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REGULATORY ALERT – SOPs For Processing Of FDI Applications

03 July 2017


Vide a press release dated May 24, 2017, the Union Cabinet had given its formal approval on abolishment of the Foreign Investment Promotion Board (‘FIPB’). The press release also stated that a detailed Standard Operating Procedure (‘SOP’) in the absence of FIPB for processing Foreign Direct Investment (‘FDI’) proposals under the Government approval route, shall be released in due course by Department of Industrial Policy & Promotion (‘DIPP’).

On June 5, 2017, the Government of India issued an Office memorandum sketching the roadmap for processing of FDI applications under approval route, post the FIPB abolition. The memorandum provides for the Administrative Ministry/Department to be approached for FDI application in various sectors but did not include the SOP for applications and procedural information.

On June 29, 2017, the DIPP has released SOP specifying the procedure for application, procedure for processing of applications, time limits and the competent authorities for approval of FDI. We have summarized the key aspects of SOP in this alert.

Application and Processing Procedure

  1. Filing of application:
    • Applications for FDI under the Government approval route are required to be filed online on Foreign Investment Facilitation Portal (‘FIFP’) (i.e. the revamped FIPB portal) along with the prescribed documents.
    • If the application that has been filed online, is not digitally signed, the DIPP shall direct the applicant to file a physical copy of the application with the Competent Authority within 5 days of such communication. In case of digitally signed applications, physical filing may not be required.
  2. Processing of application:
    • On online filing of application, DIPP shall identify & e-transfer the proposal to the concerned Ministry/Department i.e. the Competent and to Reserve Bank of India (‘RBI’) within 2 days.
    • The following applications shall require security clearance
      • 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.
      • Investments from Pakistan & Bangladesh
    • Proposals requiring security clearance shall be forwarded to Ministry of Home Affairs (‘MHA’) who shall comment on the application within 6 weeks from the online receipt of 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.
    • Further, all proposals would be forwarded to Ministry of External Affairs and Department of Revenue for information.
    • The concerned Ministry/Department i.e. the Competent Authority shall scrutinize the application within 1 week and if any further documents / information is required from the applicant, ask for the same through email / online. The Competent Authority shall remind the applicant in case of no receipt of clarifications on the queries within a week from the applicant.
    • In case there are specific issues of applications requiring clarification from the point of view of FDI Policy, DIPP may be consulted who shall provide clarification on the specific issues within 15 days.
    • The Competent Authority may consult any other Ministry / Department, provided full justification and approval of the Secretary of that Ministry / Department has been obtained. The consulted Ministries/ Departments shall upload their comments on the application within 4 weeks from the online receipt of proposal. In case no comments are received, it shall be presumed that they have no comments to offer.
    • The entire application should be complete not later than 6 weeks / 8 weeks (in cases where comments of MHA has been sought). The Competent Authority shall within the next 2 weeks, process the application for decision and convey the same to the applicant. The decision i.e. approval or rejection of the application will be sent online by the Competent Authority to the applicants, consulted Ministries / Departments and DIPP. Specific format has been provided for issue of approval letters.
    • In respect of proposals where the Competent Authority proposes to reject the application 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 the receipt of the application. DIPP shall consider these applications within the next 2 weeks.
    • The Competent Authority shall refer the applications involving total foreign equity inflow of more than INR 5000 Crore to the Cabinet committee on Economic Affairs within the stipulated time limit. After the receipt of the decision of Cabinet Committee on Economic Affairs, approval letter shall be issued within 1 week.
  3. Timelines:
    • For the purpose of disposal of applications, the date of receipt of application shall be the date of filing online application.
    • The date of physical filing of application shall be considered as date of receipt of application if the physical copy is not filed within 7 days from communication from DIPP directing such physical filing.
    • Time limits allocated exclude the time taken by applicants in removing deficiencies in the application / supplying additional information as may be required by the Competent Authority.
    • The press release has summarized the indicative time limits subject to the above caveats.
  4. Competent Authorities:

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

S. No.

Activity/ sector


Ministry/ Department



Ministry of Mines



  1. Items requiring Industrial Licence under the Industries  (Development  &  Regulation) Act, 1951, and/or Arms Act, 1959 for which the powers  have  been  delegated  by Ministry  of Home Affairs to DIPP

Department  of  Defence Production,  Ministry  of Defence

  1. Manufacturing    of    Small    Arms    and Ammunitions covered under Arms Act 1959




Ministry  of  Information & Broadcasting


Print Media


Civil Aviation

Ministry of Civil Aviation



Department of Space



Department of Telecommunications


Private Security Agencies




Applications involving investments from Countries of Concern which presently include Pakistan and Bangladesh, requiring security clearance as per the extant FEMA 20, FDI Policy and security guidelines, amended from time to time


Trading (Single, Multi brand and Food Product Retail Trading)




FDI proposals by Non-Resident Indians (NRIs)/ Export Oriented Units (EOUs) requiring approval of the Government


Application  relating  to  issue  of  equity  shares under the FDI policy under the Government route for import of capital goods/machinery/equipment   (excluding second-hand machinery)


Applications relating to issue of equity shares for pre- operative/pre-incorporation expenses (including payments of rent etc.)


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


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


Banking (Public and Private)

Department of  Financial Services



Department of Pharmaceuticals


BDO Comments:

The timelines mentioned in the press release aims to process the application faster and in a time bound manner. Although, the effectiveness and the efficiency with which the procedure under the new regime shall be implemented will be understood in due course. However, the language of the press release hints at providing not only speedy resolutions but also talks about cutting through the ‘red tape’ considerably. All in all, it’s a welcome step forward by this Government which is constantly pushing for ease of doing business in India.

It may be noted that the press release does not comment on the treatment of the pending applications filed with FIPB and the manner in which they shall stand transferred to the Competent Authorities.