You are on page 1of 11

Foreign Direct Investment in India

The fast and steadily growing economy of India in majority of its sectors, has made India one of the most famous and popular destinations in the whole world, for Foreign Direct Investment. India's ever-expanding markets, liberalization of trade policies, development in technology and telecommunication, and loosening of diverse foreign investment restrictions, have further collectively made India, the apple of investors' eye, for most productive, profitable, and secure foreign investment. According to a recent survey by the United Nations Conference on Trade and Development (UNCTAD), India has conspicuously emerged out as the second most popular and preferable destination in the entire world, after China, for highly profitable foreign direct investment.

In recent years, bulk of the foreign direct investment in indian business sectors of infrastructure, telecommunication, information technology, computer hardware and software, and hospitality services, have been made by investors of countries like US, UK, Mauritius, Singapore, and many others. Global Jurix, one of the leading full-fledged legal organizations of India with global repute, has been helping companies, business corporations, organizations, and other potential investors of countries all around the world, in making foreign direct investment in indian business sectors, in various ways described in the section below.

FDI Law Practice India

The foreign direct investment in indian business sectors, can easily be made in a variety of ways, through the Governmental and Automatic Routes. However, the Joint Ventures are the most popular and preferred forms of making investment in Indian industry. At present, the most lucrative business sectors for FDI in India are, Infrastructure (Power, Steel, Railways, etc.); Telecommunications; Hospitality sector; Education; Retail; Real Estate; Retail sector, Petroleum and Petroleum Products; Biotechnology; Alternative Energy, etc. Global Jurix can help wellrounded the foreign investors of all class and categories for getting highly lucrative and secure FDI in India, through providing the following legal services reliably and economically:

Company Formation and Company Law services Establishment of Joint ventures Corporate and Commercial Law services For making all mandatory Compliances Drafting all requisite Contracts, Agreements, and other Documents Setting up Subsidiaries

Tax Planning Project Finance Dispute Resolution Private Equity And, other legal services for FDI in India.

About India FDI Watch

India FDI Watch is building awareness and facilitating grassroots action to prevent the take-over of India's retail sector by corporations. We are building Joint Action Committees (JAC) led by those who will be most affected, mainly; trade associations, unions, hawkers organizations, farmers groups and small scale industries. A National Streering Committee has formed in Delhi, of which India FDI Watch is a facilitator and member. The National Steering Committee has come under the banner Vyapaar Rozgaar Bachao Andolan. Similarly in Mumbai, India FDI Watch is a chair and member of the Vyapaar Rozgaar Suraksha Kriti Samiti. In Bangalore, India FDI Watch is a key member and coordinator of the Karnataka Joint Acton Committee Against Corporate Retail. The National Steering Committee is working with partners across the country and the Joint Action Committees, based in Mumbai and Bangalore to facilitate broad-based action at the local and national level and to develop policy demands that will ensure the protection or enhancement of those people who stand to be most impacted. Over the next year India FDI Watch will work with the National Steering Committee to expand the grassroots base of the campaign by partnering with mass-based groups across the country. India FDI Watch has been key in coordinating and organizing national actions; mainly the February 22nd actions against thde Wal-Mart Vice Chairman's arrival in India to sign the Joint Venture with Bharti. On August 9th, 2007, India FDI Watch again organized national, state, and local partners for a National Day of Action, calling on "Corporations to Quit Retail." A call has been given to all the partners to hold demonstrations before corporate stores on 23rd February, 2008. India FDI Watch will join and facilitate a mass rally in Delhi on 4th March 2008 against corporate retail. A call for all India Trade Strike will be given in the Delhi Rally.

FDI - Inbound and Outbound

The Foreign Direct Investment (FDI), anywhere in all across the world, is elaborately and impeccably advised, supported, and well-facilitated by Global Jurix. With its well-established and organized offices in major countries of all around the globe, Global Jurix has been providing a rather wide range of diverse legal services for FDI, in a large number of developed and developing countries.

Our well-learned, informed, and experienced corporate lawyers and attorneys have enriched expertise for providing excellent foreign investment law services in most of the fast-growing and stable economies of the world, including US, India, UK, France, Gulf countries, Singapore, Malaysia, Korea, Germany, Canada, China, and others. Both Inbound and outbound fdi services are extended for each of these economies, through our well-connected legal organization with worldwide network and liaison.

Companies, industries, organizations, corporations, multi-national conglomerates, and potential investors of varied sectors, etc., of both the governmental and private sectors, doing business in the fields of Infrastructure, Energy and Power, Oil and Gas, Telecommunications, Real Estate and Construction, Industrial Production, Joint Ventures, Private Equity, Mergers and Acquisitions, Technology Transfers, Foreign Collaborations, Capital Markets, Engineering, Technology, Information Technology, Computer Hardware and Software, and so on, have been our satisfied and loyal clients so far.

