FOREIGN DIRECT INVESTMENT IN INDIA

Phases of Indian Economy

Uneven beginning

 Self-reliance Model
 Fears of foreign investment swamping our
domestic industry
 Unanimity came in 1995-1996
 Phases of Indian Economy
Maintaining the Flow

 Formation of Foreign Investment Promotion

Council
 FIPB being streamlined and made more
transparent
 Phases of Indian Economy
Another beginning

 BJP Overhauling of its previous stance

 FIIA was set-up for providing single point
interference
 FDI Become a non-electable issue
 FDI Approval Procedure

Automatic Route in most

Sector Govt. Route for few
sectors

RBI FIPB

No permission required,
Approval is
only to notify RBI within 30
granted generally
days of issue of shares to
in 30 days
foreign investors 5
 Methods of FDI
• Incorporating a wholly owned subsidiary or a
company
• Merger or acquisition
• Participating in an equity joint venture with
other investor or enterprise
 STATEMENT ON COUNTRY-WISE FOR FDI
INFLOWS
• Mauritius – 43%
• Singapore – 9%
• U.S – 8%
• U.K – 6%
• Netherlands – 4%
• Japan- 3%
• Cyprus – 2.6%
• Germany – 2.6%
• France – 1.5%
• U.A.E – 1.1%
 STATEMENT ON SECTOR - WISE FOR FDI
INFLOWS
• Services – 22%
• Computer software and hardware – 11%
• Telecommunications – 8%
• Housing and Real Estate – 6.5%
• Construction – 6%
• Automobile – 4%
• Power- 4%
• Metallurgical Industries – 3%
• Petroleum and Natural Gas- 3%
• Chemicals- 2.5%
 Forbidden Territories
FDI is not permitted in the following industrial sectors:
 Arms and ammunition.
 Atomic Energy.
 Railway Transport.
 Gambling and Betting
 Lottery Business

• Agriculture (with certain exceptions) and Plantations (Other

than Tea plantations
 Recommendations
• Encourage Export oriented units by FDI companies
• Efficient execution and implementation .
• Government knowledge required in diffusion of
knowledge brought in by the foreign enterprise
• In insurance, education sector, FDI cap should be
increased