Prohibitions on investment in India

Prohibitions on investment in India

• Foreign investment in any form is prohibited in a company or a partnership firm, or a proprietary concern or any entity, whether incorporated or not (such as trusts) that is engaged, or proposes to engage, in the following activities:
  • Business of chit fund
  • Nidhi company
  • Agricultural or plantation activities
  • Real estate business or the construction of farm houses
  • Trading in transferable development rights (TDRs).
• It has been clarified that “real estate business” does not include the development of townships, the construction of residential or commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure or townships. It is further clarified that partnership firms or proprietorship concerns with investments in line with FEMA regulations are not allowed to engage in the print media sector.

In addition, investment in the form of FDI is also prohibited in certain sectors such as:

1. Retail trading (except single-brand product retailing)
2. Atomic energy
3. Lottery business, including government and private lottery and online lotteries
4. Gambling and betting, including casinos
5. Business of chit fund
6. Nidhi company
7. Trading in TDRs
8. Activities or sectors not opened to private sector investment
9. Agriculture (excluding floriculture, horticulture, the development of seeds, animal husbandry, pisciculture and the cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and plantations (other than tea plantations)
10. The manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
    • Foreign investments in trusts other than investments by SEBI-registered Foreign Venture Capital Investors (FVCI) in domestic VCFs are not permitted.