Centre issues SOP for paperless foreign direct investment application processing
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The Department for Promotion of Industry and Internal Trade (DPIIT) has issued standard operating procedures (SoP) for digital processing of foreign direct investment (FDI) applications.
The applicants will not be required to file physical copies of any documents required to process FDI proposals and ministries and departments in charge of the specific sector will continue to examine FDI proposals on the portal. According to the SoP, the applications will be filed through the Foreign Investment Facilitation Portal (FIF) and the National Single Window System (NSWS), covering all proposals requiring government approval under the FDI Policy and FEMA (Foreign Exchange Management Act) rules.
The SoP also states that the competent authorities shall not replicate an Inter-Ministerial body in respective administrative ministries or departments to grant approval for foreign investment. “The regime for the disposal of FDI proposals needs to be simpler to execute and more expeditious. The decision shall be conveyed by the administrative ministries or departments”, it said.
Under the new framework, DPIIT will act as the nodal body, routing proposals to relevant ministries while simultaneously seeking inputs from the Reserve Bank of India (RBI), Ministry of Home Affairs (MHA) for security clearance, and Ministry of External Affairs (MEA)”.
The process is expected to eliminate duplication and ensure time-bound decisions, with timelines ranging from initial scrutiny within two weeks to final approvals in about 12 weeks. Delays in inter-ministerial responses will be treated as “no objection.”
The SOP also introduces stricter compliance oversight alongside faster processing. Investments in sensitive sectors such as defence, telecom, and civil aviation will require mandatory security clearance, while large proposals will be escalated to the Cabinet Committee on Economic Affairs (CCEA).
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.
“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”, says Ajay Srivastava, founder, Delhi based think tank Global Trade Research Initiative (GTRI). “While a welcome step, India must go further—simplifying regulations, cutting compliance costs, and reducing the cost of doing business—to attract high-quality, long-term investment into manufacturing and advanced sectors”, he adds.