Govt Streamlines FDI Clearances: 12-Week Deadline and Paperless Process Set

New Delhi: The government on Tuesday said that it would now clear all foreign direct investment or FDI proposals within 12 weeks as per the updated standard operating procedure (SOP) for processing foreign direct investment applications. The move of the government aims to facilitate the foreign investors within the time limit with a seamless and paperless FDI application filing process.

According to its latest SOP, up to 12 weeks’ time has been fixed for a decision on the proposals, excluding the time taken by applicants in removing deficiencies in the proposals or in supplying additional information as may be required by the competent authority. Earlier, the government had prescribed a maximum of 10 weeks for clearing the proposal in its SOP.

As per the fresh SOP, the additional two weeks will also be given to the department for promotion of industry and internal trade (DPIIT) for consideration of those proposals, which are proposed for rejection or where additional conditions have been proposed to be imposed by the competent authority. “This SOP aims to make the FDI application filing process completely paperless. Therefore, the applicant will not be required to file physical copies of any documents required to process FDI proposals,” the DPIIT said.

“All applications will be forwarded to the ministry of external affairs for their comments/clearance on investments from countries sharing a land border with India and, in other cases, where necessary, within the stipulated time period. Besides, all the ministries and departments consulted on any proposal, including the RBI, the home ministry and the external affairs ministry, will have to provide their comments within the timeline, and in case comments are not received within the prescribed time, it will be presumed that they have no comments to offer,” the SOP noted.

The SOP also includes separate guidelines on investments from countries sharing a land border with India — China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan. In April, the government eased FDI norms for foreign companies having a Chinese/Hong Kong shareholding of up to 10 per cent (or non-controlling stake), enabling them to invest in India under the automatic route, subject to applicable sectoral conditions and FDI caps.

Further, the government has also decided to provide expedited clearance within 60 days for investors of these seven countries in specific sectors/activities. "These sectors include capital goods manufacturing (heavy electrical industries like insulation items for power plants, castings and forgings, alloy steel seamless pipes and tubes, and machine tools), and electronic capital goods and electronic component manufacturing items," it said .

Further, it said that in case of proposals involving total foreign equity inflow of more than Rs 5,000 crore, the Cabinet Committee on Economic Affairs (CCEA) will take a decision. The applications requiring government approval need to be filed online through the Foreign Investment Facilitation/NSWS (National Single Window System) portal.

“Administrative ministries and departments will examine the proposals on the portal. After a proposal is filed online, the DPIIT will identify the concerned ministry and assign it within the prescribed timeline for processing and disposal of the application. The proposal will have to be circulated online to the RBI for comments, and applications that require security clearance will also be referred to the ministry of home affairs,” it said.

Commenting on this, think tank GTRI Founder Ajay Srivastava said the SOP will improve ease of doing business by making FDI approvals faster, transparent, and fully digital, with clear timelines boosting investor confidence. “However, strong inter-agency scrutiny and security checks mean compliance will remain demanding. India must further simplify regulations, cutting compliance costs, and reducing the cost of doing business - to attract high-quality, long-term investment into manufacturing and advanced sectors,” he said.