New Delhi, Dec. 26: The ministry of commerce and industry today directed investors whose FDI proposals fall under the automatic route to go ahead with their investments without seeking approval from the government.

According to a statement issued by the ministry, even though FDI up to 100 per cent is permitted under the automatic route in most sectors, a large number of investors still submit proposals for prior approval of the government.

The statement makes it clear that such approvals are not required for sectors or activities that fall under the automatic route.

It seems that intermediaries have been misleading investors and the ministry is keen to clarify things so that FDI inflows are not hampered by the red-tape.

A senior official said, “Some companies also have the tendency to run to the government at the drop of a hat, although they have been granted the freedom to go ahead with their investments.”

“Others are not doing their homework and increasing our workload instead,” he added.

The statement also clarified that the automatic route is allowed for foreign technology collaborations where the payments are within 5 per cent for domestic sales and 8 per cent for exports.

Henceforth, whenever prior approval of the government is sought for business activities or royalty payments eligible for the automatic route, investors will have to indicate the specific reason for seeking the approval while submitting their proposals, the ministry said.

The statement emphasises that only cases not covered under the automatic route need government’s approval through the foreign investment promotion board or the project approval board for FDI or foreign technology board, respectively.

FDI up to 100 per cent is allowed in housing, industrial townships and infrastructure projects like the development of ports, highways and mass rapid transport systems. Investments in hotels and tourism also fall in this category.

Similarly, all investments in downstream oil marketing and upstream oil exploration businesses have been included in the automatic route. Mining of gold and silver, other than diamonds and precious stones, and processing of these also qualify for 100 per cent FDI through the automatic route.