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the largest democracy in the world. The far reaching and sweeping economic reform undertaken since 1991 have unleashed the enormous growth potential of the economy. There has been a rapid, yet calibrated, move towards deregulation and liberalisation, which has resulted in India becoming a favourite destination for foreign investment. The mood is upbeat and the signals strong. Undoubtely. India has emerged as one of the most vibrant and dynamic of the developing economics. What India Offers One of the largest economies of the world, fourth largest economy in terms of purchasing power parity. Large and rapidly growing consumer market-up to 300 million people constitute the market for branded consumer products. Easy access to markets of the other nations belonging to the South Asian Association for Regional Cooperation (Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka). Large and diversified infrastructure spread across the country. Promising future in the Information technology industry. Large manufacturing capability, spanning almost all areas of manufacturing activities. Well-developed research and development (R&D) infrastructure and technical and marketing services. Well established knowledge industry. Abundance of natural resources (has a rich mineral base), and
agricultural self-sufficiency. Developed banking system-commercial banking network of over 63,000 branches supported by a number of National and State level financial institutions. Vibrant capital market consisting of 22 stock exchanges with over 9,000 listed companies. Skilled manpower and professional management including engineers, managerial personnel, accountants, and lawyers, available at competitive costs. Conducive foreign investment environment that provides freedom of entry, investment, location, choice of technology, import and export. The policy environment provides clear guidelines for entry, freedom of location, choice of technology, production, repatriation of capital, dividends, etc., which is specifically aimed of enhancing the flow of FDI. Well-balanced package of fiscal incentives. Stable democratic environment fostered by over 53 years of Independence. Established, Independent judiciary. English the preferred business language. Investment Policy Foreign Direct Investment As part of the economic reforms programme, policy and procedures governing foreign investment and technology transfer have been
the item involved requires on industrial licence under the Industries (Development & Regulation) Act. the item concerned requires on industrial Licence in terms of the locational policy ii All proposals in which the foreign collaborator has a previous venture or tie-up in India. Software Technology Parks (STPs) and Electronics Hardware Technology Parks (EHTPs) also quality for the Automatic . Special Economic Zones (SEZs). All items/activities except the following are under the automatic route for foreign direct investment (FDI): i. 1951 or b. foreign investment is freely allowed in all sectors including the services. (excluding IT Sector). iv. sector except in cases where there are sectoral ceilings. All proposals that require an industrial Licence. or c. and units in Export Processing Zones (EPZs). All proposals outside the notified sectoral polict/caps. or under sectors in which FDI is not permitted Investment in public sector units as also in Export Oriented Units (EOUs). a. Automatic Route Today. An industrial Licence is mandatory if: a. the foreign equity portion is more than 24% of the equity capital of units manufacturing items reserved for small scale industries.significantly simplified and streamlined. iii All proposals relating to the acquisition of shares in an existing Indian company in favour of a foreign investor.
In addition to Automatic Approval for new companies. Investors coming through the Automatic Route are required to file relevant documents with the Reserve Bank of India within 30 days after the issue of shares to foreign investors. ii. and the proposed expansion programme should be predominantly in the sector(s) under automatic route. iii. Proposals which do not fulfill the conditions for automatic approval will require the approval . such approval can also be granted for existing companies proposing to induct foreign equity. iii. they should be engaged predominantly in industries under the automatic route.Route. the additional requirements for eligibility for automatic approval are : i. for existing companies with an expansion programme. For existing companies without an expansion programme. the increase in equity level must result from the expansion f the equity base of the existing company. the additional requirements are that:i. the proposal would need Government approval through the Foreign Investment Promotion Board (FIPB). is allowed under the automatic route subject to licence from the insurance regulatory & development Authority for undertaking insurance activities. FDI in the Sector upto 26%. the increase in equity level must be from expansion of the equity base. and the foreign equity must come in foreign currency. ii. Otherwise. the money to be remitted should be in foreign currency.
