“EMPLOYER’S LIABILITY IN CASE OF OCCUPATIONAL DISEASES”

A Project submitted in fulfilment of the course LABOUR LAWS-I, 4TH

SEMESTER during the Academic Year 2019-2020

SUBMITTED BY:
Rishabh Sinha
Roll No. - 2034
B.B.A LL.B

SUBMITTED TO:
Ms. Pallavi Shankar
FACULTY OF LABOUR LAWS-I

MARCH,2020
CHANAKYA NATIONAL LAW UNIVERSITY, NAYAYA NAGAR,
MEETHAPUR, PATNA-800001
 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.B.A. LL.B (Hons.) Project Report entitled
“Employer’s Liability in case of Occupational Diseases” submitted at Chanakya National
Law University; Patna is an authentic record of my work carried out under the supervision of
Ms. Pallavi Shankar. I have not submitted this work elsewhere for any other degree or
diploma. I am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

Rishabh Sinha
Chanakya National Law University, Patna

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 ACKNOWLEDGEMENT

“IF YOU WANT TO WALK FAST GO ALONE

IF YOU WANT TO WALK FAR GO TOGETHER”
A project is a joint endeavour which is to be accomplished with utmost compassion, diligence
and with support of all. Gratitude is a noble response of one’s soul to kindness or help
generously rendered by another and its acknowledgement is the duty and joyance. I am
overwhelmed in all humbleness and gratefulness to acknowledge from the bottom of my
heart to all those who have helped me to put these ideas, well above the level of simplicity
and into something concrete effectively and moreover on time.
This project would not have been completed without combined effort of my revered Labour
Laws- I teacher Ms.Pallavi Shankar whose support and guidance was the driving force to
successfully complete this project. I express my heartfelt gratitude to her. Thanks are also due
to my parents, family, siblings, my dear friends and all those who helped me in this project in
any way. Last but not the least; I would like to express my sincere gratitude to our Faculty of
Labour Laws-I teacher for providing us with such a golden opportunity to showcase our
talents. Also this project was instrumental in making me know more about Foreign
Investment and its effect on business. It was truly an endeavour which enabled me to embark
on a journey which redefined my intelligentsia, induced my mind to discover the intricacies
involved in the competency of employer’s liability under Labour Laws.
.
Moreover, thanks to all those who helped me in any way be it words, presence,
Encouragement or blessings...

- Rishabh Sinha
- 4th Semester
- B.B.A .,LL.B.

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 TABLE OF CONTENTS

Declaration…………………………………………………………………………………….i

Acknowledgement…………………………………………………………………………….ii

Table of Contents…………………………………………………………....……………….iii

Aims and Objectives……………………………………………………………………….…iv

Hypothesis.................................................................................................................................i

Research Methodology......................................................................................................…...iv

1. Introduction………………………………………………………………………….1-2

2. Types of Foreign Investment…………...............................................................…...3-5

3. Foreign Exchange Management Act,2000…………................................................6-9

4. Impact on Economy ,Domestic Market & Investors......…….....................……....10-11

5. FDI Policy of Government of India……………….........................................…...12-13

6. Conclusion..............................................................................................................14

Bibliography……………………………...………………………….....………........………15

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 AIMS AND OBJECTIVES

The Aims and Objectives of this project are:

1. The researcher tends to understand employer’s liability in case of occupational
diseases.
2. The researcher tends to understand the relationship between workman and employer
to ascertain liability.

RESEARCH METHODOLOGY

For this study, doctrinal research method was utilised. Various articles, e-articles, reports and
books from library were used extensively in framing all the data and figures in appropriate
form, essential for this study.
The method used in writing this research is primarily analytical.

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 INTRODUCTION

Foreign investment involves capital flows from one country to another, granting extensive

ownership stakes in domestic companies and assets. Foreign investment denotes that
foreigners have an active role in management as a part of their investment. A modern trend
leans toward globalization, where multinational firms have investments in a variety of
countries. Foreign investment is largely seen as a catalyst for economic growth in the future.

