Government Approval for FDI - Overview
FDI Stands for Foreign Direct Investment. Reserve bank of india and department of industrial
policy and promotion (DIPP) has allowed FDI Investment in india.
Reserve bank of india has allowed various sectors to accept FDI in the Automatic route. But
for certain sectors, RBI has prescribed that the FDI needs to be brought into india only
after Government Approval.
The Government approval for FDI will be provided by the department of industrial policy and
promotion (DIPP) after consultation with various departments and ministries.
Documents required for Government Approval of FDI
The following are the documents that are required for filing application for proposal of FDI:
- Certificate of incorporation of investor Company and Investee Company (if incorporated)
- Memorandum of Association of investor Company and Investee Company (if incorporated)
- Articles of Association of investor Company and Investee Company (if incorporated)
- Board Resolution of investor Company and Investee Company (if incorporated)
- Audited financial statement of last financial year of investor Company and Investee
Company (if incorporated)
- The details regarding all foreign collaborators including their Names and addresses
along with Passport Copy/ Identification Proof of the Investor Company/Entity
- Fund Flow diagrammatic representation from original investor to investee
- Affidavit regarding information stated is same and correct in online application and
hard copy
- in case there are existing ventures, then Signed copy of the JV agreement/shareholders
agreement/ technology transfer/trademark/brand assignment agreement is required, if any
- Board resolution of Joint venture company, if any
- Certificates of Incorporation along with MOA and AOA of any joint venture/company which
is a party to the proposed transaction, if any
- Copy of Downstream Intimation, if any
- in case of amendment proposal, then a Copy of relevant past FIPB/SIA/RBI approvals,
connected with the current proposal is required to be attached
- In case of Post facto approval or if the investment has already come, then FIRC needs to
be attached
- The details such as names and addresses of promoters, investment managers is required to
be provided, In the cases of investments by entities which themselves are pooled
investment funds
- List of the downstream companies of the Indian company and the details of the equity
held by the Indian Company along with the details of the activities of the companies
- in case of a scheme of arrangement such as merger, amalgamation, etc., High Court order
is required to be attached
- Valuation certificate by Chartered accountant
- Certificate of statutory auditor, if applicable
- Non Compete certificate, in case of pharmaceutical sector
Procedure for Government Approval of FDI
The procedure for Government Approval for FDI is as follows :
- Filing of Online Application : The applicant has to file an online application
along with supporting documents for Approval of FDI Proposal. The Application shall be
filed on Foreign investment facilitation Portal.
- E-transfer of application to competent authority : within 2 days of filing the
proposal for FDI online, DIPP will identify the concerned Administrative Ministry or
Department and e-transfer the proposal to the concerned Administrative Ministry or
Department (Competent Authority)
- Submission of physical documents : In case application filed has not been signed
digitally by the applicant, then the DIPP shall send an email communication to the
application to submit the physical copy of the application with the competent Authority,
which needs to be submitted within 5 days of email communication.
- Processing and approval / rejection of application: The DIPP along with the
competent authority will Internally process the application and ask for comments from
various ministries like Ministry of Home affairs, Ministry of External Affairs, Reserve
Bank of India, etc. and after considering the comments, if any received from various
departments and after analysing and verifying all the documents and proposal shall
intimate the approval rejection of the proposal.
Time limits
The following is the time limit chart for the time taken by the DIPP for approval or
rejection of Proposal:
S No. |
Event |
Time period |
Cumulative time period |
1 |
Investment Proposal Dissemination by DIPP to Competent Authority |
2 days |
1 week |
2 |
Submission of signed physical copy of the proposal to the Competent Authority by
applicant, if needed |
5 Days |
3 |
Initial scrutiny of the proposal and documents attached therewith, and seeking
relevant additional information/documents from the applicant |
1 Week |
2 Weeks |
4 |
Clarification submission by DIPP on specific issues of FDI policy |
2 Weeks |
4 Weeks |
5 |
Time limit for Submission of Comments by Consulted Ministry/ Department/ RBI/ Any
Other Stakeholder |
4 weeks |
6 weeks |
6 |
Submission of Comments by Ministry of Home Affairs (MHA) on proposals requiring
security clearance |
6 weeks |
8 weeks |
7 |
Approval on proposals of FDI by Competent Authority for grant of approval |
2 weeks |
|
8 |
Proposals not requiring security clearance |
8 weeks |
9 |
Proposal Requiring security clearance |
10 weeks |
From where the Time limit of the application shall be recknoned
The time limits for disposal of applications shall be counted from the date of filing of
online application. However, if the signed physical copy is not filed with the Competent
Authority within 7 days of the communication from DIPP, then the date of filing of the
physical application would be treated as date of filing application
Departments / Ministries from which approval may also be required
Department of Industrial Policy and Promotion (DIPP) after receiving the application for the
proposal of FDI shall also forward the application to the concerned ministries for their
comments and observations.
After receiving their comments and observations, DIPP will take decision on whether to
approve or reject the Proposal for FDI.
The following is the list of Departments or ministries to which the proposal for FDI may be
sent by DIPP:
- Ministry of Mines
- Department of Defence Production, Ministry of Defence
- Ministry of Home Affairs
- Ministry of Information and technology
- Ministry of Civil Aviation
- Department of Space
- Department of Telecommunication
- Department of Industrial Policy and Promotion
- Department of Economic Affairs
- Department of Financial Services
- Department of Pharmaceuticals
How Rajput Jain and Associates can Assist
We offer all kinds of Consultancy and Compliances Services in relation to Foreign Direct
Investment (FDI). We have empanelled various experts to provide the expert advisory and
Compliances services for to Foreign Direct Investment (FDI).
We also have a vast experience in applying and obtaining various government approvals for the
FDI from the DIPP.
The services that we offer in regard to FDI under government approval route includes the
following:
- Filing of application with the DIPP
- Drafting of documents for making application
- Valuation of shares
- Advising on matters relating to FDI
- RBI Compliances post government approval
- Filing of reply with the DIPP and other competent Authorities
- Advising on certain other issues in relation to FDI