Sector caps and approval routes are the main regulatory filter for foreign businesses. Manufacturing, telecom and many trading models are open to 100% foreign investment under the automatic route, while banking, defence above 74%, multi-brand retail, print media and pension business carry caps or need approval. Insurance companies became open to 100% foreign investment under the automatic route in 2026, subject to IRDAI verification. Real estate business is closed to foreign investment, and units in the GIFT City international financial services centre have long tax holidays.
Sector caps and approval routes
Manufacturing is open to 100% foreign investment under the automatic route, as is telecom subject to security safeguards. Defence allows 74% under the automatic route, with government approval above that. Private banking allows 74%, with the automatic route up to 49%, while multi-brand retail is capped at 51% and print media for news and current affairs at 26%, both under the government route.
Insurance companies can now take up to 100% foreign investment under the automatic route, subject to IRDAI approval and verification, with at least one of the chairperson, managing director or chief executive required to be a resident Indian citizen. Proposals in sensitive sectors such as defence, telecom and civil aviation also go through security clearance by the Ministry of Home Affairs.12345678
Real estate and property
Foreign direct investment is prohibited in real estate business and in building farmhouses. Township development, construction of residential or commercial premises, roads and bridges, and SEBI-registered real estate investment trusts fall outside the prohibition.
A foreign-owned Indian company's ability to acquire land is a separate question governed by FEMA rules on immovable property and by state land laws, which should be checked for each site.9
Incentives
Units in the international financial services centre at GIFT City have a tax holiday for 20 of their first 25 years, and offshore banking units for 20 years, followed by a 15% concessional rate. Units formed by splitting or restructuring an existing Indian business are excluded.
From 1 April 2026 to 31 March 2047, foreign companies that procure data centre services from a specified data centre in India are exempt from income tax on that basis, subject to conditions. Production-linked incentive schemes, special economic zones and state incentive policies also exist but were not checked.1011
| Sector | Cap | Route |
|---|---|---|
| Manufacturing | 100% | Automatic |
| Telecom services | 100% | Automatic, subject to safeguards |
| Defence | 100% | Automatic up to 74%; government above 74% |
| Insurance companies | 100% | Automatic, subject to IRDAI approval and verification |
| Private sector banking | 74% | Automatic up to 49%; government above 49% |
| Multi-brand retail trading | 51% | Government |
| Print media (news and current affairs) | 26% | Government |
| Pension sector | 49% | Government |
| Real estate business, farmhouses | Prohibited | Not available |
How it works, step by step
- Map each planned activity to its FDI sector entry, cap and conditions14DPIIT (FDI Policy)
- Identify the sector regulator and its licence (for example IRDAI for insurance)2Sector regulator
- Allow for Ministry of Home Affairs security clearance in sensitive sectors8Ministry of Home Affairs
No timings or fees are shown unless an official source states them.
Documents usually needed
- Sector analysis against the FDI Policy and Press Notes
- Sector regulator licence application
- Security clearance form where required
- Board composition showing resident Indian citizens where a sector requires them
Common mistakes
- Relying on sector caps from guides that predate the 2026 insurance change.
- Treating an FDI cap as the only requirement and missing the separate sector licence.
- Assuming that an automatic-route sector removes the need for security clearance or regulator verification.
- Treating land acquisition as covered by the FDI approval when state land laws also apply.
When the business crosses borders
- The land-border-country rule applies on top of sector caps, including in automatic-route sectors.
- Resident Indian citizen requirements for senior roles in insurance affect expatriate leadership plans.
- The data centre exemption is aimed at foreign companies buying data centre services in India.
Questions businesses ask
Can a foreign insurer own 100% of an Indian insurance company?
Yes, since the 2026 changes, under the automatic route subject to IRDAI approval and verification, and with at least one of the chairperson, managing director or chief executive being a resident Indian citizen.2
Can we invest in Indian real estate?
Real estate business and farmhouse construction are closed to foreign direct investment, but township development, construction of residential or commercial premises and SEBI-registered REITs are outside the prohibition.9
What this guide does not yet confirm
These points need checking with a qualified local professional in India before you rely on them.
- The DPIIT FAQ table used for several caps does not show its date and still shows insurance at 74%; caps for banking, retail, print media and pension should be confirmed against the current Consolidated FDI Policy.
- Acquisition of immovable property by foreign-owned companies, branches and non-residents under FEMA was not confirmed: the RBI Master Direction could not yet be checked.
- Public procurement preferences (Make in India orders) and restrictions on bidders from land-border countries were not source-checked.
- Special economic zone rules, production-linked incentive schemes and state incentive policies were not covered.
- Sector-specific licensing for financial services, telecom, broadcasting and e-commerce conditions was not covered in detail.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Manufacturing is open to 100% foreign direct investment under the automatic route. Subject to the sector conditions and the land-border-country rule. Central rule.
The sector table extract was hard to read; confirm against Chapter 5 of the Consolidated FDI Policy.
Insurance companies may receive up to 100% foreign investment under the automatic route, subject to IRDAI approval and verification, and at least one of the chairperson, managing director or chief executive officer must be a resident Indian citizen. Excludes LIC (separately capped at 20%). Based on Press Note 1 (2026 Series) of 9 February 2026 and the FEMA (Non-debt Instruments) (Second Amendment) Rules, 2026 notified on 2 May 2026. Central rule.
Law-firm summary; the official Press Note and gazette notification could not yet be checked. The effective date is the notification date reported by the source.
Foreign investment in defence is permitted up to 74% under the automatic route, with government approval required above 74%. Press Note 4 (2020 Series). Central rule.
Also stated on IndBiz, India's FDI Policy (Press Note 4 of 2020 dated 17 September 2020).
Foreign investment in private sector banking is capped at 74%, with the automatic route up to 49% and government approval above 49%. Banking licences are separately regulated by the RBI. Central rule.
The FAQ is undated and its table still shows insurance at 74%, so confirm this cap against the current Consolidated FDI Policy.
Multi-brand retail trading is capped at 51% foreign investment under the government route. Central rule; additional sector conditions apply.
Undated FAQ; confirm against the current Consolidated FDI Policy.
Foreign investment in print media dealing with news and current affairs is capped at 26% and in the pension sector at 49%, both under the government route. Central rule.
Undated FAQ; confirm against the current Consolidated FDI Policy.
Foreign direct investment of up to 100% is allowed in the telecom sector under the automatic route, subject to safeguards. Press Note 4 (2021 Series) dated 6 October 2021. Central rule.
FDI proposals from land-border-country investors, and proposals in sectors such as defence, telecom and civil aviation, require security clearance from the Ministry of Home Affairs. Standard Operating Procedure dated 4 May 2026. Central rule.
Foreign direct investment is prohibited in real estate business and construction of farmhouses, but township development, construction of residential or commercial premises, roads or bridges, and SEBI-registered REITs are outside the prohibition. Central FDI rule; acquisition of land is separately governed by FEMA property rules and state land laws.
Units in an international financial services centre have a tax holiday for 20 of their first 25 years, and offshore banking units for 20 years, followed by a 15% concessional rate, excluding units formed by splitting or restructuring an existing Indian business. IFSC units (for example at GIFT City), as extended by the Finance Act, 2026. Central tax incentive.
Secondary source (last reviewed 11 May 2026).
Foreign companies procuring data centre services from a specified data centre in India are exempt from Indian income tax on that basis from 1 April 2026 to 31 March 2047, subject to conditions. Finance Act, 2026. Central tax incentive.
Secondary source; conditions not set out.
Questions on this topic
11 statements on sector rules, incentives and property in India