Foreign investments can be made by individuals, but are most often endeavours pursued by
companies and corporations with substantial assets looking to expand their reach. As
globalization increases, more and more companies have branches in countries around the
world. For some companies, opening new manufacturing and production plants in a different
country is attractive because of the opportunities for cheaper production, labour and lower or
fewer taxes. Foreign investments can be classified in one of two ways: direct and indirect.
Foreign direct investments (FDIs) are the physical investments and purchases made by a
company in a foreign country, typically by opening plants and buying buildings, machines,
factories and other equipment in the foreign country. These types of investments find a far
greater deal of favour, as they are generally considered long-term investments and help
bolster the foreign country’s economy.

Foreign indirect investments involve corporations, financial institutions and private

investors buying stakes or positions in foreign companies that trade on a foreign stock
exchange. In general, this form of foreign investment is less favorable, as the domestic
company can easily sell off their investment very quickly, sometimes within days of the
purchase. This type of investment is also sometimes referred to as a foreign portfolio
investment (FPI). Indirect investments include not only equity instruments such as stocks, but
also debt instruments such as bonds. International investment or capital flows fall into four
principal categories: commercial loans, official flows, foreign direct investment (FDI), and
foreign portfolio investment (FPI).Commercial loans, which primarily take the form of bank
loans issued to foreign businesses or governments.

Official flows, which refer generally to the forms of development assistance that

developed nations give to developing ones.

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Foreign direct investment (FDI) pertains to international investment in which the investor
obtains a lasting interest in an enterprise in another country. Most concretely, it may take the
form of buying or constructing a factory in a foreign country or adding improvements to such
a facility, in the form of property, plants, or equipment. Next we have is the FPI( Foreign
Portfolio Investment).It is a category of investment instruments that is more easily traded,
may be less permanent, and do not represent a controlling stake in an enterprise. These
include investments via equity instruments (stocks) or debt (bonds) of a foreign enterprise
which does not necessarily represent a long-term interest.

Stocks:

 dividend payments

 holder owns a part of a company

 possible voting rights

 open-ended holding period

Bonds:

 interest payments

 ownership of bond rights only

 no voting rights

 specific holding period

We shall discuss the types of Foreign Investment in detail in the next chapter. Advantages,
Disadvantages, how it affects the trade and development of the domestic market.We shall
understand why foreign investment is important and what is it impact on economy of a
nation. We shall take an example of a developing nation (India) and discuss in detail the
positive and negative drawbacks of foreign investment in a developing nation. Also which
type of Foreign Investment brings back positive returns to the economy of the nation and how
it uplifts the status of a country from a developing one to a developed one.

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 TYPES OF FOREIGN INVESTMENT

Funds from foreign country could be invested in shares, properties, ownership / management
or collaboration. Based on this, Foreign Investments are classified as below.
 Foreign Direct Investment (FDI)
 Foreign Portfolio Investment (FPI)
 Foreign Institutional Investment (FII)

1) Foreign Direct Investment-

A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a
business in one country by an entity based in another country. It is thus distinguished from a
foreign portfolio investment by a notion of direct control.
The origin of the investment does not impact the definition, as an FDI: the investment may be
made either "inorganically" by buying a company in the target country or "organically" by
expanding the operations of an existing business in that country. Foreign direct investments
are commonly made in open economies that offer a skilled workforce and above-average
growth prospects for the investor, as opposed to tightly regulated economies. Foreign direct
investment frequently involves more than just a capital investment. It may include provisions
of management or technology as well. The key feature of foreign direct investment is that it
establishes either effective control of or at least substantial influence over the decision-
making of a foreign business. Foreign direct investments can be made in a variety of ways,
including the opening of a subsidiary or associate company in a foreign country, acquiring a
controlling interest in an existing foreign company, or by means of a merger or joint venture
with a foreign company.

The threshold for a foreign direct investment that establishes a controlling interest, per
guidelines established by the Organisation of Economic Co-operation and Development
(OECD), is a minimum 10% ownership stake in a foreign-based company. However, that

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definition is flexible, as there are instances where effective controlling interest in a firm can
be established with less than 10% of the company's voting shares.

