India rules · all investors

Trade & Sectors: India rules for foreign companies

CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375

India's FDI policy lists sectors where foreign investment is prohibited, capped, or allowed only with Government approval. Most manufacturing and services are open up to 100% under the automatic route, but retail, media, insurance, defence and some others carry conditions.

Reading the sector rules

Sector regulators add their own licences: food safety, drugs, telecom, financial services and others. These often take longer than incorporation, so the licence plan should be part of the entry plan.

Trade agreements change tariffs and services access, and may require proof of origin to claim preferential duty; they do not override FDI policy or sector licences.

Checklist

FDI route and cap
Sector licence list
Origin rules for preferential duty
Production-linked incentive eligibility
State-level approvals

Common mistakes

Assuming a trade agreement opens a capped sector
Incorporating before checking licences
No origin documentation
Missing state approvals

How this applies to your country

Our service: Company incorporation

Questions

Do production-linked incentives apply to foreign-owned companies?

Yes, eligible companies can apply regardless of ownership, subject to each scheme's thresholds.

Does a trade agreement change FDI rules?

No. Tariffs and services access change; FDI policy, sector caps and FEMA reporting still apply.

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