Govt looking at procedural easing to further promote FDI: Official

The government is looking at further easing of procedures in certain sectors to attract more foreign direct investments (FDI) into the country, a government official said.

The department for promotion of industry and internal trade (DPIIT) has held stakeholder consultations with different government departments, regulators, industry associations, advisory and law firms, pension funds, private equity and venture capitals.

The department sought their views on ways to further attract foreign direct investments into the country.


"We have completed the consultations. The department has received suggestions on different issues. Things have not yet been finalised...Looking at easing of norms at the procedural front," the official said.

However, the official did not disclose the sectors where the government is considering the procedural easing.

In the consultations, issues which were raised included permitting e-commerce players to receive FDI in inventory-based models of online trade for export purposes only; easing press note 3 by defining beneficial ownership; and some tweaking of the policy for single-brand retail trading.

Under this press note, government approval is mandatory for investors from countries sharing land borders with India in any sector.

Foreign direct investment inflows into India have crossed the USD 1 trillion milestone in the April 2000-September 2024 period.

The key sectors attracting the maximum of these inflows include the services segment, computer software and hardware, telecommunications, trading, construction development, automobile, chemicals, and pharmaceuticals.

The investment in India rose by 45 per cent year-on-year to USD 29.79 billion in April-September this fiscal.

Experts suggested that steps such as implementing time-bound approvals for FDI applications, clear guidelines for approvals, and a seamless single-window clearance system will help India further improve its business climate for overseas players.

"India's FDI inflows are largely into brownfield projects, but the real opportunity lies in greenfield expansion. A plug-and-play infrastructure ecosystem, coupled with streamlined land acquisition processes, efficient dispute resolution, and easy clearances can unlock India's full investment potential," Rumki Majumdar, Economist, Deloitte India, said.

Rudra Kumar Pandey, Partner, Shardul Amarchand Mangaldas, said that at present, the approval process for FDI often involves cumbersome bureaucratic procedures, creating an environment of uncertainties - as generally speaking the overall timeline goes beyond six months and in some cases even 9-12 months.

"This perception can be addressed by introducing greater transparency, particularly in the objectives and criteria the government considers when assessing FDI applications. Clear guidelines and timelines for approvals would help eliminate uncertainty, ensuring that investors feel secure and informed," Pandey said.

One of the most impactful reforms would be the introduction of "deemed approvals", he said, adding, under this system, FDI applications that are not processed within a specified timeframe would be automatically approved, thereby eliminating unnecessary delays.

Avimukt Dar, Founding Partner, IndusLaw, suggested the government provide clarity and alignment on the meaning of beneficial owners under press note 3.