Import of second-hand capital goods less than 10 years and allowed without licences.000 products introduced. silk.electronic filing of applications to be the norm. Export processing zones at Mumbaii. garments. pharmaceuticals. Trade Policy-Year 2000 Special Economic Zones to be set up. The investors have to make an application to the Foreign Investment Promotion Board. Major sector sperecific intitiatives in gems & jewellery. Export Promotion Capital Goods scheme extended to all industrial sectors. Boost to e-commerce . Pharmaceutical and bio-tech firms allowed to import R & D equipment and goods duty-free up to 1% of free-on-board value of . Duty free replenishment certificate scheme for over 5. Kandala. and also for renovation of power plants. Pre-export Duty Entitlement Passbook Scheme abolished. etc.of the Government. Ministry of Commerce & Industry. leather. against surrender of special import licences. Visakhapatnam and Cochin to be coverted into special economic zones. at 5% import duty. Udyog Bhawan. 1 billion or above. agrochemicals. bio-technology. like coal and hydrocarbon. New Delhi. Deemed export benefits extended to core infrastructural sectors involving an investment of Rs. Quantitative restrictions on 714 items removed. for obtaining such approval.
defence and atomic energy). services. sectors such as automobiles. and concessional tax treatment for certain sector. Business opportunities The reform process has deregulated the economy and stimulated domestic and foreign investments. The Government.their exports. petrochemicals. These include import of capital goods at concessional customs duty (subject to fulfillment of certain export obligations). India offers exciting business opportunities in virtually every sector of the economy. in the changes investment climate. loans at concessional rates of interest. . food processing. keen to promote investment in the country has radically simplified and rationalised polices. taking India firmly into the forefront of investment destinations. Since the initiation of the economic liberalisation process in 1991. procedures and regulatory aspects. liberalisation of external commercial borrowing norms. such as subsidy on fixed capital. power. Trriff protection and safeguards under antidumping and anti-subsidy mechanism to continue for domestic industry. Today. oil & natural gas. chemicals. several State Government offer incentives. and attractive power rates. While several incentives are project specific. In addition. except those of strategic concern ( for instance. Foreign investment is welcome in almost all sectors. and telecommunications have attracted considerable investments. A series of incentives has been announced to promote investments. tax holiday. a number of firms have been successful in negotiating favourable investment terms with the State Government concerned.
hydel projects and wind or solar projects of any size. Over the 10 year period from 19972007. transmission and distribution.Energy Power Investment Policy The 1991 Power Policy seeks to attract significant private sector investment in the Indian power sector.750 billion in power generation. gas or liquid based thermal project. oil based and coal/lignite based power projects. 100% foreign equity permitted. The specific project opportunities expected in the near future include: .000 MW is envisaged. entailing an investment of Rs. transmission and distribution of power generated in hydro-electric. a total capacity addition of 98. 5. Ancillary sector such as cool significantly deregulated. facilitating speedy clearances for the investor. Role of the Central Government curtailed and the State Governments and State Electricity Boards (SEBs) empowered to negotiate directly with developers. Opportunities Demand is expected to grow to 570 billion Kwh by 2001-02 and to 782 billion Kwh by 2006-07. The key initiatives include: Private sector permitted to set up cool. Foreign equity participation brought under automatic approval of generation.
Vacuum Residue. The liberalised foreign investment approval regime is aimed at facilitating foreign investment and transfer of technology through joint ventures. 100% foreign investment as equity is permissible. Condensate and Orimulsion are permitted by the Government. furnace oil (FO). Import of liquified natural gas (LNG) is also being considered for setting up large capacity combined cycle power plants. Government of India encouraging foreign investors to set up renewable energy based pwer generation project on Build-OwnOperate basis. Opportunities In India. The transmission system project are being identified for competitive bidding by the Central and State Transmission Utilities. Non-Conventional Energy Sources Investment Policy Foreign Investors can enter into a joint venture with an Indian partner for financial and/or technical collaboration and also for setting up of renewable energy based power generation projects. Naphtha. investment opportunities are available for the following types of investors and users:- . Transmission projects for power transfer are available for competitive bidding by the Central Transmission Utility (Power Grid) and State Transmission Utilities (SEBs)/Grid Corporations).Liquid Fuel Based Projects using low sulphur heavy stock (LSHS). heavy petroleum stock (HPS). Attractive investment opportunities are likely to develop in distribution of power as several State governments have agreed to allow the gradual entry of the private sector in distribution.
