Disclosed herein is improved, cost effective process for preparation of water soluble ferric carboxymaltose with reduced impurity suitable for preparation of medicament without involving further purification. Particularly, the present invention discloses the process of manufacturing ferric carboxymaltose obtained by reaction of aqueous iron (III) salt and an aqueous solution of oxidation product of maltodextrin having dextrose equivalent 10-20 using citric acid as mild oxidizing and cross linking agent.