FDI approvals 2026: DPIIT rolls out 12-week clearance system; what the new paperless SOP means for investors

The Department for Promotion of Industry and Internal Trade (DPIIT) has issued an updated standard operating procedure (SOP) for processing foreign direct investment (FDI) proposals introducing a defined 12-week timeline and a fully paperless application system, PTI reported.Under the revised framework, decisions on FDI proposals will be taken within 12 weeks, excluding the time taken by applicants to rectify deficiencies or provide additional information sought by authorities.“This SOP aims to make the FDI application filing process completely paperless. Therefore, the applicant will not be required to file physical copies of any documents required to process FDI proposals,” DPIIT said.The SOP mandates a digital, paperless system for filing applications through the Foreign Investment Facilitation Portal (FIF) and the National Single Window System (NSWS), covering all proposals requiring government approval under the FDI Policy and FEMA rules.DPIIT will act as the nodal body under the new framework, routing proposals to relevant ministries while simultaneously seeking inputs from the Reserve Bank of India (RBI), Ministry of Home Affairs (MHA) for security clearance, and Ministry of External Affairs (MEA).The process aims to eliminate duplication and ensure time-bound decisions, with timelines ranging from initial scrutiny within two weeks to final approvals in about 12 weeks. If comments are not received within the prescribed period, they will be treated as “no objection”.As per the SOP, all applications involving investments from countries sharing a land border with India will be forwarded to the MEA for comments or clearance within the stipulated timeline. Other proposals may also be referred where necessary.The SOP also introduces stricter compliance oversight alongside faster processing. Investments in sensitive sectors such as defence, telecom and civil aviation will require mandatory security clearance, while large proposals may be escalated to the Cabinet Committee on Economic Affairs (CCEA).It allows closure of incomplete applications, withdrawal by applicants, and mandates DPIIT concurrence before rejecting proposals or imposing additional conditions. Ministries will be responsible for monitoring compliance, with violations attracting penalties under FEMA.The revised norms also require all consulted departments–including the RBI, MHA and MEA–to respond within fixed timelines, failing which their views will be presumed as no objections.The previous SOP, issued on June 29, 2017, had fixed a maximum of 10 weeks for clearance of FDI proposals.Commenting on the changes, Global Trade Research Initiative (GTRI) said the framework would improve efficiency but keep compliance requirements high.“The SOP will improve ease of doing business by making FDI approvals faster, transparent, and fully digital, with clear timelines boosting investor confidence. However, strong inter-agency scrutiny and security checks mean compliance will remain demanding,” GTRI founder Ajay Srivastava said.He added that while the move is a positive step, India needs further reforms. “While a welcome step, India must go further—simplifying regulations, cutting compliance costs, and reducing the cost of doing business—to attract high-quality, long-term investment into manufacturing and advanced sectors,” he said.