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CERTIFICATE

DECLARATION
ACKNOELEDGEMENT
LIST OF CONTENT
1 Introduction

2 Types of FDI

3 FDI in India

4 FDI Law Practice India

5 FDI Prohibited

6 India Foreign Direct Investment 2018 to 2022

7 Objective of Study

8 Literature Review

9 Research Methodology

10 Scope of the Study

11 Data Analysis

12 Findings

13 Suggestion and Recommendation

14 Conclusion

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INTRODUCTION
Foreign direct investment (FDI) plays a crucial role in the development of economies like
India. It acts as a bridge between investment and savings, helping to cover domestic saving
constraints and providing access to superior technology, which in turn promotes efficiency
and productivity. India's history with FDI dates back to the colonial era with the
establishment of the East India Company. Over time, various policies have been introduced
to attract FDI, with changes reflecting economic and political shifts.
India's economic growth has been greatly aided by foreign direct investment (FDI) since the
1990s, as it provides employment possibilities, technological transfer, and financial rewards.
FDI is especially beneficial for emerging nations like India since it can increase employment
and provide cutting-edge technologies and management techniques. Furthermore, FDI is
regarded as a risk-free investment option that promotes innovation and skill development
while boosting local savings, domestic competition, and foreign reserves.

India has been wary of foreign direct investment (FDI) despite its advantages, especially in
some industries like multi-brand retail. But the 2012 opening of FDI in multi-brand retail
shows a change in attitude towards accepting foreign investment. Regulators frequently set
FDI restrictions in order to preserve home dominance over important industries, including
insurance.

Prioritising FDI is required to further expedite India's development. In contrast to other

nations like China, which have used FDI to achieve fast growth, India has adopted a more
conservative growth strategy. India needs to dramatically increase FDI inflows if it is to
achieve growth rates of 10-12%. While the influence of foreign direct investment (FDI) on
economic growth varies between industries, research by Harvard Business School's Laura
Alfaro indicates that it generally benefits the manufacturing and services sectors, while there
is some ambiguity in the latter.

FDI is a major factor in India's economic growth, to sum up. Adopting strategies to draw in
more foreign investment and welcoming foreign direct investment (FDI) will allow India to
realise its full potential and quicken its transition to a global economy.

Meaning:
Investing foreign assets in domestic buildings, machinery, and organisations is known as
foreign direct investment. Foreign investment in the stock markets is not included.
It is believed that foreign direct investment is more beneficial to a nation than stock
investments.

of its businesses because foreign direct investment (FDI) is long-lasting and typically helpful
regardless of how things go, while equity investments have the potential to be "hot money"
that can flee at the first indication of problems.
To put it simply, foreign direct investment (FDI) is the long-term involvement of nation A in
nation B. Foreign direct investment (FDI) is the process of physically investing in another
nation.
TYPES of FDI:
FDI is divided into two group according to the direction:

1. Inward: When foreign capital is invested in local resources, it is known as inward foreign
direct investment.
FDI from abroad is promoted by:

Tax benefits, grants, low-interest loans, and the relaxation of some regulations. The theory
goes that a long-term benefit outweighs a temporary loss of revenue.

Ownership restrictions or limitations and differential performance standards are the two main
factors limiting inward FDI.

2. Outward: When local capital is invested in foreign resources, it's known as outward foreign
direct investment, or "direct investment abroad." However, it can also be utilised to finance
purchases and sales from a foreign nation that produces commodities.

The following factors promote outward FDI: government-backed risk insurance

The following factors limit foreign direct investment (FDI):

• Tax incentives or disincentives on foreign-based companies that invest abroad or on profits

repatriated

• Local business subsidies

• Leftist policies that encourage industry nationalisation (or at least some degree of
government control)

• Self-serving advocacy organisations and social sectors, such labour markets and agriculture,
that receive backing from state or foreign direct investment.

• To maintain localised state control over the military industrial complex, security sectors are
frequently protected against external foreign direct investment (FDI).

FDI is allowed under the following types of investments:

• Through joint ventures and technical cooperation;

• Through financial cooperation

• Through Euro issues on the capital markets.

• By use of preferential allocations or private placements

Based on the intended use, FDI is divided into:

• Investment in greenfields
• Purchases and Mergers
Investment in a company's home industry made overseas is known as horizontal FDI.
Vertical FDI comes in two varieties:
• Backward vertical FDI: this type of FDI involves a foreign industry supplying inputs to a
company's local production process.
• Forward vertical FDI: a business that exports the products of a company's domestic
production processes to another industry
Based on the intended use, FDI is divided into:

• Investment in greenfields
• Purchases and Mergers

Investment in a company's home industry made overseas is known as horizontal foreign

direct investment.