Foreign Investment (Inbound & Outbound) Law Services

Providing satisfactory legal services for FDI, is no simple and easy task. It essentially requires comprehensive knowledge, experience, and expertise, in most of the foreign investment law services, in accordance with the field, national and international rules & regulations, mandatory compliances, current business and capital market trends, and a keen acumen for overall safety and profitability. We provide elegant, reliable, and economical foreign investment law services, under the following categories:

Company Formation and Establishment Joint Ventures Foreign Investment in all above mentioned sectors of commerce and economy Corporate Law Services Mergers & Acquisitions (M & A) All Contractual Delegations relating to FDI

All regulatory and mandatory compliances Capital Markets Foreign Collaborations and Technology Transfer Wise and expert advice over FDI, for the best possible results.

Foreign Direct Investment in Retail

The Retail Industry is the sector of economy which is consisted of individuals, stores, commercial complexes, agencies, companies, and organizations, etc., involved in the business of selling or merchandizing diverse finished products or goods to the end-user consumers directly and indirectly. Goods and products of the retail industry or sector, are the finished final objects/products of all sectors of commerce and economy of a country. The Retail sector of India is vast, and has huge potential for growth and development, as the majority of its constituents are un-organized. The retail sector of India handles about $250 billion every year, and is expected by veteran economists to reach to $660 billion by the year 2015. The business in the organized retail sector of India, is to grow most and faster at the rate of 15-20% every year, and can reach the level of $100 billion by the year 2015. Here, it is noteworthy that the retail sector of India contributes about 15% to the national GDP, and employs a massive workforce of it, after the agriculture sector. India's growing economy with a rate of approximately 8% per year, makes its retail sector highly fertile and profitable to the foreign investors of all sectors of commerce and economy, of all over the world. Global Jurix, a full-fledged legal organization prominent worldwide, provides allencompassing services and advice for most lucrative and secured fdi in indian retail sector.

FDI in Retail India

AT Kearney (a globally famous international management consultancy) recognized India as the second most alluring and thriving retail destination of the world, among other thirty growing and emerging markets. At present, other profitable retail destinations of the world are China and Dubai of Asia. Diverse foreign direct investment in indian retail is greatly cherished by most of the major and leading retailers of USA and European countries, including Walmart (USA), Tesco (UK), Metro (Germany), and Carrefour (France). Liberalization of trade policy and loosening of barriers and restrictions to the foreign investment in the retail sector of India, have collectively made the fdi in retail sector quite easy and smooth. Our services are easily and economically available for the following







The fdi in india's retail business can be made through any of the following routes:

Joint Ventures Franchising Sourcing of Supplies from small-scale sector Cash and Carry Operations Non-Store Formats

Foreign Direct investment in Real Estate

Fast and steadily growing economy of India, has a huge real estate industry amounting to about US$ 12 billion. Meticulous studies reveal that this real estate industry of India has been constantly growing at a high rate of 30% for last several years. After the Agriculture sector, the Real Estate sector of India, is the second biggest employer in the country, and possesses immense potential for foreign direct investment for diverse purposes, especially after the liberalization of FDI norms recently by the Government of India in 2005. So far, it is found that majority of the real estate developments have been made in the fields of residential housing facilities, and the remaining in the IT/ITES offices, business enterprises, hotels, hospitals, shopping malls, and industrial establishments. Today, abundant opportunities are available for foreign direct investment in real estate business of India, in these and other fields. Today, along with NRIs and PIOs, foreigners are also facilitated to invest in the real estate sector of India in residential housing and townships, commercial premises, infrastructural facilities (at regional and local levels), technological parks, hotels & resorts, hospitals, educational institutions, industries, special economic zones (SEZs), retail, leisure and recreational amenities, etc, under the confinement of certain conditions. For wholly-owned subsidiaries a minimum capitalization of $10 million is made compulsory, and for joint ventures, it is $5 million. Again, a minimum of 25 acres of land coverage is desirable for FDI projects in real estate. Global Jurix, one of the reputed legal organizations of the world, helps comprehensively and expertly regarding these all types of fdi in indian real estate.

FDI in Real Estate sector in India

Companies, industries, and multi-mational corporations of the Information Technology and Outsourcing sectors are major and leading investors in the real estate of India, at present. According to an estimate, over 65 million square feet of IT space are to be developed in the next five years. Other popular means of fdi in indian real estate are residential and commercial complexes, amenities of the hospitality sector, industries, healthcare facilities, leisure organizations, and infrastructure. Easy and cheap availability of talented and skilled work force, lower casts of logistics, constantly expanding Indian market, steady growth of Indian economy, etc. have been attracting and enticing factors for diverse foreign direct investment in real estate business in all across India.

