time (FDI Policy), read with the Foreign Exchange Management (Non Debt Instruments) Rules, 2019 (NDI Rules)

2. Which government or other body (or bodies) reviews foreign investments?

Under Indian exchange control laws, there are two routes available to a foreign investor to invest in India, depending upon the sector in which the investment is being made:

  1. Automatic review–investments under this route do not require any approval from the designated Government department but may have certain sector related conditions attached to them

  2. Approval route–investments under this route require prior approval from the designated Government department and may also have certain sector related conditions attached to the investment.

Prior to June 5, 2017, the Foreign Investment Promotion Board (FIPB) was the body which would review foreign investment proposals requiring prior Government approval. However, pursuant to June 5, 2017 the FIPB was abolished and replaced with the Foreign Investment Facilitation Portal (FIFP). Currently, if the proposed investment does not qualify for the ‘automatic route’, the company in which such foreign

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