Vertical FDI comes in two varieties:

• Backward vertical FDI: this type of FDI involves a foreign industry supplying inputs to a
company's local production process.
• Forward vertical FDI: a business that exports the products of a company's domestic
production processes to another industry.

Foreign Direct Investment (FDI) in India: Several global economic concerns have cast a
shadow over the country's post-liberalization growth narrative.
Massive economic expansion was facilitated by liberalisation, industrialization, globalisation,
and privatisation.

In 1991 the government saw imposed economic reforms in india. National policies have
tackled macro financial challenges in a number of ways to support the expansion and
advancement of the country as a whole.
It has proven a useful tool for accelerating development and making better use of limited
resources. One topic that has generated a lot of discussion and uncertainty over how best to
use foreign direct investment for the development of the country is this one.
With the bulk of its industries experiencing rapid and steady growth, India has emerged as
one of the world's most sought-after locations for foreign direct investment.
India's constantly growing markets, trade policy liberalisation, technological advancements,
and

Together, the expansion of telecommunication and the relaxation of various constraints on

foreign investment have elevated India to the top of investors' lists for the most profitable,
secure, and productive foreign investment.

All of these elements combined have made India a desirable and promising location for
secure, lucrative, and fruitful international investment. India is predicted to solidify its
standing as a top option for foreign investors looking for chances for growth and
diversification as it proceeds with its economic reforms and development.

A recent survey by the United Nations Conference on Trade and Development (UNCTAD)
indicates that, after China, India is now the second most popular location globally for
extremely profitable foreign direct investment (FDI).

Several Indian economic sectors have had notable FDI inflows in recent years, with
infrastructure, telecommunications, information technology, computer hardware and
software, and hotel services being the main recipients.

Investors have been aggressively supporting FDI in these areas from a number of nations,
including the United States, the United Kingdom, Mauritius, Singapore, and others.

An important part of enabling foreign direct investment in Indian business sectors for firms,
corporations, organisations, and potential investors from around the world is Global Jurix, a
distinguished legal organisation with a global reputation and headquarters in India.

In order to help international investors navigate the complicated regulatory environment,

comprehend investment laws and policies, facilitate partnerships and collaborations, and
guarantee legal compliance, the organisation provides them with full legal services and
advice.

For investors hoping to take advantage of the rich potential presented by the Indian market,
Global Jurix is a useful partner due to its knowledge and competence.

Legal Advice: Complying with Indian laws and regulations of foreign direct investment,
Global Jurix offers foreign investors thorough legal advice and guidance. Help with
intellectual property rights, taxation, company registration, and contract negotiations are all
included.

Due Diligence: To evaluate the risks and opportunities related to FDI in Indian business
sectors, the organisation carries out extensive due diligence on behalf of international
investors. This lessens possible dangers and enables investors to make well-informed
judgements.

Regulatory Compliance: Global Jurix helps international investors comprehend and abide by
the laws governing FDI in India. Getting the required authorization, licences, and consents
from the appropriate government agencies falls under this category.

Transaction Support: The company provides services for structuring investments, creating
and negotiating contracts, and assisting with mergers and acquisitions (M&A) in Indian
business sectors.

Dispute Resolution: To safeguard the rights of international investors making investments in

India, Global Jurix offers professional legal counsel and dispute resolution services in the
event of disagreements or legal difficulties.

In conclusion, a recent UNCTAD survey revealed that, after China, India is now the second
most popular location for lucrative foreign direct investment (FDI). India presents attractive
prospects for foreign investment in various industries, including infrastructure,
telecommunications, information technology, computer hardware and software, and hotel
services, owing to its strong economic growth, widening markets, and liberalised trade
regulations.
By offering legal advice, due diligence, regulatory compliance, transaction assistance, and
dispute resolution services to investors from all over the world, Global Jurix plays a critical
role in facilitating FDI in India and promoting the country's ongoing economic development
and expansion.

India's Practice of FDI Law:

Easily made through a number of channels, including the government and automatic routes,
is foreign direct investment in Indian commercial sectors. The most common and favoured
method of investing in Indian markets, meanwhile, is through joint ventures bussiness. The
most profitable industries for foreign direct investment (FDI) in India right now are those in
the infrastructure (power, steel, railways, etc.); telecommunications; hospitality; retail; real
estate; retail; petroleum and petroleum products; biotechnology; alternative energy, etc.

Through the reliable and affordable provision of the following legal services, Global Jurix
can assist international investors of all classes and categories in obtaining extremely lucrative
and secure foreign direct investment (FDI) in India:
• Corporate and commercial Law services,

• Joint venture establishment,

• Company formation and company law services,

• For following task include completing all required Compliances,

• Drafting all necessary Contracts, Agreements, and other Documents,

• Establishing Subsidiaries,

• Tax Planning,

• Project Financing,

• Dispute Resolution,

• Private Equity.

