Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country. Thus,  if a foreign individual or institution invest in business interest in India, the investment will be known as FDI. It can be in the form of directly establishing a new business(greenfield investment) or in the form of acquiring existing businesses (brownfield investment). It is a source of gaining technical know-how and labour employment for the FDI recipient country. FDI is very important for emerging markets and developing countries like India.

Under the current FDI policy, foreign investment in Indian Companies is permitted under:

  1. the automatic route; and
  2. the approval route (with prior approval of the Foreign Investment Promotion Board (‘FIPB’), depending on the sector in which FDI is being inducted.

FDI limits in various sectors in India :


 Automatic route 

Sectors with 100% FDI automatic route

  1. Agriculture & Animal Husbandry
  2. Plantation Sector(Tea, Coffee, Rubber, Cardamom, Palm oil, Olive oil)
  3. Petroleum & Natural Gas(All other activity)
  4. Civil Aviation
  5. Airports[Greenfield projects ]
  6. Brownfield Airport projects
  7. Industrial Parks
  8. Construction Development
  9. Trading [Cash & Carry Wholesale Trading/Wholesale Trading (including sourcing from MSEs) ]
  10. E-commerce activities
  11. Railway Infrastructure
  12. Processed Food Products
  13. Asset Reconstruction Companies
  14. Duty-Free Shops located and operated in the Customs bonded areas.
  15. Regulated Financial Services
  16. Railway Infrastructure
  17. Pharmaceuticals[Greenfield]
  18. Non-Banking Finance Companies (NBFC)
  19. Credit Information Companies (CIC)
  20. White Label ATM Operations
  21. Limited Liability Partnerships (LLP) operating in sectors/activities where 100% FDI is allowed
  22. townships, malls/ shopping complexes and business centres.
  23. Teleports, DTH, Cable Networks, Mobile TV, HITS

Sectors with 49% FDI automatic route

  1. Petroleum & Natural Gas( Petroleum refining by the Public Sector Undertakings (PSU)
  2. Infrastructure Company in the Securities Market[in compliance with SEBI Regulations ]
  3. Insurance
  4. Pension Sector
  5. Stock Exchanges,
  6. depositories,
  7. clearing corporations
  8. Commodity exchanges
  9. FM Radio
  10. Civil Aviation
  11. Power exchanges
  12. defence sector with specified conditions.



Sectors with 100% FDI  Government approval route

  1. Print Media Publishing/printing of scientific and technical magazines/speciality journals/ periodical
  2. Satellites– establishment and operation
  3. food products manufactured and/or produced in India.

Sectors with 51%  FDI Government approval  route

  1. Multi-brand retailing

Sectors with 20%  FDI Government approval route

  1. Public Sector Banks



Sectors where automatic route is permitted up to certain extent and then it requires approval beyond that limit

FDI  up to 74%

  1. Private Security Agencies: FDI up to 49% is permitted under automatic route in this sector and FDI beyond 49%  government approval is needed. FDI in this sector cannot be beyond 74%.
  2. private Sector banks up to 49% is under automatic route and if beyond 49% to 74% government approval is needed. FDI in this sector cannot be beyond 74%.

FDI upto 100%

  1.  Regional Air Transport Service with 49% under automatic route, and beyond that through government approval route.
  2. Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline 49% under automatic route, and beyond that through government approval route.
  3. Single brand retailing up to 49% automatic route and beyond 49%  government approval is needed.
  4. Telecom Services Automatic up to 49% and Government approval is needed beyond 49%.
  5. Pharmaceutical sector 74% FDI under automatic route has been permitted in brownfield pharmaceuticals. FDI beyond 74% will be allowed through government approval route.