2) Foreign Portfolio Investment-

A foreign portfolio investment is a grouping of assets such as stocks, bonds, and cash
equivalents. Portfolio investments are held directly by an investor or managed by financial
professionals. In economics, foreign portfolio investment is the entry of funds into a country
where foreigners deposit money in a country's bank or make purchases in the country’s stock
and bond markets, sometimes for speculation. It involves the making and holding of a hands-
off—or passive—investment of securities, done with the expectation of earning a return. In
foreign portfolio investment, these securities can include stocks, Indian depositary receipts
(IDRs), or global depositary receipts of companies headquartered outside the investor's
nation. Holding also includes bonds or other debt issued by these companies or foreign
governments, mutual funds, or exchange traded funds (ETFs) that invest in assets abroad or
overseas.
An individual investor interested in opportunities outside their own country is most likely to
invest through an FPI. On a more macro level, foreign portfolio investment is part of a
country’s capital account and shown on its balance of payments (BOP). The BOP measures
the amount of money flowing from one country to other countries over one monetary year.

Pros

 Feasible for retail investors

 Quicker return on investment
 Highly liquid

Cons

 No direct control/management of investments

 Volatile
 Cause of economic disruption (if withdrawn)

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The year 2018 was a good one for India in terms of FPI. More than 600 new investment
funds registered with the Securities and Exchange Board of India (SEBI), bringing the total to
9,246. An easier regulatory climate and a strong performance by Indian equities over the last
few years were among the factors sparking foreign investors' interest.

3) Foreign Institutional Investment-

A foreign institutional investor (FII) is an investor or investment fund investing in a country
outside of the one in which it is registered or headquartered. The term foreign institutional
investor is probably most commonly used in India, where it refers to outside entities investing
in the nation's financial markets. The term is also used officially in China.
FIIs can include hedge funds, insurance companies, pension funds, investment banks, and
mutual funds. FIIs can be important sources of capital in developing economies, yet many
developing nations, such as India, have placed limits on the total value of assets an FII can
purchase and the number of equity shares it can buy, particularly in a single company. This
helps limit the influence of FIIs on individual companies and the nation's financial markets,
and the potential damage that might occur if FIIs fled en masse during a crisis. Some of the
countries with the highest volume of foreign institutional investments are those with
developing economies, which generally provide investors with higher growth potential than
mature economies.
This is one reason FIIs are commonly found in India, which has a high-growth economy and
attractive individual corporations to invest in. All FIIs in India must register with the
Securities and Exchange Board of India (SEBI) to participate in the market.
FIIs are allowed to invest in India's primary and secondary capital markets only through the
country's portfolio investment scheme. This scheme allows FIIs to purchase shares and
debentures of Indian companies on the nation's public exchanges.
However, there are many regulations. For example, FIIs are generally limited to a maximum
investment of 24% of the paid-up capital of the Indian company receiving the investment.
However, FIIs can invest more than 24% if the investment is approved by the company's
board and a special resolution is passed. The ceiling on FIIs' investments in Indian public-
sector banks is only 20% of the banks' paid-up capital.
The Reserve Bank of India monitors compliance with these limits daily by implementing
cutoff points 2% below the maximum investment. This gives it a chance to caution the Indian
company receiving the investment before allowing the final 2% to be purchased.

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If a mutual fund in the United States sees a high-growth investment opportunity in an India-
listed company, it can take a long position by purchasing shares in an Indian stock market.
This type of arrangement also benefits private U.S. investors who may not be able to buy
Indian stocks directly. Instead, they can invest in the mutual fund and take part in the high-
growth potential.

