How can a foreigner invest in India?

Are you an NRI keen to invest in your home country, or simply curious how foreign institutional investors route their money to India for growth? Go through the various options available for channelising the foreign wealth.


Foreign investment routes in India:

Foreign Direct Investment

A Non-resident entity can invest in India, except in the prohibited sectors or activities. These investments are subject to Foreign Exchange Management Act (FEMA) regulations and the FDI policy, including sectoral caps. An Indian company can receive FDI through:

Automatic route: FDI is allowed without prior approval either of the government or the RBI in sectors specified in the FDI policy. These are, typically, strategic long-term investments.

Government route: FDI in activities not covered under the automatic route requires the prior approval of the government, which is considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs and Ministry of Finance.

Foreign Portfolio Investment

Portfolio Investment Scheme (PIS) allows eligible entities, such as foreign institutional investors (FIIs), non-resident Indians (NRIs), persons of Indian origin (PIOs) and qualified foreign investors (QFIs) to invest in shares and convertible debentures of Indian companies, and units of domestic mutual funds, on any of the Indian stock exchanges.

FII: An FII is an institution, which is established abroad and wants to invest in securities in India. The RBI has granted permission to Sebiregistered FIIs to do so under the PIS route.

NRI, PIO: NRIs and PIOs are eligible to buy and sell shares, convertible debentures of Indian firms through a registered broker on a recognised stock exchange in India. NRIs can also buy and sell mutual funds units.





QFI: QFIs include individuals, groups or associations resident in a country, which is a member of the Financial Action Task Force (FATF). QFIs can invest in mutual funds, equity shares and corporate and government bonds.