Yes, a foreigner can invest in India only thorough government-regulated channels. Let's learn about some of the investment alternatives.
There are multiple avenues through which a foreign investor or NRI can invest in India, and there is no restriction as such. However, these are primarily one of the many ways that you can do so. All of which are provided in detail below.
Foreign investors can invest in India through automatic routes where their investment is long term and not short term. Moreover, if the automatic route doesn't cover the investment, you would need government approval to seek necessary permissions by the FIPB to kick start your investment process in the country.
Particular individuals come under FII's, NRIs, PIOs who can invest in shares of specific companies in the stock market. Under the PIS route, FIIs can invest in securities in India. NRIs can sell and buy mutual fund units through recognized brokers of the stock market.
Through the foreign venture capital investors or FVCI route, they can invest in India's company but have to seek special permission from the SEBI. Their investments have to be 66.67% of the investible funds in equity shares are unlisted.
Other than the ones given above, the other routes of investments are government securities, commercial papers issued by India companies, bonds, debentures, domestic mutual funds and many other such avenues.
Through these avenues, a foreigner who is willing to invest in India could do so. Moreover, you can trade in the India stock market, which is remanded with several clauses. Thus, look into the above-given options to check out your potential investment avenues to seek an India investment opportunity.