Summary:
The government is considering raising the FDI approval threshold from ₹5,000 crore to ₹15,000 crore to simplify clearances and attract larger foreign investments. It is also looking to ease downstream investment rules and streamline the approval process through digital reforms. Net FDI inflows rose to around $6.9 billion in FY26, with expectations of reaching $15 billion in FY27.
It is proposed to have a significant liberalization of the approval process of foreign direct investment (FDI) into India by increasing the cut-off amount for such investments needing clearances from the Cabinet Committee on Economic Affairs (CCEA) from ₹5,000 crore to ₹15,000 crore.
Currently, all FDI proposals falling under the government approval route where foreign equity exceeds ₹5,000 crore need to be placed before the CCEA. Those investments below ₹5,000 crore are approved by the relevant ministry or department dealing with that particular sector. In case the above proposal is adopted, all FDI investments up to ₹15,000 crore would be cleared directly by the concerned ministry or department.
FDI Approval Limit Could Triple After a Decade
The threshold for approval has gone up significantly owing to the fact that the size of investments in India is going up. Prior to 2010, any FDI proposal above the value of ₹600 crore needed approval from the CCEA. The threshold was increased to ₹1,200 crore in February 2010 and then further to ₹3,000 crore in April 2015, and subsequently to ₹5,000 crore in March 2016. Later on, the FIPB was scrapped in May 2017, and the process for approval was taken up by the respective ministries and departments.
The proposal for ₹15,000 crore threshold would mean an increase by a factor of three compared to the present figure.
Government Also Looks to Ease Downstream Investment Rules
There have been talks of relaxing the norms for indirect foreign investment as well. There is one proposal which seeks relaxation by which an Indian entity which has been granted the approval for foreign investments will not need any further approval when making downstream investments under certain conditions.
According to the existing rules, there may be fresh approval necessary where there are downstream investments in the sectors coming under the government route and investments made by individuals from those countries which share common borders with India.
The general aim behind all these steps is to facilitate procedures, attract investments and help create jobs.
In addition, DPIIT has also revamped the SOP for dealing with FDI applications. The new guidelines are quite digitalized and specify time limits for commenting on the applications from RBI, Ministry of Home Affairs and Ministry of External Affairs. The overall time limit for disposal has now become 12 weeks from 10 weeks. If the agencies do not comment within the prescribed timelines, their comments are assumed to be nil.
Explore Differences between FDI & FPI
India Seeks to Revive Net FDI Inflows
Foreign Direct Investment flows into India for FY26 came at roughly $94.53 billion, but net flows are significantly weaker. Net FDI was reported to have decreased from $44 billion in FY21 to below $1 billion in FY25 before increasing back to around $6.9 billion in FY26. According to experts quoted in the report, net FDI flows are expected to improve to $15 billion in FY27, which will be the highest in four years.
Meanwhile, India is looking at its bilateral investment treaty regime to make itself more competitive in attracting foreign investments.