OIL & NATURAL GAS Investment Policy The Government has announced significant new policy initiatives to attract foreign investment: In exploration and production. 100% in small-sized oil fields 60% for unincorpoorated joint ventures and 51% for incorporated joint ventures 100% for exploration and production of blocks identified under the new Exploration Licensing Policy In the case of private Indian companies. Tidal and Urban & Industrial Wastes for their utilisation in India and also for exports to developing and Third World countries.Investment by foreign investors in renewable energy: Wind. Solar Thermal. Biomass. Solar Photo-voltaic. Co-generation. The level of FDI in the oil refining sector under automatic approval has been raised from 49% to 100% EOU refineries. Investment by foreign investors for manufacturing of renewable energy systems and devices based on: Wide. Small Hydro. Tidal and Urban & Industrial Wastes based power projects. Solar Photo-voltaic. Solar Thermal. 100% . Geothermal. FDI in refining is permitted up to 49%. Geothermal. Small Hydro. Co-generation. Biomass. Foreign investment it to be permitted up to. oil and gas fields are open to the private sector as well as for foreign participation under production sharing contracts.
FDI is permitted. FDI is permitted up to 51% FDI is permitted up to 74% in infrastructure related to marketing and marketing of petroleum products. including deep waters.14 million sq . minimum 26% Indian equity is required over 5 years. promoters are free to market the gas at market related prices. Opportunities Total sedimentary basins. kms (41% of this still unexplored) Large demand for natural gas: Year 1999 2002 2007 2012 2025 Demand (MMSCMD) 110 151 231 313 391 . For the petroleum products and pipeline sector. For actual trading and marketing. For gas fields developed in the private sector. 3. 100% wholly owned subsidiary is permitted for investment /financing. 100% wholly owned subsidiary (WOS) is permitted for purpose of market study and formulatopn.
FDI is allowed up to 50% under the Automatic 22. The increasing demand-supply gap is expected to be met by imports. In all the above cases. 100% FDI is allowed for setting up coal processing plants subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing. FDI upto 74% is allowed for exploration or mining of coal or lignite for captive consumption.85 111. Development of infrastructure 1998-992024-25 Product Pipeline Capcaity (MMTpa) Port Capacity (MMT) Coal Investment Policy Private Indian companies setting up or operating power projects as well as cool or lignite mines for captive consumption are allowed FDI up to 100%.00 166 361 .MMSCMD : Million Standard cubic Metres Per Day The present domestic gas supply is only 65 MMSCMD.
with the average waiting period for telephone connections exceeding one . c. FDI is limited to 49% subject to grant of licence from the Department of Telecommunications and adherence by the companies (who are investing and the companies in which investment is being made) to the licence condition for foreign equity cap and lock-inperiod for transfer and addition of equity and other licence provisions. and Global mobile personnel communications by satellite. Opportunities There exists an enormous demand-supply gap for basic services. Infrastructure Providers providing dark fibre (IP category).Route subject to the condition that such investment shall not exceed 49% of the equity of a PSU. cellular Mobile. Communication & Information Technology TELECOMMUNICATION Investment Policy In Basic. ISPs not providing gateways (both for satellite and submarine cables): b. FDI upto 100% is allowed for the following activities in the telecom sector. a. Electronic Mail. Paging and Value Added Service. Voice Mail Upto 100% FDI in telecom manufacturing activities on automatic approval basis. and d.
