It's often felt that areas like Media and Defense could compromise on India's security interest and hence no FDI should be permitted. In certain areas the FDI limit has been capped, like the Insurance Business.
Where there is no approval through Automatic Route, the company concerned has to seek permission from Foreign Investment Promotion Board.
Here are a few sectors where FDI is prohibited under both the Government Route as well as the Automatic Route:
1) Atomic Energy
2) Lottery Business
3) Gambling and Betting
4) Business of Chit Fund
5) Nidhi Company
6) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations)
7) Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified)
8) Trading in Transferable Development Rights (TDRs).
9) Manufacture of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.
Information Courtesy: RBI