FDI in India 2026: Which Sectors Allow 100% Foreign Investment Under the Automatic Route?

However, “100% FDI permitted” does not always mean “100% automatic route.” Defence, scheduled airlines, brownfield pharmaceuticals and major parts of the space sector permit up to 100% foreign ownership but require Government approval above specified automatic-route thresholds. DPIIT

What Does 100% FDI Under the Automatic Route Mean?

Under the automatic route, the foreign investor and Indian investee company generally do not need prior Central Government approval simply to make the foreign investment. They must still comply with FEMA, sectoral conditions, pricing, reporting, licensing and other applicable laws. Invest India

The FDI policy also contains an important default rule: where a sector or activity is not specifically listed with a different cap or route, FDI is generally permitted up to 100% under the automatic route, subject to applicable laws, security requirements and other conditions. DPIIT

That default rule is why businesses such as ordinary software development, many B2B services, consulting, engineering services and other non-regulated activities can often be established as 100%-foreign-owned Indian subsidiaries without a specific sector appearing by name in the FDI table.

The principal categories are below.

Sector / activity

100% automatic?

Important qualification

Specified agriculture and animal husbandry

Yes

Only specified permitted activities

Specified plantation activities

Yes

Limited to listed plantations

Mining of most metal/non-metal ores

Yes

Titanium-bearing minerals have different treatment

Coal and lignite

Yes

Subject to mining legislation

Petroleum & natural gas activities

Yes

Specified private-sector activities

Manufacturing

Yes

Includes qualifying contract manufacturing

Broadcasting carriage services

Yes

Sectoral licensing still applies

Non-news TV uplinking/downlinking

Yes

Broadcasting conditions apply

Greenfield airports

Yes

Aviation regulation applies

Existing/brownfield airports

Yes

Aviation regulation applies

Non-scheduled air transport

Yes

Subject to aviation rules

Helicopter/seaplane services

Yes

Subject to DGCA requirements

Ground handling / aviation MRO etc.

Yes

Sectoral conditions apply

Construction development

Yes

Not ordinary prohibited “real estate business”

Industrial parks

Yes

Policy conditions apply

Telecom services

Yes

Telecom licensing/security conditions apply

Wholesale / cash-and-carry trading

Yes

Trading conditions apply

Marketplace e-commerce

Yes

Inventory-based e-commerce remains restricted

Single-brand retail trading

Yes

Local-sourcing and other conditions may apply

Duty-free shops

Yes

Customs/location conditions apply

Specified railway infrastructure

Yes

Sensitive cases may undergo security review

Asset Reconstruction Companies

Yes

SARFAESI/RBI conditions apply

Credit Information Companies

Yes

Regulatory conditions apply

Insurance intermediaries

Yes

IRDAI requirements apply

Insurance companies

Yes in current 2026 framework

Insurance Act/IRDAI conditions apply

White Label ATM Operations

Yes

RBI conditions apply

Regulated “other financial services”

Yes

Must be regulated by recognised financial regulator

Greenfield pharmaceuticals

Yes

Pharma conditions apply

Medical devices

Yes

Regulatory requirements still apply

Space components/systems under specified category

Yes

Other space activities have lower automatic thresholds

The core DPIIT automatic-route list confirms most of these categories; subsequent amendments materially changed telecom, space and insurance treatment. DPIIT

Yes. Manufacturing is generally open to 100% FDI under the automatic route.

The policy covers both manufacturing by the Indian investee company itself and contract manufacturing in India under a legally tenable contract. A manufacturer may also sell products manufactured in India through wholesale, retail and e-commerce without separate Government approval merely for that selling activity. DPIIT

This makes the automatic route particularly relevant for foreign businesses establishing Indian subsidiaries for:

• electronics;

• machinery;

• automotive components;

• textiles;

• chemicals;

• industrial products; and

• other ordinary manufacturing activities.

Separate industrial, environmental, factory or product-specific licences may still apply.

