The government has issued an updated standard operating procedure (SOP) to streamline the processing of foreign direct investment (FDI) proposals, aiming to make the process paperless and fixing a 12-week timeline for final approvals.
Per the SOP issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on May 4, a FDI proposal must be disseminated by DPIIT to the Ministries/Departments concerned, RBI, the Home Ministry (MHA) and the Foreign Affairs Ministry (MEA) within two days of receiving it. A 12-day window is to follow for initial scrutiny of the proposal and documents and seeking additional information.
A two-week time limit is then allowed for submission of clarification by DPIIT on specific issues of FDI policy while a six-week time period is provided for submission of comments by MHA, MEA and any other consulted ministry/department/RBI/regulator/stakeholder.
Finally, the competent authority gets 4 weeks for grant of approval, taking the total time for approval to 12 weeks.
“Time-limits allocated shall exclude time taken by applicants in removing deficiencies in the proposals or in supplying additional information, as may be required by the competent authority. Time-limits allocated shall exclude time taken by applicants in removing deficiencies in the proposals or in supplying additional information…,” per the notification.
Ease of doing biz
Under the new framework, DPIIT will act as the nodal body, routing proposals to relevant ministries while simultaneously seeking inputs from the RBI, MHA for security clearance, and MEA, according to an analysis by research body GTRI.
“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,” it said.
In case of proposals involving total foreign equity inflow of more than the established limits, the competent authority shall place the same for consideration of Cabinet Committee on Economic Affairs (CCEA) within the timeline prescribed.
Sensitive sectors
Investments in sensitive sectors such as defence, telecom, and civil aviation will require mandatory security clearance, while large proposals will be escalated to the CCEA, the GTRI paper noted.
“It also allows closure of incomplete applications, withdrawal by applicants, and mandates DPIIT concurrence before rejecting proposals or imposing additional conditions. Ministries will be responsible for monitoring compliance, with violations attracting penalties under FEMA,” it added.
The SOP includes separate guidelines on investments from the seven countries sharing a land border with India (China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar and Afghanistan).
Published on May 5, 2026
