Loopholes In The FDI Approval Mechanism In India: A Critical Study Under FEMA And SEBI Jurisprudence
- IJLLR Journal
- 4 days ago
- 1 min read
Aakanksh Gupta, BBA LLB (H), Amity Law School, Kolkata
Sagnik Banerjee, BBA LLB (H), Amity Law School, Kolkata
ABSTRACT
Foreign Direct Investment (FDI) occupies a central position in India's economic architecture, serving as a conduit for capital inflows, technological advancement, and integration into global financial markets. The regulatory framework governing FDI is principally anchored in the Foreign Exchange Management Act, 1999 (FEMA), augmented by capital market regulations administered by the Securities and Exchange Board of India (SEBI) and executive policies issued by the Department for Promotion of Industry and Internal Trade (DPIIT). Notwithstanding considerable liberalisation over the past three decades, the FDI approval mechanism continues to be beset by structural and procedural inadequacies that adversely affect regulatory transparency, jurisdictional coherence, and enforcement efficacy. This paper critically examines these loopholes arising from regulatory overlap, administrative discretion in the Government Route, ambiguity in sectoral restrictions, and deficiencies in post-approval monitoring and interrogates SEBI's adjudicatory role in foreign investment-related violations. It argues that the FDI framework, despite its apparent comprehensiveness, suffers from fragmented implementation that generates interpretational uncertainty and systemic enforcement gaps, and aims to contribute to a rigorous understanding of India's investment law regime.
Keywords: Foreign Direct Investment, Regulatory Overlap, Enforcement mechanism.