FOREIGN EXCHANGE MANAGEMENT ACT,2000

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India
"to consolidate and amend the law relating to foreign exchange with the objective of
facilitating external trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India". It was passed in the winter session of
Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA). This act makes
offences related to foreign exchange civil offenses. It extends to the whole of India, replacing
FERA, which had become incompatible with the pro-liberalization policies of the
Government of India. It enabled a new foreign exchange management regime consistent with
the emerging framework of the World Trade Organization (WTO). It also paved the way for
the introduction of the Prevention of Money Laundering Act, 2002, which came into effect
from 1 July 2005.
Unlike other laws where everything is permitted unless specifically prohibited, under the
Foreign Exchange Regulation Act (FERA) of 1973 (predecessor to FEMA) everything was
prohibited unless specifically permitted. Hence the tenor and tone of the Act was very drastic.
It required imprisonment even for minor offences. Under FERA, a person was presumed
guilty unless he proved himself innocent, whereas under other laws a person is presumed
innocent unless he is proven guilty.
FEMA is a regulatory mechanism that enables the Reserve Bank of India to pass regulations
and the Central Government to pass rules relating to foreign exchange in tune with the
Foreign Trade policy of India. The Foreign Exchange Regulation Act (FERA) was legislation
passed in India in 1973 that imposed strict regulations on certain kinds of payments, the
dealings in foreign exchange (forex)and securities and the transactions which had an indirect
impact on the foreign exchange and the import and export of currency.The bill was
formulated with the aim of regulating payments and foreign exchange.
FERA came into force with effect from January 1, 1974. FERA was introduced at a time
when foreign exchange (Forex) reserves of the country were low, Forex being a scarce

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commodity. FERA therefore proceeded on the presumption that all foreign exchange earned
by Indian residents rightfully belonged to the Government of India and had to be collected
and surrendered to the Reserve Bank of India (RBI). FERA primarily prohibited all
transactions not permitted by RBI.
Coca-Cola was India's leading soft drink until 1977 when it left India after a new government
ordered the company to dilute its stake in its Indian unit as required by the Foreign Exchange
Regulation Act (FERA). In 1993, the company (along with PepsiCo) returned after the
introduction of India's Liberalization policy.
FERA did not succeed in restricting activities such as the expansion of Multinational
Corporations. The concessions made to FERA in 1991-1993 showed that FERA was on the
verge of becoming redundant. After the amendment of FERA in 1993, it was decided that the
act would become the FEMA. This was done in order to relax the controls on foreign
exchange in India.
FERA was repealed in 1998 by the government of Atal Bihari Vajpayee and replaced by the
Foreign Exchange Management Act, which liberalised foreign exchange controls and
restrictions on foreign investment.
The buying and selling of foreign currency and other debt instruments by businesses,
individuals and governments happens in the foreign exchange market. Apart from being very
competitive, this market is also the largest and most liquid market in the world as well as in
India. It constantly undergoes changes and innovations, which can either be beneficial to a
country or expose them to greater risks. The management of foreign exchange market
becomes necessary in order to mitigate and avoid the risks. Central banks would work
towards an orderly functioning of the transactions which can also develop their foreign
exchange market. Foreign Exchange Market Whether under FERA or FEMA’s control, the
need for the management of foreign exchange is important. It is necessary to keep adequate
amount of foreign exchange.

FEMA served to make transactions for external trade and easier – transactions involving
current account for external trade no longer required RBI’s permission. The deals in Foreign
Exchange were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the
change on the part of the government in terms of for the capital.
SOME MAIN FEATURES OF FEMA,1999-

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  Activities such as payments made to any person outside India or receipts from them,
along with the deals in foreign exchange and foreign security is restricted. It is FEMA
that gives the central government the power to impose the restrictions.
 Free transactions on current account subject to a reasonable restrictions that may be
imposed.
 Without general or specific permission of FEMA, MA restricts the transactions
involving foreign exchange or foreign security and payments from outside the country
to India – the transactions should be made only through an authorised person.
 Deals in foreign exchange under the current account by an authorised person can be
restricted by the Central Government, based on public interest generally.
 Although selling or drawing of foreign exchange is done through an authorized
person, the RBI is empowered by this Act to subject the capital account transactions
to a number of restrictions.
 Residents of India will be permitted to carry out transactions in foreign exchange,
foreign security or to own or hold immovable property abroad if the currency, security
or property was owned or acquired when he/she was living outside India, or when it
was inherited by him/her from someone living outside India.

