No.

1/8/2016-FC-1
Government of India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion

29th of June, 2017

Standard Operating Procedure (SOP) for Processing FDI Proposals

I. Online Filing of Application

1. Proposals for foreign investment in sectors/activities requiring Government approval as

per the Consolidated FDI Policy Circular of 2016, as amended from time to time, would
be filed online on the revamped FIPB portal, rechristened as Foreign Investment
Facilitation Portal.

2. The applicant would be required to submit the proposal for foreign investment in the
format as available on the portal and upload documents as per the list at Annexure-1.

3. After the proposals are filed online, DIPP will identify the concerned Administrative
Ministry/Department and e-transfer the proposal to the concerned Administrative
Ministry/Department (Competent Authority) within 2 days.

3.1 In case of digitally signed applications, the applicant is not required to submit any
physical copy with the competent authority. For applications which are not digitally
signed, DIPP would inform the applicant through online communication to submit one
signed physical copy of the proposal to the Competent Authority. Applicant would be
required to submit the signed physical copy of the application within 5 days of such
communication from DIPP.

3.2 Calculation of time limits for disposal of applications would be with reference to
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, the
date of filing of the physical application would be reckoned as the reference date for
calculation of time limits.

Standard Operating Procedure for Processing FDI Proposals 1

II. Competent Authorities for Approval of Foreign Investment

1. Following are the Competent Authorities for grant of approval for foreign investment
for sectors/activities requiring Government approval:

S. No. Activity/ sector Administrative

Ministry/ Department
(i) Mining Ministry of Mines
(ii) Defence
a) Items requiring Industrial Licence under the Department of Defence
Industries (Development & Regulation) Act, Production, Ministry of
1951, and/or Arms Act, 1959 for which the Defence
powers have been delegated by Ministry of
Home Affairs to DIPP

b) Manufacturing of Small Arms and Ministry of Home Affairs

Ammunitions covered under Arms Act 1959
(iii) Broadcasting Ministry of Information
(iv) Print Media & Broadcasting
(v) Civil Aviation Ministry of Civil Aviation
(vi) Satellites Department of Space
(vii) Telecommunication Department of
Telecommunications
(viii) Private Security Agencies
(ix) Applications involving investments from
Countries of Concern which presently include Ministry of Home Affairs
Pakistan and Bangladesh, requiring security
clearance as per the extant FEMA 20, FDI
Policy and security guidelines, amended from
time to time
(x) Trading (Single, Multi brand and Food Product
Retail Trading) Department of Industrial
(xi) FDI proposals by Non-Resident Indians Policy & Promotion
(NRIs)/ Export Oriented Units (EOUs)
requiring approval of the Government

Standard Operating Procedure for Processing FDI Proposals 2

 (xii) Application relating to issue of equity shares
under the FDI policy under the Government
route for import of capital
goods/machinery/equipment (excluding Department of Industrial
second-hand machinery) Policy & Promotion
(xiii) Applications relating to issue of equity shares for
pre-operative/pre-incorporation expenses
(including payments of rent etc.)
(xiv) Financial services which are not regulated by any
Financial Sector Regulator or where only part of
the financial services activity is regulated or
where there is doubt regarding the regulatory
oversight Department of Economic
Affairs
(xv) Applications for foreign investment into a Core
Investment Company or an Indian company
engaged only in the activity of investing in the
capital of other Indian Company/ies
(xvi) Banking (Public and Private) Department of Financial
Services
(xvii) Pharmaceuticals Department of
Pharmaceuticals

2. In respect of sectors/activities which are presently under automatic route but required
Government approval earlier as per the extant policy during the relevant period,
concerned administrative Ministry/Department would be the Competent Authorities for
the grant of post-facto approval for foreign investment.

3. In respect of applications in which there is a doubt as to which is the concerned

Administrative Ministry/Department, DIPP shall identify the Administrative
Ministry/Department where the application will be processed for decision.

III. Procedure for Processing of Applications Seeking Approval for Foreign

Investment
1. Competent Authorities shall not replicate an inter-Ministerial body in respective
Ministries/Departments to grant approval for foreign investment. New regime for
foreign investment needs to be simpler in execution and expeditious in disposal.

