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

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Frequently Asked Questions (Faq)

  • What are the routes available for FDI?

    FDI is permitted under the following routes :

    • Automatic Route : Where no approval of government is required for bringing FDI in india.
    • Government Approval Route : Where approval of government is required for bringing FDI in india.
  • How much time it takes to get the government approval for FDI?

    It takes around 90 days to get the approval or rejection on proposal for government approval for FDI.

  • Within how many days do the applicant requires to submit the physical copy of application along with documents ?

    The physical copy of application along with documents needs to be submitted to the competent authority within 5 days of email communication

  • What if the DIPP finds any discrepancy in the information or documents provided for proposal of FDI Approval?

    DIPP will call for further information and documents which must be provided by the applicant within the prescribed time limit.

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