For a country where capital is not readily available, Foreign Direct Investment (FDI) has
been an important source of funds for companies. Under FDI, overseas money, either by an
individual or entity, is invested in an Indian company.
According to Organization for Economic Co-operation and Development (OECD), an
investment of 10% or above from overseas is considered as FDI. In India, foreign direct
investment policy is regulated under the Foreign Exchange Management Act, 2000 governed
by the Reserve Bank of India.
One can invest in India - either under Automatic Route which does not require approval from
RBI or under Government Route, which requires prior approval from the concerned
Ministries/Departments via a single window - Foreign Investment Facilitation Portal (FIFB)
administered by the Department of Industrial Policy & Promotion (DIPP), Ministry of
Commerce and Industry,Government of India.

Apart from specified 11 sectors/activities (mentioned below), where Government approval is

mandatory, applications where there is a doubt over which Ministry should the application

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fall under, DIPP has the responsibility of identifying who would be the concerned authority.
Proposals from NRIs and Export Oriented Units, applications relating to issues of equity for
import of capital goods/equipment, pre-operative/pre-incorporation expenses, etc. are also
handled by DIPP.

Various categories of foreign investors - Foreign Portfolio Investors, Foreign Institutional

Investors, Foreign Venture Capital Investor, Non-Resident Indians can hold stakes in Indian
business entities (company, partnership firms, proprietary concerns, LLPs) subject to
conditions and sectoral caps on ownerships.
FIIs/FPIs are allowed to invest and trade in equity securities, with a maximum total
investment of 24 percent of the issued and paid up capital of a company. This limit can be
raised up to the prescribed sectoral cap of that particular industry by passing a special
resolution to the effect.
Every non-resident entity is allowed to invest in India either under Automatic or Government
Approval Route, except in prohibited sectors.

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 IMPACT ON ECONOMY, DOMESTIC MARKET & INVESTORS

Creation of jobs is the most obvious advantage of FDI. It is also one of the most important
reasons why a nation, especially a developing one, looks to attract FDI. Increased FDI boosts
the manufacturing as well as the services sector. This in turn creates jobs, and helps reduce
unemployment among the educated youth - as well as skilled and unskilled labour - in the
country. Increased employment translates to increased incomes, and equips the population
with enhanced buying power. This boosts the economy of the country. For international
investors, foreign direct investment plays an extremely important role. The growth of
emerging markets has been due in large part to incoming foreign direct investment. At the
same time, companies investing abroad can realize higher growth rates and diversify their
income, which creates opportunities for investors. It's hard to overstate the macroeconomic
importance of foreign direct investment with more than $1 trillion worth of capital changing
hands in 2010 alone. While these funds usually improve a host country, there are several
downsides that may also come into play. That said, sustainable levels of incoming foreign
direct investment are often seen as a healthy economic signal to international investors.
Some key benefits of foreign direct investment include:

 Economic Growth. Countries receiving foreign direct investment often experience

higher economic growth by opening it up to new markets, as seen in many emerging
economies.
 Job Creation & Employment. Most foreign direct investment is designed to create
new businesses in the host country, which usually translates to job creation and higher
wages.
 Technology Transfer. Foreign direct investment often introduces world-class
technologies and technical expertise to developing countries.

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FDI is a source of external capital and higher revenues for a country. When factories are
constructed, at least some local labour, materials and equipment are utilised. Once the
construction is complete, the factory will employ some local employees and further use local
materials and services. The people who are employed by such factories thus have more
money to spend. This creates more jobs.
These factories will also create additional tax revenue for the Government, that can be
infused into creating and improving physical and financial infrastructure. Foreign direct
investment (FDI) in India seems to be petering out with the inflows growth rate recording a
five-year low of 3 per cent at USD 44.85 billion in 2017-18.
According to the latest data of the Department of Industrial Policy and Promotion (DIPP),
FDI in 2017-18 grew by only 3 per cent to USD 44.85 billion. Foreign inflows in the country
grew by 8.67 per cent in 2016-17, 29 per cent in 2015-16, 27 per cent in 2014-15, and 8 per
cent in 2013-14. However, However, FDI inflows recorded a negative growth of 38 per cent
in 2012-13.
Foreign direct investment also plays an important role on a microeconomic level. Domestic
companies that expand into foreign markets can realize significant growth. Moreover,
exposure to more than one country also enhances diversification. On the flip side, foreign
companies operating in emerging markets can be targets for foreign direct investments
themselves, creating opportunities for investors.

