Glossary · FEMA & International Tax
FDI
Foreign Direct Investment — investment by a person resident outside India in the capital of an Indian company, with the objective of establishing a long-term interest.
FDI is defined under FEMA 20(R) as investment by a non-resident in unlisted equity instruments of an Indian company, or in 10%+ stake in a listed company, or in 10%+ stake in an LLP. FDI can be made under the automatic route (no prior approval needed) or the government route (requires FIPB or sectoral ministry approval). Sectors like insurance, banking, and telecom have sectoral caps. FDI inflow data is published by the DPIIT and the RBI on a monthly basis. In FY 2023-24, India received $71 billion in FDI inflows.
Examples
A US venture-capital fund invests $10 million for a 15% stake in an Indian fintech startup, classified as FDI under the automatic route with reporting via Form FC-GPR.