While the chances of a breach of cap were less when a company was planning to enter the Indian market since FIPB still vetted a large number of proposals, the possibility of violation at a later date was not ruled out since no government agency was monitoring it.

"There are 19 activities that NBFCs (non-banking finance companies) can undertake. There is a possibility that the government allows a company to carry out one or two businesses but the company could actually be doing all 19. There is no mechanism to check such violations at present," said an official involved with the formulation of the new guidelines.

Apart from the monitoring mechanism, the government and RBI, the nodal body for automatic investment proposals that do not require prior approval from any agency, have to decide on which agency should be assigned the task.

In the past, the security agencies have also suggested that the government keep tabs on foreign companies investing in India -- a proposal which has been opposed by North Block and DIPP that have argued that they do not have the ability to track investment.

There has, however, been no progress on the National Security Council's proposal to put in place a new law to ensure that foreign investors did not turn into a threat to national security with most economic ministries opposing the move. The NSC Secretariat is expected to put forward a draft Bill for other ministries in the coming months.