Global Jurix helps well-rounded and offers discerning advice over all above categories of foreign direct investment in real estate business in India, through the Governmental and Automatic Routes. Our services for fdi in indian real estate, essentially deal with all Federal and State Laws governing the real estate transactions and investments in India, Property Taxation, and Stamp Duty applicable.

Foreign Direct Investment in Aviation

Ever-growing national and international tourism for diverse purposes has widened and enriched the aviation sector of most of the major and fast-growing economies of the world. The aviation sector of India is outstanding among these. Therefore, foreign direct investment in aviation sector of these countries is highly profitable and secure. The fdi in indian aviation, is especially lucrative, because of the following reasons.

India's Aviation sector and its domestic aviation market both have been growing fast at high rates in the recent years. India is currently the ninth largest aviation market in the whole world, according to a RNCOS Report, and is very hopefully expected to emerge among the top five biggest aviation markets of the world by the year 2020. The magnitude of passenger traffic, both domestic and international, handled by the aviation sector of India, is about 100 million every year, and is growing fast further at striking growth rates more than 15%. The growth of its domestic market, too, is among the highest in the world (according to a recent report published in June 2011 by the International Air Transport Association, IATA), and has the potential to become the third largest domestic aviation market (with over 450 million mark of domestic passengers) by the year 2020, after that of USA and China. To support and promote growth and prosperity in the Aviation sector of India, the Department of Industrial Policy and Promotion (DIPP) and the Government of India, are now planning to increase the FDI cap for foreign investors

in the domestic airlines, from 24% to 26%. The foreign direct investment in aviation up to 49% is permissible in India, but foreign airlines were not permitted to invest in any domestic airline company. This increment legislation proposed by DIPP would allow the foreign investors to have voting rights in the board of an Indian carrier. Thus, in near future, the fdi in indian aviation is to be increased rapidly.

FDI in Aviation Sector in India

After the liberalization on foreign investment rules in the aviation sector of India, the number of national and international players and investors, and number of aircrafts (passenger, cargo, charter, etc), both are to be increased further, in forthcoming years. Today, there are about 15 scheduled operators operating nearly 500 aircrafts which connect the nation and the world. Global Jurix one of the globally prominent full-fledged legal organizations of the world, offers the following services for advantageous and sound foreign direct investment in aviation sectors of emerging and leading aviation markets, including India:

Airline Start-ups and Certifications All mandatory Compliances to Governmental and Regulatory Authorities Aircraft Finance All Commercial matters and disputes related to aviation Sales, Purchases, and Leases of Aircrafts Aviation Privatization Airplane Manufacturing and Repairing Aviation Contract Disputes Passenger and Cargo Carrier Representation Airport Representation Air travel Safety and Security Aviation Insurance Aviation Accidents and Airplane Crashes Personal Injury and Wrongful Deaths And, other matters, disputes, and litigations of the aviation sector.

Foreign Direct Investment

The Foreign Direct Investment (FDI) in any country abroad is the net inflow of investment (capital or other), in order to acquire management control and profit sharing (10% or more voting stock) or the whole ownership of an accredited company operating in the country receiving investment. The foreign direct investment generally encompasses the transfer of technology and expertise, and participation in the joint venture and management. Highly productive advantages of foreign direct investment have been constantly being harvested by both governmental and private companies and organizations of all over the world.

The foreign direct investment is profitable both to the country receiving investment (foreign capital and funds) and the investor. For the investor company FDI offers an exclusive opportunity to enter into the international or global business, new markets and marketing channels, elusive access to new technology and expertise, expansion of company with new or more products or services, and cheaper production facilities. While the host country receives foreign funds for development, transfer of new profitable technology, wealth of expertise and experience, and increased job opportunities.

Owing to the ever-increasing globalization of businesses of almost all sectors, liberalization of trade policies, and loosening of foreign investment restrictions, the foreign direct investment (FDI) has been quite revolutionary and vital for faster economic growth of most of the developing and developed countries of all across the world for last few decades. Supported by refinement in the information and telecommunication technology, and the increasing trend of Mergers and Acquisitions, the FDI is to receive tremendous impetus in various sectors in the future times to come, especially in the developing countries of the world. It has been observed that more than two-thirds (2/3th) of direct foreign investment is made in infrastructure, commercial and residential buildings, machinery, equipment, mines, and land.

