Caps and routes
Caps come from the Consolidated FDI Policy 2020 as amended by later Press Notes. Sector licences apply separately, and land-border ownership rules apply to every activity.
| Activity | Cap and route | Key conditions |
|---|---|---|
| Pharmaceuticals: greenfield | 100%, automatic route | Non-compete clauses are not allowed except in special circumstances with Government approval. |
| Pharmaceuticals: brownfield (existing companies) | 100%: automatic up to 74%, Government route beyond 74% | For five years, keep production of National List of Essential Medicines (NLEM) drugs and R&D spend at the highest level of the three years before the investment; give the ministry technology-transfer details. Non-compete clauses need Government approval. |
| Medical devices manufacturing | 100%, automatic route | Applies to greenfield and brownfield projects; the brownfield pharma conditions do not apply. |
| Hospitals, diagnostic centres and other health services | Up to 100%, automatic route | Not a listed sector, so the general rule for unlisted activities applies; health and facility regulation applies separately. |
| Health insurance | 100%, automatic route | Subject to IRDAI verification; at least one of the chairperson, managing director and CEO must be a resident Indian citizen (Press Note 1 of 2026). |
| Online pharmacy (e-commerce) | 100%, automatic route (marketplace model) | Marketplace entities with FDI may hold inventory only to export goods made in India (Press Note 3 of 2026); domestic inventory-based e-commerce remains barred. |
| Investors with a land-border-country owner | Government route | Applies where a beneficial owner (over 10%, or control) is a citizen of a land-border country; later changes into such ownership need approval. Within 10% and without control: automatic route, with prior reporting (Press Note 2 of 2026). |
Sources: DPIIT Consolidated FDI Policy 2020, para 5.2.27; DPIIT Press Notes 1, 2 and 3 (2026 series); Invest India medical devices page (retrieved 1 Oct 2026); Trilegal, EY and India Briefing alerts, 2026.
Greenfield against brownfield
The distinction matters only for pharmaceuticals. A greenfield project is a new venture; a brownfield investment is a stake in an existing pharma company. Both are open to 100% foreign ownership, but a brownfield stake above 74% needs Government approval before closing, obtained from the Department of Pharmaceuticals as the competent ministry through the Foreign Investment Facilitation Portal.
The brownfield conditions run for five years from the investment:
- production of NLEM drugs must stay at the highest level of the three years before the investment;
- R&D spend must stay at the highest level of the same three years;
- technology-transfer details must be given to the ministry;
- non-compete clauses need Government approval.
Medical devices manufacturing is treated differently: 100% automatic for greenfield and brownfield alike, and the brownfield pharma conditions do not apply.
Land-border ownership
A beneficial owner from a land-border country holding over 10%, or holding control, moves a deal to the Government route whatever the activity. A later change that brings such an owner above the threshold also needs approval. Since Press Note 2 (2026) took legal effect on 2 May 2026, a land-border stake within 10% and without control can use the automatic route, with prior reporting. The general treatment is on the land-border investors page.
Joint ventures where a land-border investor takes up to 49% in a fast-track sector, with resident Indians keeping majority ownership and control, have a 60-day decision target under the DPIIT SOP of 4 May 2026.
Government-route approvals
| Case | Approving authority | When |
|---|---|---|
| Brownfield pharma above 74% | Department of Pharmaceuticals, via the Foreign Investment Facilitation Portal | Before closing |
| Land-border-country beneficial owner over 10% or with control | Competent ministry, via the Foreign Investment Facilitation Portal | Before closing |
| Non-compete clause in a pharma deal | Government approval | Before the clause takes effect; only in special circumstances for greenfield |
Related sector rules
- Health insurance. 100% automatic since Press Note 1 of 2026, subject to IRDAI verification and the resident-citizen test for at least one of the chairperson, managing director and CEO.
- Online pharmacy. The marketplace model is 100% automatic. Press Note 3 of 2026 lets marketplace entities with FDI hold inventory only to export goods made in India; domestic inventory-based e-commerce remains barred.
- Hospitals. Not a listed sector, so the general rule for unlisted activities gives up to 100% on the automatic route. State health and facility regulation applies separately, and no manufacturing licence is needed.
The site-wide route and cap table is on FDI routes and caps.
What to check next
- Classify the target as greenfield or brownfield; for brownfield, model NLEM output and R&D spend for the three prior years.
- Trace every beneficial owner for land-border-country citizenship, including through funds and holding companies.
- Remove or re-draft any non-compete clause unless Government approval is sought.
- For health insurance, confirm the resident-citizen test for the board and executive line-up before IRDAI verification.
- For an online pharmacy, confirm the marketplace model and that any inventory is held only for export.