India Eyes FDI Boost: Cabinet Approval Threshold to ₹15,000 Cr

The Indian government is planning to significantly ease foreign direct investment (FDI) regulations by raising the Cabinet approval threshold for projects, a move designed to accelerate capital inflow into the manufacturing sector.

This initiative aims to streamline administrative processes and reduce friction for foreign investors looking to establish large-scale production facilities across India, particularly within deep-value industrial sectors.

Revised Approval Limits

Currently, any project exceeding ₹5,000 crore requires a review from the Cabinet Committee on Economic Affairs (CCEA), often prolonging project timelines. The government is now contemplating an increase to ₹15,000 crore for this cabinet-level scrutiny.

• Current CCEA approval threshold: ₹5,000 crore
• Proposed CCEA approval threshold: ₹15,000 crore

This adjustment is crucial for investors, as it could allow larger investments to bypass extensive bureaucratic processes, enabling a quicker transition into the production phase for manufacturing units.

Enhancing Investment Pathways

This policy shift builds upon earlier efforts to improve the investment climate, including a revised framework introduced in May 2026. That framework permitted foreign entities from land-bordering countries to invest via the automatic route under specific conditions.

Under the May 2026 rules, non-controlling beneficial ownership must be 10% or less. This pathway has already shown positive results since its implementation.

• Approved proposals under new pathway: 29
• Total investment under new pathway: ₹4,895 crore

Fostering Industrial Value Chain Integration

Beyond simply attracting investment, the government is expanding its focus towards deeper integration within the industrial value chain. Officials are actively encouraging manufacturing in critical sectors such as industrial gases and specialty chemicals.

A key example is the push for domestic production of titanium dioxide, an essential input for the paint industry that is largely imported. Developing local capacity for such components aims to reduce the import bill and foster a more self-reliant industrial ecosystem.

Navigating Practical Investment Realities

While these reforms are designed to expedite investment, companies and investors must remain aware of practical requirements. Even with a 10% safe-harbour threshold for beneficial ownership, the verification process across various holding tiers remains stringent.

Projects that do not meet the criteria for the automatic route will still undergo government approval, which remains a point of scrutiny for some foreign investors. Additionally, global economic volatility could influence the speed at which these planned investments translate into actual production.

Investors should monitor the official notification regarding the potential increase in the CCEA threshold. Progress in new manufacturing projects within the specialty chemicals and industrial gases sectors will offer further insights into the effectiveness of these government initiatives.