All industrial undertakings are exempt from obtaining an industrial license tomanufacture, except for the following:• Industries reserved for the Public Sector;•Industries retained under compulsory licensing;• Items of manufacture reserved for the small scale sector; and• Any proposal attracting locational restriction.Industrial undertakings exempt from obtaining an industrial license are required to filean Industrial Entrepreneur Memoranda (IEM) with the Secretariat of IndustrialAssistance (SIA), Department of Industrial Policy and Promotion.
Foreign Investment Policy
Foreign investment is permitted in virtually every sector, except those of strategicconcern such as defence (opened up recently to a limited extent) and rail transport.Foreign companies are permitted to set up 100 per cent subsidiaries in India. No prior approval from the exchange control authorities (RBI) is required, except for certainspecified activities. The investment should be in accordance with the prescribedguidelines and the details of the investment should be filed with the authorities withinthe prescribed time limit. This procedure is applicable only for fresh investments directlyin Indian companies and not for purchase of shares from the existing shareholders. Thisinvestment procedure is commonly known as the
"automatic approval route"
Foreign Investment Promotion Board (FIPB)
of the Government of India isconstituted mainly to promote inflows of FDI into the country, as also to provideappropriate institutional arrangements, transparent procedures and guidelines for investment promotion and to consider and approve/recommend proposals for foreigninvestment.
Regulation and procedures
Procedures for obtaining government approvals have been considerably simplified.Approval procedures have been laid out for undertakings that are• exempt from industrial licensing requirements (including existing units undertakingsubstantial expansion);• subject to compulsory industrial licensing; and