Govt issues SOP for FDI approvals with timelines for each stage of the process

Under the new FDI approval plan, final clearance of FDI proposals will have to be given in 10 weeks from the day it is received by DPIIT in cases where no security clearance is required.
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The Union Government made major changes to the Foreign Direct Investment (FDI) regime and the Department for Promotion of Industry and Internal Trade (DPIIT) has come out with fresh set of standard operating procedures. This is for processing FDI proposals that makes online furnishing of investment proposals and clearance by the respective authorities mandatory and within a specified period of time.

In line with changes brought about in the functioning by the outbreak of the pandemic, digitally signed applications and documents by an applicant will be accepted without any human interface. In case this is not available, additional seven days’ time would be given to the applicant to furnish physical copies of the document for further processing of the FDI proposal.

Under the new FDI approval plan, timelines for each stage of clearance has been defined with final clearance of FDI proposals being given in 10 weeks from the day it is received by DPIIT in cases where no security clearance is required. FDI proposals needing security clearance will have to be cleared by taking additional two weeks’ time in 12 weeks from the application date.

Government has also decided to assign FDI proposals coming in the domain of respective ministries to them for clearance. Such ministries, which will be called competent authority, will have a free hand to examine the proposals and clear them in a time-bound manner.

To smoothen the process, commerce and industry ministry has advised administrative ministries not to set up inter-ministerial groups to clear FDI proposals but rather assign it to an identified group of people for clearance within the ministry. This has been done to save time with the focus remaining with a specific group within the ministry.

DPIIT and each of the Competent Authorities shall maintain a database on the proposals received along with details such as date of receipt, investor and investee company details, volume of foreign investment involved, and date of grant of approval/rejection letter.

Additional time of two weeks will be given to DPIIT for consideration of those proposals which are proposed for rejection or where additional conditions which are not provided in the FDI Policy are proposed to be imposed by the Competent Authority.

Besides, to prevent pendency of FDI proposals, it has now been decided that competent authorities will hold a regular monthly review on pending proposals and take a call on its disposal in a time bound manner.

The government had already set up an empowered group of secretaries to fast track clearances for investment proposals while a Project Development Cell is now proposed to be set up in each ministry to prepare investable projects and coordinate with investors and central and state governments.

Government has revamped the investment procedures to maintain the FDI momentum. Despite Covid-19 disruptions and shrinking of economic activities globally, India attracted $ 35.37 billion worth of FDI in the April-August period of current fiscal. This is the highest ever FDI recorded during the period in any of the previous years.

After abolishing the Foreign Investment Promotion Board in 2017, a set of SoPs for FDI regime were announced to facilitate investment. No changes have been made in procedures since then. The fresh overhaul has taken a leaf out from the previous rules and regulations to make investment processes smoother going ahead.

(Subhash Narayan can be contacted at

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