One great example of a successful foreign direct investment is Suzuki Motor Company's joint
venture in India through Maruti Suzuki India Limited. Since the joint venture was created, the
company has become a market leader in India's automobile industry. And Suzuki's majority
ownership stake has since provided it with billions in profits over the years.
Here are some suggestions to go through before investing in active domestic market in India-
 Be Wary of Regulations. Some countries regulate how much control foreign
corporations and investors can have in their domestic companies. For instance,
China's joint ventures with foreign companies are notorious for their structural
complexity.
 Be Aware of the Risks. Mining and energy joint ventures, in particular, are very
popular in somewhat unstable regions in the Americas and Africa. Investors should be
aware of the risk of nationalization, political conflicts and other potential problems
that may arise.

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  Diversification is Best. Companies that are involved in foreign direct investment
across a number of different regions around the world offer greater diversification.

FDI POLICY OF GOVERNMENT OF INDIA

Since 1991, the regulatory environment and the process to get FDI has consistently been
eased to make it investor-friendly, catapulting India into the position of one of the fastest-
growing economies of the world. It has been ranked (9th in terms of FDI inflows for 2016 by
UNCTAD) among the top attractive destinations for inbound investments in the world. The
Government with intent to attract and promote foreign investments has put in place FDI
regulations in India with a framework that is transparent, predictable and easily
comprehensible. Foreign investment into a domestic entity on a strategic basis is subject to
FDI policy in India. The GOI through Department of Industrial Policy & Promotion (DIPP)
formulates a consolidated the process of FDI on a yearly basis which is a defined framework
for FDI. Most recently, reforms were made for FDI policy in India 2019.
Foreign investors can invest directly in India, either on their own or through joint ventures in
virtually all the sectors except in a very small list of activities where foreign investment is
prohibited. FDI in the majority of the sectors is under the automatic route, i.e., allowed
without any requirement of seeking regulatory approval prior to such investment. Thus, the
process to get FDI in most sectors don't require prior approval from the GOI. Eligible
investors can invest in most of the sectors of Indian Economy on an automatic basis.
Any Non-resident individual (NRI)/Entity can invest subject to FDI policy (except in
prohibited sectors). NRI resident in and Citizens of Nepal & Bhutan are permitted to invest
on repatriation basis (amount of consideration for such investment shall be paid only by way
of inward remittances through normal banking channels). Foreign Direct Investment (FDI)
can be made through two routes that are:
 Automatic Route: Indian companies engaged in various industries can issue shares to
foreign investors up to 100% of their paid up capital in Indian companies
 Government Approval Route: Certain activities that are not covered under the
automatic route require prior Government approval for FDIs.

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Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the
Government of India for investors to facilitate Foreign Direct Investment. This portal is
designed to facilitate the single window clearance of applications which are through approval
route. Upon receipt of the FDI application, the concerned Administrative
Ministry/Department shall process the application as per the Standard Operation Procedure
(SOP).

Subsequent to abolition of the Foreign Investment Promotion Board (FIPB) by the

Government, the work of granting government approval for foreign investment under the
extant FDI Policy and FEMA Regulations, has been entrusted to the concerned
Administrative Ministries/Departments. In March 2020, government permitted non-resident
Indians (NRIs) to acquire up to 100 per cent stake in Air India. In December 2019,
government permitted 26 per cent FDI in digital sectors.

