India: DIPP Issues Standard Operating Procedure For Processing FDI Proposals

Last Updated: 3 July 2017
Article by Atul Pandey, Abhishek Sanyal and Harshit Kohli

Most Read Contributor in India, October 2017


The Union Cabinet, at its meeting held on 24 May 2017, had decided to wind up the Foreign Investment Promotion Board (FIPB) and had issued a Press Release to that effect which also stated that the processing, scrutiny and approval of FDI applications would henceforth be handled by the Department / Ministry relevant to the particular sector (Competent Authority). The Press Release also stated that a standard operating procedure (SOP) for facilitating the processing of applications for foreign direct investment (FDI) in sectors / transactions that require government approval will be issued by the Department of Industrial Policy and Promotion (DIPP). Accordingly, on 29 June 2017, the DIPP has released a SOP which sets out the process and procedure for filing and processing of FDI proposals, time limits and internal mechanisms for monitoring the processing of FDI proposals.

Time limits

The most significant aspect of the SOP is that it envisages a time frame of 8 – 10 weeks (depending on requirement of security clearance from the Ministry of Home Affairs (MHA)) for approving FDI proposals. However, this time frame does not appear to be binding. Further, at least in the cases where security clearance is required, it is unlikely that the timeframe of 10 weeks would be adhered to, especially since, under the SOP, the MHA can simply intimate the Competent Authority that it would need additional time to provide its comments.

Application process

  1. Online and physical filing - FDI proposals under the approval route are required to be filed in the format provided on the FIPB portal which has been renamed as the 'Foreign Investment Facilitation Portal' (FIFP) along with the required documents. Applications that are digitally signed are not required to be submitted in physical copy to the Competent Authority. However, if the online application is not digitally signed, the applicant is required to submit a physical copy of the application to the Competent Authority within 5 days.
  1. Calculation of time limits: Time limits for disposal of applications will be determined from the date of filing of the online application. However, where a physical copy is required to be filed and there is delay in making such filing, the time limit will be determined from the date of filing of the physical application. Time limits allocated do not include the time expended in making corrections to the proposals or supplying additional information, by the applicants.
  2. Documents: The list of documents that were required to be filed with FDI proposals on the erstwhile FIPB portal has not changed and has been specified in Annexure-1 of the SOP;
  3. Procedure and timeline: The SOP envisages the following procedure for processing FDI applications:
  1. Once the FDI proposal is filed on the FIFP, the DIPP will send it to the concerned administrative ministry / department (Competent Authority) within 2 days and also to the Reserve Bank of India (RBI) for its comments from a FEMA standpoint.
  2. The Competent Authority shall scrutinise the proposal and documents within 1 week and requisition relevant additional information/documents, if required.
  3. If the Competent Authority needs to consult any other Ministry / Department, the Secretary of the Competent Authority is required to give full justification and approval for such consultation. The Competent Authority can seek clarifications from the DIPP (which is required to provide its responses in 15 days) in relation to specific issues on FDI proposals. The SOP envisages that consultation with DIPP will only be carried out if necessary and not as a routine practice as had been the case earlier when FIPB was in existence.
  4. The concerned Ministries / Departments consulted on the proposal are required to upload their comments on the FIFP within 4 weeks from the date of receiving the proposal online, failing which it shall be presumed that they have no comments. All proposals would also be sent to Ministry of External Affairs (MEA) and Department of Revenue (DoR) for information, who may give their comments within the same stipulated time period.
  5. The indicative time limit for comments by MHA on proposals for investment in sectors which require security clearance is 6 weeks from the receipt of such proposals on the FIFP. However, the MHA may take additional time and inform the Competent Authority of the expected timeframe within which it would be able to provide its comments. Presently, the following proposals require a security clearance from the MHA:
  1. 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.
  2. Investments from Pakistan and Bangladesh.
  1. The Competent Authority is required to take into consideration the extant FDI Policy, Press Notes, FEMA/RBI Notifications/Guidelines issued from time to time, sectoral requirements and the sectoral policies vis-à-vis the proposals, while examining the proposals.
  2. On completion of the proposal in all respects, the Competent Authority is required to, within the next 2 weeks, process the FDI proposal for decision and intimate the same to the applicant electronically.
  3. Where a proposal is proposed to be rejected by the Competent Authority or where additional conditions for approval are stipulated beyond the conditions laid down in the FDI policy or sectoral laws/regulations, concurrence of DIPP is mandatorily required to be sought within 8 weeks/10 weeks, as the case maybe from the receipt of the proposal. The DIPP has been granted an additional time of 2 weeks to consider the proposals which are proposed to be rejected or where additional conditions are proposed to be imposed by the Competent Authority.
  4. Approval letters are required to be issued by the Competent Authority in the format prescribed at Annexure-2 to the SOP.
  5. Proposals involving total foreign equity inflow of more than INR 5000 crore, are required to be placed 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.

