India’s Department for Promotion of Industry and Internal Trade (DPIIT) has issued a standard operating procedure (SOP) for processing foreign direct investment (FDI) proposals requiring government approval.

The SOP identifies eligible sectors and activities, including capital goods manufacturing; electronic capital goods and electronic component manufacturing; polysilicon and wafer manufacturing; advanced battery components; rare-earth permanent magnets; and rare-earth processing.

Among countries sharing a land border with India is China, which holds a dominant position in the solar photovoltaic supply chain, particularly in the production of polysilicon, solar wafers, and ingots.

India has extended the Approved List of Models and Manufacturers (ALMM) framework to solar wafers in a major step toward building a fully integrated domestic solar manufacturing ecosystem. The mandate will become effective from June 2028. Industry stakeholders have warned that a sharp gap in upstream capacity and a tight compliance window could disrupt supply chains.

Online Proposals

The FDI SOP requires applicants to file such proposals online through the Foreign Investment Facilitation or National Single Window System portal. Applicants must upload the prescribed documents digitally.

After online filing, DPIIT will identify the administrative ministry or department concerned and assign the proposal to it for processing. DPIIT will also circulate the proposal online to the Reserve Bank of India for comments under Foreign Exchange Management (Non-debt Instruments) Amendment (FEMA) Rules, 2026, and related rules.

Proposals requiring security clearance will be referred to the Ministry of Home Affairs (MHA), and all proposals will be forwarded to the Ministry of External Affairs (MEA).

Security clearance from MHA is required for proposals involving broadcasting, telecommunications, space, private security agencies, defense, civil aviation, and mining and mineral separation of titanium-bearing minerals and ores, including value addition and integrated activities.

The SOP sets a 12-week cumulative timeline for ordinary processing. DPIIT must disseminate proposals within two days. The competent authority must complete initial scrutiny and seek additional information within 12 days. DPIIT has two weeks to provide clarifications on FDI policy issues. MHA, MEA, the Reserve Bank of India (RBI), regulators, stakeholders, and other ministries or departments consulted have six weeks to provide comments. The competent authority then has four weeks to decide on approval.

If the authorities do not provide comments on time, the SOP treats them as having none. The stated timelines exclude the time taken by applicants to address deficiencies or provide additional information.

Where a proposal involves total foreign equity inflow above the limit, the competent authority must place it before the Cabinet Committee on Economic Affairs (CCEA). The decision is then conveyed to the applicant after CCEA consideration.

The competent authority may close an application if the applicant fails to provide the required information or adequately address queries despite reminders. Closure does not amount to rejection and does not prevent the applicant from filing a fresh application with the required documents.

If it rejects a proposal or imposes conditions beyond those in the FDI policy or sectoral laws and regulations, it must seek DPIIT’s concurrence and the approval of the concerned secretary. DPIIT concurrence is not required for conditions concerning FEMA compounding, compliance with applicable laws or regulations, or court orders.

The SOP also permits applicants to withdraw pending proposals by submitting an authorized withdrawal letter explaining the reasons. Applicants may surrender an approval letter after approval, provided they submit a signed declaration explaining the reasons for surrender. Typographical, grammatical, or other apparent errors in approval letters may be corrected through a corrigendum after verification and approval by the concerned secretary.

The document prescribes detailed filing requirements. These include authorization letters, summaries of the proposed investment, pre- and post-transaction shareholding patterns, flow-of-funds diagrams, group structure charts, beneficial ownership details, investee and investor documents, past approvals, investment agreements, valuation certificates, negative-list undertakings, relevant consents, declarations, and a notarized affidavit on ₹100 (~$1.05) stamp paper.

Foreign Investment Cap

For investments involving countries sharing land borders with India, the SOP provides separate reporting and procedural guidelines. Certain investments below the applicable threshold that meet specified Prevention of Money Laundering Act criteria must be reported before inward remittance or, where no remittance is involved, before execution of the relevant transaction.

For land-border-country investments seeking government approval in specified sectors or activities, the administrative ministry or department must convey its decision within 60 days, provided that the investment is up to 49% of capital or voting rights and that a majority shareholding and control remain with resident Indian citizens or resident Indian-owned and controlled entities.

FDI violations remain subject to penal provisions under the Foreign Exchange Management Act. The SOP refers administrative ministries and departments to RBI’s master directions on compounding of contraventions under FEMA.

Each ministry or department must maintain a dedicated FDI cell with a nodal officer not below the rank of Joint Secretary. DPIIT’s secretary will convene review meetings every four to six weeks to monitor the pendency of FDI proposals.

Recently, the Ministry of Power temporarily waived the DPIIT registration requirement for bidders using lithium-ion cell technology and entering into transfer-of-technology arrangements with land-border-sharing countries, allowing them to participate in tenders for grid-connected battery energy storage projects.

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