Generally yes, where the particular activity is not subject to a separate restricted-sector rule.

The FDI framework permits up to 100% automatic-route investment in sectors not specifically listed with a different restriction. That commonly covers ordinary software development, IT-enabled services, BPO/KPO operations and many professional or commercial service businesses. DPIIT

But the company should examine the actual activity, not simply describe itself as “technology”.

For example, a technology business that actually operates:

• telecom infrastructure;

• payment services;

• lending;

• insurance;

• regulated financial services; or

• news digital media

may fall under a specific sectoral regime instead.

Yes. Telecom services are currently listed at 100% under the automatic route, subject to licensing and security conditions. DPIIT's automatic-route sector list reflects the current 100% cap. DPIIT

“Automatic route” does not eliminate the need for licences or Department of Telecommunications compliance.

Foreign ownership and operating permission are separate questions.

Mining and exploration of most metal and non-metal ores is permitted up to 100% under the automatic route, as is coal and lignite mining under the applicable statutory framework. DPIIT

Coal policy specifically permits 100% automatic-route FDI for qualifying coal-mining activities, including sale of coal and associated processing infrastructure, subject to mining legislation. PM India

However, mining and mineral separation involving titanium-bearing minerals and ores has separate Government-route treatment and should not be grouped into the ordinary 100%-automatic mining category. DPIIT

Specified petroleum and natural-gas activities permit 100% FDI under the automatic route.

These include activities such as oil and natural-gas exploration, specified petroleum/natural-gas infrastructure, pipelines, LNG regasification and private-sector petroleum refining, subject to sectoral policy and regulation. DPIIT

Petroleum refining by existing public-sector undertakings has a different cap and should not be confused with private-sector refining. DPIIT

Yes. Both greenfield and existing airport projects permit 100% FDI under the automatic route. DPIIT

Certain other civil-aviation activities also allow 100% automatic FDI, including:

• non-scheduled air transport services;

• helicopter and seaplane services;

• ground handling;

• aircraft maintenance and repair organisations;

• flying-training institutes; and

• technical-training institutions. DPIIT

What about scheduled airlines?

Scheduled passenger airlines are different.

The sector permits up to 100% foreign investment, but the normal automatic-route ceiling is 49%, with Government-route treatment above that level, subject to special rules and exceptions. DPIIT

Therefore:

100% ownership permitted ≠ 100% automatic route.

Construction development is open to 100% FDI under the automatic route, but “real estate business” itself remains a prohibited FDI activity.

Construction-development activity can include qualifying townships, housing and built-up infrastructure. DPIIT has also clarified that real-estate broking is not treated as prohibited “real estate business” for this purpose and is eligible for 100% automatic-route FDI. DPIIT

A foreign investor should therefore distinguish between:

• development/construction activity, which may qualify; and

• passive dealing in land or prohibited real-estate business.

Several do.

Wholesale / cash-and-carry

100% automatic-route FDI is permitted. DPIIT

Marketplace e-commerce

100% automatic-route FDI is permitted in the marketplace model of e-commerce, subject to the FDI policy conditions. Press Information Bureau

The inventory-based model of e-commerce should not be treated as equivalent to the marketplace model.

Single-brand retail trading

100% FDI is permitted under the automatic route, subject to applicable single-brand retail conditions, including sourcing requirements where relevant. DPIIT

Duty-free shops

100% automatic-route FDI is permitted, subject to the applicable customs and location requirements. DPIIT

Multi-brand retail

This should not be placed in the 100%-automatic category. It remains subject to a substantially different FDI regime.

Yes, but only for specified railway-infrastructure activities opened to private-sector participation.

Permitted areas include specified:

• suburban corridor projects;

• high-speed train projects;

• dedicated freight lines;

• rolling stock manufacturing and maintenance;

• railway electrification;

• signalling;

• freight terminals;

• passenger terminals;

• railway infrastructure in industrial parks; and

• mass rapid transport systems. DPIIT

Proposals involving foreign investment beyond 49% in sensitive areas may be referred to the Cabinet Committee on Security on a case-by-case basis. DPIIT

Several important financial-sector categories do.

