2.2.1.2 Restricted Areas for FDI FDI is subject to an approval from the Government of India in the following cases
( i ) Activities / items that require an Industrial License ;
( ii ) Proposals for acquisition of shares in an existing Indian company in financial services sector and where Securities and Exchange Board of India ( Substantial Acquisition of Shares and Takeovers ) Regulations , 1997 is attracted ( iii ) All proposals exceeding the sectoral caps or in sectors where FDI is not permitted 2
There are ceilings on investment in certain sectors / activities . These limits are called sectoral caps 3 and FDI is not permitted beyond specified caps , unless an approval is obtained . For instance , activity of publishing newspapers and periodicals ( print media sector ) is restricted by a sectoral cap of 26 per cent . Effectively , a foreign investor would be allowed to invest up to 26 per cent equity in the proposed print media business .
FDI policy is reviewed on an ongoing basis and changes in sectoral cap are notified through press notes by the SIA , Department of Industrial Policy & Promotion . FDI policy is also notified by the RBI .
2.2.1.3 Approval Route
FDI in activities not covered under the automatic route requires prior government approval . Applications are considered by the FIPB which is a specially empowered board chaired by the Secretary , Ministry of Finance . Composite proposals involving foreign investment and foreign technical collaboration are also considered by the FIPB . Application for FDI cases , except NRI investments and EOUs , are to be submitted with the FIPB Unit , Department of Economic Affairs , Ministry of Finance situated at New Delhi .
Once an Indian company has the foreign investment approval from the FIPB , they do not require any further clearance from the RBI to receive inward remittance or to issue shares to the foreign investors . The company is simply required to inform the concerned regional office of the RBI on receiving remittance towards share application and issuing shares to the foreign investor 4 .
2
Schedule 3
3
Schedule 3
4
Refer section 3.1.5
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