ROUTES FOR FOREIGN DIRECT INVESTMENT Indian company may receive foreign investment under two routes: Automatic route Government route Further, there are certain areas where FDI is completely prohibited. These routes are discussed ahead.

AUTOMATIC ROUTE FDI is allowed under automatic route without prior approval of Government & RBI. The foreign investor just has to send a report to the foreign Exchange Department of concerned regional office of RBI. This information has to be provided within 30 days from foreign investor. Indian company receiving foreign investment has to submit necessary documents such as name & addresses of foreign investors, authorised dealers through which funds have been received from foreign investors. Issuing Company will have to submit a certificate that the company has complied the procedure for issue of shares as laid down under FDI scheme.

GOVERNMENT ROUTE All sectors which are not covered under automatic route and areas which are not prohibited for FDI are covered under government route. These areas require prior approval of government through Foreign Investment Promotion Board. These funds are routed through authorised dealers within 30 days of receipt of money, the company is required to intimate RBI about name & addresses of foreign investors, authorised dealers, details of government approval etc. It has also to certify that investment is within sectoral cap under the government route.

LEVELS OF APPROVALS FOR CASES UNDER GOVERNMENT ROUTE The Minister of finance who is in charge of FIPB would consider the recommendations of FIPB on proposals with total foreign equity inflow of & below 5000 crore. The recommendations of FIPB on proposals with total foreign equity inflow of more than 5000 crore would be placed for consideration of CCEA. The CCEA would also consider the proposals which may be referred to it by the FIPB.

PROHIBITTED SECTORS FOR FDI Lottery business including Govt./private lottery, online lotteries etc. Gambling & betting including casinos etc. Real Estate Business or construction of farm houses. Manufacturing of cigars, cigarettes of tobacco. Services like legal, book keeping, accounting & auditing. Trading in Transferable Development Rights(TDRs). Chit funds.

Cases which do not require fresh approval Entities the activities of which had earlier required prior approval of FIPB and which had accordingly , earlier obtained prior approval of FIPB/CCEA for their initial foreign investment but subsequently theses activities are placed under automatic route. Entities the activities of which had sectoral caps earlier & which had accordingly, earlier obtained prior approval of FIPB/CCEA for their initial foreign investment but such caps are removed &such activities are placed under automatic route. So that additional investment does not exceed the sectoral caps. Additional foreign investment where prior approval of FIPB/CCEA had been obtained earlier due to some specific requirements & prior approval of the govt. under FDI policy is now not required.