Asset Reconstruction Companies

100% automatic-route FDI is permitted, subject to the SARFAESI Act and RBI framework. DPIIT

Credit Information Companies

100% automatic-route foreign investment is permitted, subject to regulatory conditions. DPIIT

White Label ATM Operations

100% FDI is permitted under the automatic route, subject to RBI criteria, including applicable net-worth and payment-system requirements. DEA

Other regulated financial services

Financial-service activities regulated by bodies such as RBI, SEBI, IRDAI or PFRDA may permit 100% automatic-route foreign investment, subject to the relevant regulator's conditions. Where the activity is unregulated, only partly regulated or regulatory oversight is uncertain, Government approval may instead be required. DPIIT

Yes. This is an important 2026 change.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 increased the permissible foreign equity holding in an Indian insurance company to 100%. Most provisions of that Act came into force on 5 February 2026. eGazette

The Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 changed the automatic-route provision so that the automatic ceiling tracks the percentage permitted under the Insurance Act rather than the former fixed 74% ceiling. Department of Financial Services

Accordingly, the current framework permits up to 100% foreign investment in an Indian insurance company through the automatic route, subject to the Insurance Act, IRDAI licensing and applicable foreign-investment conditions. Department of Financial Services

Insurance intermediaries were already open to 100% automatic-route FDI. DPIIT

Greenfield pharmaceutical projects permit 100% FDI under the automatic route.

Brownfield pharmaceuticals are different: foreign investment is automatic only up to 74%, while investment beyond 74% and up to 100% follows the Government route. DPIIT

Manufacturing of qualifying medical devices is also permitted up to 100% under the automatic route. DPIIT

This distinction is critical in acquisitions:

Building a new pharmaceutical operation and buying an existing Indian pharmaceutical company do not have the same FDI route.

Only one important space category is fully 100% automatic; other space activities have lower automatic-route thresholds.

Under the 2024 NDI Rules amendment:

• manufacturing of components and systems/sub-systems for satellites, Ground Segment and User Segment: 100% automatic;

• satellites manufacturing/operation, satellite data products, Ground Segment and User Segment: automatic up to 74%, Government route beyond 74%;

• launch vehicles and associated systems/sub-systems and creation of spaceports: automatic up to 49%, Government route beyond 49%. DEA

So describing the entire Indian space sector as “100% automatic” would be incorrect.

This distinction is one of the most useful checks for foreign investors.

Sector

Maximum foreign investment

Automatic portion

Defence

100%

Up to 74%

Brownfield pharmaceuticals

100%

Up to 74%

Satellites/data/ground-user segments

100%

Up to 74%

Launch vehicles / spaceports

100%

Up to 49%

Scheduled air transport

100%

Generally up to 49%

Defence, for example, permits a 100% sectoral cap but moves beyond the automatic route after 74%, subject to the applicable statutory conditions. DPIIT

This is why a foreign investor should never rely only on the phrase “100% FDI allowed.”

Always check the entry route as well.

No. Automatic route means no prior FDI approval under the ordinary entry-route mechanism; it does not mean “no regulation.”

A 100%-foreign-owned company may still need:

• company incorporation;

• sector licence;

• industrial licence;

• environmental approval;

• RBI/FEMA reporting;

• FC-GPR;

• pricing compliance;

• beneficial-ownership disclosures;

• competition approval;

• security clearance; or

• regulator registration.

For example, 100% automatic FDI in telecom does not eliminate telecom licensing, and 100% automatic insurance investment does not eliminate IRDAI licensing.

Yes. However, the 2026 framework does not require every investment connected with a country sharing a land border with India to follow the Government route.