Standard Operating Procedure for Processing FDI Proposals 3

2. Once the proposal is received, same shall be circulated online within 2 days by DIPP to
Reserve Bank of India for comments from FEMA perspective. Proposals for foreign
investment in sectors requiring security clearance would additionally be referred to
Ministry of Home Affairs for comments. Further, all proposals would be forwarded to
Ministry of External Affairs (MEA) and Department of Revenue (DoR) for information.
MEA and DoR may give their comments within the stipulated time period, wherever
necessary. All comments will be given directly to the concerned Administrative
Ministry/Department.

3. Following proposals will require security clearance from Ministry of Home Affairs:

i. Investments in Broadcasting, Telecommunication, Satellites - establishment and

operation, Private Security Agencies, Defence, Civil Aviation and Mining & mineral
separation of titanium bearing minerals and ores, its value addition and integrated
activities.

ii. Investments from Pakistan and Bangladesh.

4. Specific issues of proposals requiring clarification from the point of view of FDI policy
may be referred to DIPP for clarification. Consultation with DIPP will hence be need
based and not routine and regular. DIPP will provide clarification within 15 days on
specific issues of FDI policy as may be referred by the Competent Authority.

5. Consultation with any other Ministry/Department will require full justification and
approval of the Secretary concerned.

6. Ministries/Departments consulted on the proposal shall upload their comments on the

portal within 4 weeks from the online receipt of the proposal. In case comments of
consulted Ministries/Departments/Regulatory Bodies are not received within the
stipulated time, it would be presumed that they have no comments to offer. Comments
by Ministry of Home Affairs on proposals for investment in sectors requiring security
clearance would be provided to the Competent Authority within 6 weeks from the online
receipt of such proposals. In cases where MHA is not in a position to provide its
comments with 6 weeks, it will intimate the concerned administrative
Ministry/Department of the expected time frame within which MHA would be able to
give its comments.

7. The Competent Authority shall, within 1 week, scrutinize the proposal and documents
attached therewith and ask the applicant for relevant additional information/documents,
if so required. All such queries shall be made online/emailed to the applicant so as to

Standard Operating Procedure for Processing FDI Proposals 4

 avoid delay. If no clarifications to the queries are received within 1 week, the applicants
shall be reminded to expedite their clarifications. To the extent possible, all queries to the
applicant shall be raised by the competent authority in the initial communication itself.
Time taken by the applicant in addressing the queries raised by the Competent Authority
will be excluded from the time limits for disposal of proposal.

8. While examining the proposals, adequate care has to be exercised keeping in view the
extant FDI Policy, Press Notes, FEMA/RBI Notifications/Guidelines issued from time
to time. The Competent Authority should take into consideration the sectoral
requirements and the sectoral policies vis-à-vis the proposals.

9. Once the proposal is complete in all respects, which should not be later than six
weeks/eight weeks (in cases where comments of Ministry of Home Affairs have been
sought from security clearance point of view) from the receipt of the proposal, the
Competent Authority shall, within the next two weeks, process the proposal for decision
and convey the same to the applicant. Approval/rejection letters will be sent online by
the Competent Authority to the applicant, consulted Ministries/Departments and DIPP.

10. In case of proposals involving total foreign equity inflow of more than Rs 5000 crore,
Competent Authority shall place the same for consideration of Cabinet Committee on
Economic Affairs within the above timelines. After the receipt of the decision of Cabinet
Committee on Economic Affairs, approval letter shall be issued within 1 week.

11. In respect of proposals where the Competent Authority proposes to reject the proposals
or in cases where conditions for approval are stipulated in addition to the conditions laid
down in the FDI policy or sectoral laws/regulations, concurrence of DIPP shall
compulsorily be sought by the Competent Authority within 8 weeks/10 weeks (in cases
where comments of Ministry of Home Affairs have been sought from security clearance
point of view) from the receipt of the proposal.

12. Approval letters have to be issued by the Competent Authority in the format prescribed
at Annexure-2.

13. DIPP and each of the Competent Authorities shall maintain a database on the proposals
received along with details such as date of receipt, investor and investee company details,
volume of foreign investment involved, and date of grant of approval/rejection letter.