Other legal services for FDI in india are

Automated Path:

FDI up to 100% is allowed in most sectors, including services, without prior approval.
Sectors included under the automated route do not need prior clearance from the government
or RBI.

After selling shares to overseas investors, investors have 30 days to report inward remittances
to the RBI's Regional Office and submit the necessary paperwork.

Path of Government Approval:

In order to get FDI/NRI for activities not covered by the automated route, prior government
clearance is required.

It is possible to apply for prior government approval even for operations that fall within the
automated route.

The Foreign Investment Promotion Board (FIPB) reviews requests for foreign investments
that need to be approved by the government, including composite approvals involving
technical cooperation and foreign investment.

Method for Obtaining Government Approval:

The Department of Economic Affairs (DEA), Ministry of Finance, receives proposals for FDI
in Form FC-IL, with the exception of NRI investments and 100% Export Oriented Units
(EOU).
Applications for foreign direct investment (FDI) containing 100% EOU and NRI investments
are filed with the Department of Industrial Policy & Promotion's Secretariat of Industrial
Assistance (SIA) Public Relations & Complaint (PR&C) Section.

Particular Situations Needing Government Approval:

operations that call for an industrial licence.

proposals in which the foreign partner has an established business or partnership in India in a
related or identical field.
purchase of stock by a foreign or non-resident investor in an already-existing Indian
company.
proposals that fall under sectors where FDI is prohibited or that do not comply with
announced sectoral policies or limitations.

Review of Policy and Liberalisation:

Regular reviews of FDI policy are conducted, and steps are done to further liberalise it.

The Secretariat for Industrial Assistance (SIA) notifies changes to sectoral policies and equity
caps through Press Notes; the RBI then notifies these changes under FEMA.

Every press release is accessible on the Department of Industrial Policy & Promotion
website.

These points describe the rules and procedure surrounding foreign direct investment (FDI) in
India, highlighting the differences between the automatic and government approval routes as
well as the particular situations that call for government clearance.

Prohibition of FDI in India:

1. Sports betting and gambling

2. lottery operations

3. chit fund operations

4. Transferable Development Rights (TDRs) trading

5. The Retail Industry

6. Atomic Energy

7. Activities related to agriculture and plantations (other than tea plantations) and agriculture
(excluding horticulture, viticulture, animal husbandry, development of seeds, and controlled
vegetable, mushroom, and other cultivation under controlled conditions)

General clearance of RBI under FEMA:

In accordance with the Foreign Exchange Management Act (FEMA), the RBI has given
general clearance for plans that have been given the go-ahead.

Indian businesses using the FIPB process to obtain clearance for foreign investments are
exempt from

8 more approvals from RBI to accept inward remittances and distribute shares to overseas
investors.

Nonetheless, the companies must file the necessary paperwork with the relevant Regional
offices of the RBI within 30 days of issuing the shares to foreign investors or NRIs, as well as
notify the relevant Regional office of the RBI of the receipt of inward remittances within 30
days of such receipt.

The following investment types are allowed for foreign direct investment (FDI):

• Through financial partnerships

• Through partnerships and technical alliances

• Through Euro issues on the capital markets.

Factors impacting foreign direct investment into India:

• Possibilities for domestic markets

• Low wages

• High rates of return

• low transaction costs

• labour mobility

• a mature capital market

• a contemporary financial system

• efficient infrastructure

• a structured legal and institutional framework

• clear rules and regulations

• swift and effective administrative processes

• SEZs, EPZs, etc.

National treatment to foreign investors:

• Free transfer of profits and dividends;

• Most favoured nation treatment (MFN)

• The establishment of regional trading blocs like NAFTA, ASEAN, APEC, SAARC, etc., as
well as protection of intellectual property rights (IPR)

• International standards for laws

• International arbitration in the event of a dispute, and the right to employ management of
one's selecting all had a significant influence on the pattern of FDI.

Direct investment equity flows in the reporting economy are referred to as foreign direct
investment. It is the total of other capital, earnings reinvested, and equity capital.

One type of cross-border investment is known as "direct investment," which is defined as

when an individual from one economy has control over, or a substantial amount of influence
over, the management of an enterprise located in another economy.

To establish if there is a direct investment relationship, one must possess ten percent or more
of the common shares of voting stock. Current U.S. dollars are used for data.

India received $49.92 billion in foreign direct investment in 2022, an increase of 11.6% over
2021.

India received $44.73 billion in foreign direct investment in 2021, a 30.51% decrease from
2020.
India received $64.36 billion in foreign direct investment in 2020, a 27.17% increase from
2019.

2019 saw $50.61 billion in foreign direct investment in India, up 20.17% from 2018.