DPIIT's Press Note No. 2 (2026 Series) has revised the rules governing investments from countries sharing a land border with India (“LBCs”). The revised framework became operative upon notification of the corresponding amendments to the FEMA (Non-Debt Instruments) Rules, 2019 in May 2026.

The revised framework also refers to the beneficial-ownership test under Section 2(1)(fa) of the Prevention of Money-laundering Act, 2002 and Rule 9(3) of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. In general, the Government-route requirement may arise where an LBC citizen or entity holds rights or entitlements above the prescribed threshold, or has control over the investor or ultimate effective control over the Indian investee company.

Where the LBC beneficial ownership is within the applicable 10% threshold and does not involve control, the investment may be made under the automatic route, provided the relevant sectoral cap and other applicable conditions are satisfied. Such investments are also subject to the prescribed reporting requirements.

On the other hand, where the prescribed threshold is exceeded, or an LBC citizen or entity has control or ultimate effective control over the relevant entity, the Government route may be required. The investor should therefore examine not only the sector in which the Indian company operates, but also the direct and indirect ownership and control structure of the foreign investor before determining the applicable FDI route.

The FDI framework continues to prohibit investment in specified activities, including:

• lottery business;

• gambling and betting;

• chit funds;

• Nidhi companies;

• trading in transferable development rights;

• prohibited real-estate business/farmhouse construction;

• specified tobacco-product manufacturing; and

• activities not open to private-sector investment, subject to stated exceptions. DPIIT

An automatic-route analysis therefore starts by confirming that the proposed activity is not prohibited.

Before assuming that a foreign company can own 100% of IndiaCo under the automatic route, verify:

1. What is the company's exact business activity?

2. Is the activity expressly listed in the FDI policy?

3. If not listed, does the general 100%-automatic default rule apply?

4. Is there a sectoral cap?

5. Is the full cap automatic or only part of it?

6. Are licences or regulatory approvals required separately?

7. Does a land-border/beneficial-ownership restriction apply?

8. Are there FDI-linked performance conditions?

9. Will the Indian company make downstream investments?

10. Have FEMA pricing and reporting requirements been planned?

The best time to complete this analysis is before the foreign shareholder signs the incorporation and subscription documents.

Is most FDI in India allowed under the automatic route?

Yes. The Government states that most sectors are open to foreign investment under the automatic route and that more than 90% of FDI inflows have been received through that route. Press Information Bureau

Can a foreign company own 100% of an Indian software company?

Generally yes where it is conducting ordinary software or IT services and no separately regulated activity changes the sector classification. Unlisted sectors generally permit 100% automatic-route FDI subject to applicable law. DPIIT

Is manufacturing 100% automatic?

Yes, generally, including qualifying contract manufacturing. DPIIT

Is e-commerce 100% automatic?

The marketplace model permits 100% automatic-route FDI. The inventory-based model should not be treated the same way. Press Information Bureau

Is telecom 100% automatic?

Yes, subject to applicable telecom licensing and sectoral conditions. DPIIT

Is insurance 100% automatic in 2026?

The 2026 operative framework permits foreign investment up to 100% in Indian insurance companies, with the foreign-investment rules' automatic-route ceiling linked to the statutory percentage, subject to Insurance Act and IRDAI requirements. eGazette

Is defence 100% automatic?

No. Defence permits up to 100% foreign investment, but the automatic route extends only up to 74%; investment beyond that follows the Government route under the prescribed conditions. DPIIT

Is greenfield pharma 100% automatic?

Yes. Brownfield pharmaceutical investment is automatic only up to 74%, with Government approval beyond 74%. DPIIT

Is the entire space sector 100% automatic?

No. Only specified component/system manufacturing is fully 100% automatic. Other space activities have automatic thresholds of 74% or 49%. DEA

Does automatic-route FDI eliminate FC-GPR reporting?

No. Automatic route concerns prior investment approval; FEMA post-investment reporting and other compliance can still apply.