Standard Operating Procedure for Processing FDI Proposals 5

IV. Time Limits

S.No. Action Points Time Cumulative

Period Time
Period
(i) Dissemination of Investment Proposal by DIPP 2 days
to Concerned Ministry/Department
One Week
(ii) Time for submission of signed physical copy of 5 days
the proposal by applicant to the Competent
Authority, if needed
(iii) Initial scrutiny of the proposal and documents One Two Weeks
attached therewith, and seeking relevant Week
additional information/documents from the
applicant
(iv) Time limit for submission of clarification by Two Four Weeks
DIPP on specific issues of FDI policy Weeks

(v) Time limit for Submission of Comments by Four Six Weeks

Consulted Ministry/ Department/ RBI/ Any Weeks
Other Stakeholder
(vi) Time limit for submission of Comments by Six Eight
Ministry of Home Affairs on proposals requiring Weeks Weeks
security clearance

(vii) Time limit for approval on proposals by

Competent Authority for grant of approval
Proposals not requiring security clearance Two Eight
Weeks Weeks
Proposal Requiring security clearance Ten Weeks

Note:
(i) Additional time of 2 weeks will be given to DIPP for consideration of those
proposals which are proposed for rejection or where additional conditions which
are not provided in the FDI policy are proposed to be imposed by the
Competent Authority.

(ii) Time limits allocated exclude the time taken by applicants in removing
deficiencies in the proposals/supplying additional information as may be required
by the Competent Authority.

Standard Operating Procedure for Processing FDI Proposals 6

V. Monitoring & Review
1. Competent Authorities will hold a regular monthly review on the foreign investment
proposals pending with them.

2. Joint quarterly review meeting, convened by DIPP, will be held under the co-
chairmanship of Secretary, DIPP and Secretary, DEA on pendency of proposals with
Government. The Secretary of the concerned Administrative Ministry/Department may
also attend the meeting.

*****

Standard Operating Procedure for Processing FDI Proposals 7

 Annexure-1

List of Documents

S.No. Document
Certificate of Incorporation of the Investee & Investor Companies/Entities*
1.
(Investee company may be a proposed entity and may not be incorporated)
Memorandum of Association (MOA) of the Investee & Investor
2.
Companies/Entities*
3. Board Resolution of the Investee & Investor Companies/Entities*
Audited Financial Statement of Last Financial Year of the Investee & Investor
4.
Companies/Entities*
5. Article of Association of the Investee & Investor Companies/Entities*
List of Names and addresses of all foreign collaborators along with Passport Copy/
6.
Identification Proof of the Investor Company/Entity*
Diagrammatic representation of the flow and funds from the original investor to the
7.
investee company and Pre and Post shareholding pattern of the Investee Company*
Affidavit stating that all information provided in hard copy and online are the same
8.
and correct*
Signed copy of the JV agreement/shareholders agreement/ technology
9. transfer/trademark/brand assignment agreement (as applicable), in case there are
existing ventures
10. Board resolution of any joint venture company
Certificates of Incorporation and charter documents of any joint venture/company
11.
which is a party to the proposed transaction
12. Copy of Downstream Intimation
Copy of relevant past FIPB/SIA/RBI approvals, connected with the current
13.
proposal (in case of amendment proposal)
Foreign Inward Remittance Certificate (FIRC) in case investment has already come
14.
in and in case of post-facto approval
In the cases of investments by entities which themselves are pooled investment
15.
funds, the details such as names and addresses of promoters, investment managers as

Standard Operating Procedure for Processing FDI Proposals 8

 well as all the contributors to the investment fund
List of the downstream companies of the Indian company and the details of the
16. equity held by the Indian Company along with the details of the activities of the
companies
17. High Court order in case of a scheme of arrangement
18. Valuation certificate as approved by a Chartered Accountant
Non-compete clause certificate of the investor and investee company in case of
19. investment in pharmaceutical sector (As per Annexure 10 of Consolidated FDI
Policy Circular of 2016), and as amended from time to time
20. Certificate of statutory auditors as mandated in the FDI policy, as applicable
* denotes mandatory documents

Standard Operating Procedure for Processing FDI Proposals 9

 Annexure-2

Approval Letter Format

F.No.-
Government of India
Ministry
Department
******

…… Bhawan, New Delhi- 110 011

Dated , 20..

Applicant Address
…………………..
…………………..
…………………..

Subject:

Sir,

I am directed to refer to the above mentioned application and to convey the approval of
Government of India to your proposal, subject to the following terms and conditions:

1. (a) Name and address of …Name…………….

the foreign investors
…Address……..

