The government route is the entry route for foreign direct investment (FDI) that needs prior Government approval, on the conditions that approval sets, as defined in paragraph 3(a)(ii) of Schedule I to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules). Proposals are filed online on the Foreign Investment Facilitation Portal (FIFP) and decided by the ministry for the sector.
Definition
The sector, the size of the stake or the investor’s country can put an investment on this route. The Consolidated FDI Policy Circular of 2020 places news publishing (26%) and multi-brand retail trading (51%) on it. Its counterpart, the automatic route, needs no approval.
Governing Provision
Rule 6(a) of the NDI Rules, as substituted by S.O. 2174(E) from 2 May 2026, puts on this route every entity or citizen of a country sharing a land border with India, and any investment whose beneficial ownership, tested under Section 2(1)(fa) of the Prevention of Money-laundering Act, 2002, lies with such a citizen or country. A Pakistani citizen or entity may use only this route, never for defence, space or atomic energy.
Key Features
The Department for Promotion of Industry and Internal Trade (DPIIT) set the process in its Standard Operating Procedure (SOP) of 4 May 2026.
Table: Handling of a Government-Route Proposal
| Stage | Rule |
|---|---|
| Filing | Online on the FIF Portal or NSWS, digital copies only; no submission fee |
| Consultation | RBI; Ministry of Home Affairs (security); Ministry of External Affairs |
| Time limit | 12 weeks; 2 more where rejection or extra conditions are proposed; applicant’s time excluded |
| Land-border minority stakes | 60 days: up to 49% in a Schedule II sector, Indian majority control |
Frequently Asked Questions
No. The government route only requires approval first, and the Competent Authority may approve with conditions. Barred sectors, such as lottery, gambling, chit funds and Nidhi companies, are listed separately in paragraph 2 of Schedule I to the NDI Rules and closed on either route.
No. The Department of Economic Affairs abolished the Foreign Investment Promotion Board (FIPB) by Office Memorandum dated 5 June 2017 and moved government-route approvals to the administrative ministries. DPIIT now allocates each proposal filed on the FIF Portal to the ministry for the sector.
Not always. Explanation 2 to Rule 6(a) of the NDI Rules applies where land-border holders exceed the thresholds in Rule 9(3) of the 2005 PML Rules over the investor, or control the investor or the Indian company. Below that, an automatic-route sector stays open, with a report to DPIIT before the money is remitted.
See Also
- Automatic Route (FDI): the route that needs no prior approval.
- Foreign Direct Investment (FDI): the investment this route regulates.
- Foreign Exchange Management Act, 1999: the parent law of the NDI Rules.
- Compounding of Contraventions under FEMA: settling an investment made without a required approval.
References
- NDI Rules, 2019, S.O. 3732(E) dated 17 October 2019: Schedule I paragraphs 2 and 3(a)(ii).
- S.O. 2174(E) dated 1 May 2026, substituting Rule 6(a); DPIIT Press Note No. 2 (2026 Series) dated 15 March 2026.
- DPIIT SOP No. 1/8/2016-F.C.I dated 4 May 2026.
- Consolidated FDI Policy Circular of 2020: paras 5.2.8.1 and 5.2.15.4.
For the operative text, refer to Rule 6(a) and Schedule I of the NDI Rules, 2019 on egazette.gov.in, and the SOP on fifp.gov.in.
This is an explanatory reference, not legal advice. Statutory positions change; verify against the official source cited above.