In August 2019, government permitted 100 per cent FDI under the automatic route in coal
mining for open sale (as well as in developing allied infrastructure like washeries). In Union
Budget 2019-20, the government of India proposed opening of FDI in aviation, media
(animation, AVGC) and insurance sectors in consultation with all stakeholders. 100 per cent
FDI is permitted for insurance intermediaries. As of February 2019, the Government of India
is working on a road map to achieve its goal of US$ 100 billion worth of FDI inflows.
In February 2019, the Government of India released the Draft National E-Commerce Policy
which encourages FDI in the marketplace model of e-commerce. Further, it states that the
FDI policy for e-commerce sector has been developed to ensure a level playing field for all
participants.
Government of India is planning to consider 100 per cent FDI in Insurance intermediaries in
India to give a boost to the sector and attracting more funds.
In December 2018, the Government of India revised FDI rules related to e-commerce. As per
the rules 100 per cent FDI is allowed in the marketplace-based model of e-commerce. Also,
sales of any vendor through an e-commerce marketplace entity or its group companies have
been limited to 25 per cent of the total sales of such vendor. In September 2018, the
Government of India released the National Digital Communications Policy, 2018 which
envisages increasing FDI inflows in the telecommunications sector to US$ 100 billion by
2022. In January 2018, Government of India allowed foreign airlines to invest in Air India up

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to 49 per cent with government approval. The investment cannot exceed 49 per cent directly
or indirectly.
No government approval will be required for FDI up to an extent of 100 per cent in Real
Estate Broking Services.

CONCLUSION

It can be summed up by saying that to attract FDI, India should use its advantages such as
large domestic market, abundant supply of trained and low-wage labor, vast pool of technical
professional, second largest nation, etc. FDI is a panacea for the economic ills of any country.
Economic development strongly depends on FDI. Mauritius, US, Netherlands, Japan, UK,
Germany, France, Singapore and Switzerland are the top foreign investors in India. At
present, Maharashtra rank first with 17.5 percent of FDI inflows, Delhi second with 12.1
percent. After Delhi , Karnataka and Gujarat occupy next position respectively. India
attracted 25 billion Dollar in 2007 and in 2008 FDI inflow in India was 43.4 billion dollar.
FDI in India has contributed effectively to the overall growth of the economy in the recent
times. FDI Policy permits FDI up to 100 percent from foreign/NRI investor without prior
approval in most of the sectors including the services sector under automatic route. FDI in
sectors/activities under automatic route does not require any prior approval either by the
Government or the RBI. Market oriented policies are boosting economic activity, all round
development and economic growth rate. As the Indian economy gears up for competition in
the international market, overseas investors clearly see the potential for attractive returns
from investment in India, which is also evident from the already achieved FDI success
stories.
A large number of changes that were introduced in the country’s regulatory economic
policies heralded the liberalization era of the FDI policy regime in India and brought about a
structural breakthrough in the volume of FDI inflows into the economy maintained a
fluctuating and unsteady trend during the study period. It might be of interest to note that
more than 50% of the total FDI inflows received by India, came from Singapore and the
USA. According to findings and results, we have concluded that FII did have significant
impact on Sensex but there is less co-relation with Bank and IT. One of the reasons for high

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degree of any linear relation can also be due to the simple data. There are other major factors
that influence the bourses in the stock market.
Foreign direct investment is most likely to be harmful—actually damaging—to the growth
and welfare of developing countries and the economies-in-transition when the investor is
sheltered from competition in the domestic market and burdened with high domestic content,
mandatory joint ventures and technology-sharing requirements.

BIBLIOGRAPHY

Statutes
1. Foreign Exchange Management Act,1999
Books
1. Foreign Direct Investment in developing countries : A theoretical evaluation by
Sarabjit Chaudhari and Ujjaini Mukhopadhyay
2. Protection of Foreign Investment in India & Investment Treaty Arbitration by
Aniruddha Rajput
Websites
1. http://www.investopedia.com
2. https://www.wto.org
3. https://www.unctad.org
4. http://www.ibef.org
5. https://www.dipp.gov.in

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