(b) Name and address of …Name…

the implementing
company …..Address…

2. Item(s) of Existing:
manufacture/ activity
covered by the foreign Proposed:
collaboration

3. Location: ….

4. Foreign Investment: The total foreign investment is upto X%. XYZ Pte Ltd, , will hold
….% of shares and ABC will hold …% of shares.

Standard Operating Procedure for Processing FDI Proposals 10

5. The above approval is subject to the following conditions:

(i) FDI policy conditionalities and other Sectoral Regulations/Guidelines.

(ii) Claim of any tax relief under the Income-tax Act, 1961 or the relevant DTAA will be
examined independently by the tax authorities to determine the eligibility and extent of
such relief and the approval of ABC Deptt. by itself will not amount to any recognition of
eligibility for giving such relief.
(iii) ABC Deptt approval by itself does not provide any immunity from tax investigations to
determine whether specific or general anti-avoidance Rules apply.
(iv) The fair market value of various payments, services, assets, shares etc., determined in
accordance with ABC Deptt guidelines shall be examined by the tax authorities under the
tax laws and rules in force and may be varied accordingly for tax purposes; and
(v) The taxation of dividend, future capital gains on alienation of shares by the foreign
investor, interest income and income of any other nature shall be examined by the field
formation in accordance with the provisions of Income-tax Act, 1961 and DTAA
applicable to the facts of the case.

6. Taxation of capital gains arising out of the proposed transaction shall be examined by
the field formation.

7. The pricing of shares shall be in accordance with the RBI/SEBI guidelines.

8. The above approval is subject to condition that, for opening the outlets, the company
should register its outlets with the concerned authorities in the concerned States/UTs
and shall have to comply with prevailing regulations in every State/UT for setting up its
outlets.

9. There would be no need for obtaining prior approval of ABC Deptt for increase in the
amount of foreign equity, provided there is no change in the percentage of foreign/NRI
equity already approved and the total foreign equity is upto Rs….. The company will
notify such increase to the ABC Deptt within thirty days of receipt of funds as also
allotment of shares to the non-resident shareholders.

10. In case the proposed activity is not exempted from the provisions of Industrial
(Development & Regulation) Act, 1951 and the Foreign Exchange Management Act,
1999, it will be your responsibility to obtain such clearances, as may be required under
the said Acts.

11. The location of the industrial project will be subject to Central or State Environmental
laws or regulations, including local zoning and land use laws and regulations. In case the
unit is to be setup in NCT of Delhi, it shall also conform to the locational policy of NCT
of Delhi and directions of the Hon’ble Supreme Court in the matter.

Standard Operating Procedure for Processing FDI Proposals 11

12. Adequate steps shall be taken to the satisfaction of the Government to prevent air, water
and soil pollution. The anti-pollution measures to be installed should conform to the
effluent and emission standards prescribed by the State Government in which the factory
or the industrial undertaking is located.

13. Import of capital equipments, components and raw materials will be allowed as per the
import policy prevailing from time to time.

14. This approval letter is made a part of the foreign collaboration agreement to be executed
between you and the foreign collaborator and only those provisions of the agreement
which are covered by this letter or which are not at variance with the provisions of this
letter shall be binding on the Government of India or Reserve Bank of India.

15. The agreement between the foreign investor(s) and the investee entity(ies) shall be
subject to compliance of Indian Laws.

16. You shall ensure that your proposed investment approved vide this letter is in
compliance with Prevention of Money Laundering Act, 2002, as amended from time to
time.

17. All remittances to the foreign collaborator shall be made as per the exchange rates
prevailing on the day of remittance.

18. The Administrative Ministry for this project is ABC Deptt.

19. You are requested to acknowledge and confirm acceptance of the above terms and
conditions to ABC Section of this Department.

20. A copy of the collaboration agreement, signed by both parties may be furnished to the
following authorities:
a. Administrative Ministry(s) / Department(s) as mentioned above.
b. ……, Department of …Ministry, ……, New Delhi – …..Pin Code.

21. All future correspondence for amendments/changes in terms and conditions of the
approval letter if required, etc. may be addressed to the … Section of the ……
Department ……, New Delhi – …..Pin Code
Email:

Your faithfully

Standard Operating Procedure for Processing FDI Proposals 12