India's foreign trade policies have been formulated with a view to invite and encourage Foreign Direct Investment in India (FDI). The process of regulation and approval has been substantially liberalized. The Reserve Bank of India has prescribed the administrative and compliance aspects of FDI.

FDI can be divided into two broad categories - Investment under automatic route and investment through prior approval of Government.

Procedure under automatic route
FDI in sectors/activities to the extent permitted under automatic route does not require any prior approval either by the Government or RBI. The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.

Procedure under Government approval 
FDI in activities not covered under the automatic route, requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB). Approvals of composite proposals involving foreign investment/foreign technical collaboration are also granted on the recommendations of the FIPB. For detail of project under Automatic Route and Government Route.

FDI Allowances in various sectors

• Agriculture – 100%.
• Plantation Sector – 100%.
• Mining of metal and non-metal ores – 100%.
• Mining – Coal & Lignite – 100%.
• Food Product Retail Trading – 100%.
• Broadcasting Carriage Services (Teleports, DTH, Cable Networks, Mobile TV, HITS) – 100%.
• Broadcasting Content Service - Up-linking of Non-‘News & Current Affairs’ TV Channels/ Down-linking of TV Channels – 100%.
• Airports – Greenfield – 100%.
• Airports – Brownfield – 100%.
• Air Transport Service – Non-Scheduled – 100%.
• Air Transport Service – Helicopter Services/ Seaplane Services – 100%.
• Ground Handling Services – 100%.
• Maintenance and Repair organizations; flying training institutes; and technical training institutions – 100%.
• Construction Development – 100%.
• Industrial Parks – new and existing – 100%.
• Trading – Wholesale – 100%.
• Trading – B2B E-commerce – 100%.
• Duty Free Shops – 100%.
• Railway Infrastructure – 100%.
• Asset Reconstruction Companies – 100%.
• Credit Information Companies – 100%.
• White Label ATM Operations – 100%.
• Non-Banking Finance Companies – 100%.
• Pharma – Greenfield – 100%.
• Petroleum & Natural Gas - Exploration activities of oil and natural gas fields – 100%.
• Petroleum refining by PSUs – 49%.
• Infrastructure Company in the Securities Market – 49%.
• Commodity Exchanges – 49%.
• Insurance – 49%.
• Pension – 49%.
• Power Exchanges – 49%.