With the increase in the connectivity and alleviation of regulatory regimes, there is an increase in the globalization and flow of capital across the countries. With the introduction of globalization, all kind of business from small to big have a bigger market to expose their business and since India is a developing country with a massive population the foreign investors expresses their interest in setting up business in India.
Even Indian Government is keen for the Foreign investments as it helps in the growth of economy of the country and further helps in development. According to regulations, only non-resident entity or person staying outside India can conduct FDI in India. This is regulated by DIPP(Department of industrial Policy)
There are some sectors in which a Foreign Direct Investment cannot be carried forward, they are;
FDI through Approval Route, there are few sectors which requires prior approval of the FIPB and they are as follows;
FDI under the automatic route is the most convenient one as it doesn't need any approval, if the investment is within the FDI cap then an application for FDI in Private Limited Company is not needed. All that is needed for Automatic route is that the Company must file certain documents with the Reserve Bank of India after receiving the receipt of the share subscription money from the foreign resident. Majority of the sectors allow 100% FDI hence it is very easy for the foreign nationals to start up a business in India.