FDI India

The steadily growing one of the major economies of the world, India has been enjoying huge and regular FDI from diverse investors of all around the world for the last few decades. According to a recent UNCTAD (United Nations Conference on Trade and Development) Survey, India has emerged out as the second most famous and popular destination in the world for FDI, after China. Majority of this foreign direct investment in india is made in the sectors of telecommunication, computer hardware and software, construction, and services, by investor companies from USA, UK, Singapore, Mauritius, etc.

The foreign direct investment in india can be made in a variety of ways and in a rather wide range of economic sectors. Worldwide prominent Global Jurix has been helping individuals, associations, private and public

companies/organizations, and institutions of diverse sectors for making their cherished FDI in India, through both the Automatic and Government Routes, for a long time.

What is FDI?

Foreign direct investment is the acquisition of assets in a country by foreign entities for the purpose of control. FDI is ownership of at least 10% of a business. According to the Ministry of Commerce & Industry, "FDI is freely allowed in all sectors including the services sector, except a few sectors where the existing and notified sectoral policy does not permit FDI beyond a ceiling. FDI for virtually all items/activities can be brought in through the Automatic Route under powers delegated to the Reserve Bank of India (RBI), and for the remaining items/activities through Government approval. Government approvals are accorded on the recommendation of the Foreign Investment Promotion Board (FIPB)." Currently, foreign companies are only allowed to own 10% of a business in the retail sector. Prime Minister Manmohan Singh is trying to convince his coalition partners to open up FDI along the lines of what is allowed in other industries. FDI limits for other sectors are as follows:

Banking - 74% Non-banking financial companies (stock broking, credit cards, financial consulting, etc.) - 100% Insurance - 26% Telecommunications - 74% Private petrol refining - 100% Construction development - 100% Coal & lignite - 74% Trading - 51% Electricity - 100% Pharmaceuticals - 100% Transportation infrastructure - 100 % Tourism - 100% Mining - 74% Advertising - 100% Airports - 74%

Films - 100% Domestic airlines - 49% Mass transit - 100% Pollution control - 100% Print media - 26% for newspapers and current events, 100 % for scientific and technical periodicals

What is Wal-Mart?

With around 5000 retail outlets worldwide, operating in more then a dozen countries and with over US$286 billion in annual sales, Wal-Mart is the top retail chain and number one fortune 500 company in the world. Wal-Mart is the top employer in the U.S. with 1.3 million employees, the company accounts for 9 cents of every US retail dollar and sells around 20 per cent of the nations groceries and pharmaceuticals. (Times News Network). Wal-Marts sheer size gives it unrestrained economic power which allows it to drive down costs in the retail and manufacturing sectors and to enact its own standards with regards to its work force.

Facts about Wal-Mart and China

It is important to understand that there is a huge difference between the Chinese model and the Indian growth model, the Indian model is essentially domestic demand driven unlike the Chinese one that is fuelled by export growth. More than 70 per cent of the commodities sold in Wal-Mart are made in China. Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year, keeping the annual growth rate of over 20 per cent consistent over two years. "If Wal-Mart were an individual economy, it would rank as China's eighthbiggest trading partner, ahead of Russia, Australia and Canada," Xu Jun, WalMart China's director of external affairs said. Insiders point out that Wal-Mart's imports from China have largely influenced the US trade deficit in China, which is expected to reach US$150 billion this year. According to Larry Mishel of the Economic Policy Institute about Wal-Mart's China policy, "A very conservative estimate could say that we (USA) have lost over a million jobs to China."

How will Wal-Mart affect other Indian retailers?

In all of the countries Wal-Mart has set up shop it has put other retailers out of business and driven down wages. Wal-Mart has a clearly defined anti-union policy aimed at preventing its work force from gaining any collective bargaining power which could result in increased wages, covered health benefits and job security. Many reports have been written documenting the economic and eventual social and environmental degradation which occurs when Wal-Mart comes to town. Over the course of [a few years after Wal-Mart entered a community], retailers' sales of mens' and boys' apparel dropped 44% on average, hardware sales fell by 31%, and lawn and garden sales fell by 26%. In towns without Wal-Marts that are close to towns with Wal-Marts, sales in general merchandise declined immediately after WalMart stores opened. After ten years, sales declined by a cumulative 34%. [Kenneth Stone at Iowa State University, Impact of the Wal-Mart Phenomenon on Rural Communities].

Wal-Mart and India

Wal-Mart is seeking to open its own retail chain throughout India. India's $250 billion retail business is the eighth largest in the world and has the potential to grow 7 per cent by 2011. [McKinsey Report] For a company already dominating the world markets, this is an un-passable opportunity. The owners of Wal-Mart stand to gain enormous profits from this move while Indias economy will suffer and its workers will be subjugated to the unfair work practices of this Multinational Behemoth.