As per the current rules under FEMA, foreign joint venture or wholly-owned subsidiary of an Indian entity need to approval from the RBI for FDI. Also, on the same level there are limitations imposed in respect of overseas direct investment or ODI by an Indian entity in a foreign company which already has in place FDI investment structure in India.
And thus to simplify rules per se restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company, there will be enacted some business-friendly changes that would enable ease of flow of foreign funds into legitimate businesses. Further, these investments shall not be labeled as "suspect" involving round tripping of funds.
So, as the rules would be simplified foreign funds such as through FDI and ODI will form the part of the automatic route that would not require prior approval of the RBI.
The changes are all the more called for amid economic slowdown in India and lack of investment by corporate.
Also, there has been put forth ways to increase exports from the country and in the report by HLAG led by economist it has been suggested to bring in some phenomenal changes in FDI regulations so that foreign funds could be mobilized into legitimate and bonfide businesses in India.