Competent Authorities

The Competent Authorities for approval of FDI proposals are set out below:

S No


Relevant department / ministry



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;
  2. Manufacturing of Small Arms and Ammunitions covered under Arms Act 1959


Department of Defence Production, Ministry of Defence

Ministry of Home Affairs



Ministry of Information & Broadcasting


Print Media

Ministry of Information & Broadcasting


Civil Aviation

Ministry of Civil Aviation



Department of Space



Department of Telecommunications


Private Security Agencies

Ministry of Home Affairs


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

Ministry of Home Affairs


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

Department of Industrial Policy & Promotion


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

Department of Industrial Policy & Promotion


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

Department of Industrial Policy & Promotion


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

Department of Industrial Policy & Promotion


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 Companies

Department of Economic Affairs


Banking (Public and Private)

Department of Financial Services



Department of Pharmaceuticals


Any applications for post-facto approval for FDI (which are presently under the automatic route but were earlier under the approval route) shall be examined by the Competent Authority. In cases where the Competent Authority is uncertain, the DIPP shall decide the relevant administrative Ministry.

Monitoring & Review

  • Competent Authorities are required to convene regular monthly reviews on the foreign investment proposals pending with them.
  • The Secretary, DIPP and Secretary, DEA shall jointly chair the joint quarterly review meetings on pending proposals with the Government which may also be attended by the Secretary of the concerned administrative Ministry/Department.


It is heartening to see that the SOP prescribes a time frame (including time frames for key milestones) to process FDI proposals, something that Khaitan & Co had strongly advocated for, in its suggestions to the Government of India in relation to the winding up of the FIPB. However, these time frames are non-binding. For example, in FDI proposals that require a security clearance, it is possible for the MHA to indicate the additional time that would be required by it to provide its comments. Further, the option of filing all documents online (without filing any physical applications, if they are digitally signed) is a welcome step as this will help cut down timelines in the preparation and filing of FDI applications.

While the SOP does address some of the concerns with the winding up of the FIPB, it remains to be seen how effectively the new regime will function under the aegis of various Ministries. It is likely that the consideration of initial FDI proposals could get delayed as the Ministries will take some time to understand the nuances of the FDI Policy and set up internal mechanisms to comply with the SOP. The fate of applications which were pending with the FIPB (and on which comments from the relevant sectoral Ministry were received by the FIPB) is not clear - particularly whether they will be decided afresh (in compliance with the SOP) or whether approval in such cases would be issued immediately. The single window clearance mechanism under the FIPB had been working well as its regular meetings kept pressure on administrative Ministries to provide their comments to enable the FIPB to issue approvals to FDI proposals. The monitoring framework envisaged in the SOP only provides for quarterly meetings and it cannot be ruled out that individual Ministries may go slow on FDI approvals in their sector, owing to pressure from domestic players, political quarters, pressure groups and vested interests. Accordingly, it is important that the relevant Ministries are pro-active and have a positive disposition towards FDI in their respective sectors.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

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