8 million subscribers Very Small Apertue Terminal (VSAT) Internet 6.000 Internet Services There in no restriction on the number of Internet Service Providers (ISPs). Power Grid Corporation or any other operator specially authorised to lease such lines. 20. They can obtain transmission link on lease from DTS.year. Sector Basic Service Current Size 19 million lines Projections Additional 64 million lines required over the next 9 years to meet the demand for basic services. thereafter a taken licence fee of Rs.9 million subscribers Radio Paging 0.000 shared hubs and dedicated hub terminals by 2000 2 million Internet subscribers expected by the year 2000 Cellular Services 0. SEBs.6 million by March. ISP are free to fix their own tariff. ISPs can also establish their own transmission link within their service area if such .4 million lines expected to be provided by the private sector Cellular subscribers expected to cross 1. No licence fee is payable up to October 31. licensed basic service providers.5 million subscribers expected by the end of financial year 2000 VSAT demand estimated at 11. railways. 2000 1.000 150. 1 per annum is payable. ISPs have been permitted to establish their own international gateways for carrying internet traffic. 2003.
They are to be permitted direct interconnectivity and sharing of infrastructure with other basic service providers or any other type of service providers in their area of operation. Gateways for GMPCS are to be located in India and operation and maintenance of the same are to be with an organisation designated by the Government. They are to be permitted direct interconnectivity and sharing of infrastructure with other cellular service providers or any other type of service providers in their area in their area of operation. Basic Telephone Services Basic service providers are permitted to establish last mile linkages and carry their own long distance traffic within their service area. A two-tier licence fee is payable. With a view to providing choice to consumers and promoting competition. all access provides would be mandatorily required to provide interconnection to all NLD providers. National Long Distance Services (NLD) beyond the service area shall be opened for competition. National Long Distance Services As per the National Telecom policy `99. . Global Mobile Personal Communication By Satellite (GMPCS) There is no restriction on the number of GMPCS licences and licences are issued on first-come-first-served basis. Cellular Mobile Services Cellular service providers are permitted to carry their own long distance traffic within their service area.a fixed component plus a variable component as percentage of revenues.links are not available from any of the authorised agencies.
100% foreign investment permitted in units set up exclusively for exports.Tele-education. and domestic data using VASTs. The scheme for value added services has been considerably liberalised. Evolving of new services. and 100% EOUs. India is the preferred location for software vendors for its quality and cost. public mobile radio trunking. Opportunities According to a recent World Bank study. Free Trade Zones/EPZs. These services include radio paging. Such units can be set up under any one of the following schemes.Other Value Added Services As the telecommunications and Information Technology(IT) infrastructure in the country is expanding. India has strong Unix base which provides opportunity for the development of products for internet based applications. Tele-medicine. STPs. there is a surge in demand for a range of value added services. Tele-banking. India has global connectivity with international dialing facility from over 13220 locations. Further. Automatic approval accorded for foreign technology agreements in all areas of electronics except aero-space and defence. subject to specified conditions. EHTPs. INFORMATION TECHNOLOGY Investment Policy Automatic approval for foreign equity in software and almost all areas of electronics. Call Centre-is catching up with the Indian Industry and has recently witnessed significant investments from domestic and foreign investors. Leased/switched high-speed data links from major centres through STPs and VSNL for point-to-point communication are also .
the volume of e-business in India is likely to increase from the level of Rs.7 billion in 1999-00 to a level above Rs. Abundant investment opportunities exist in the following thrust areas in India: Communication Infrasture Optic Fibre Cable Gateways Satellite based Communication Wireless Software Development IT-enables Services IT Education (100. Opportunity According to a study by ICRA Ltd. subject to the condition that the companies concerned would divest 26% of their equity in favour of the Indian public in five years. The figure makes a clear case for large scale investments in the Indian ecommerce sector.000 post graduate professionals in IT required annually by 2004) IT-enabled education Data Centres & Server Farms E-commerce Investment Policy Upto 100% FDI is permitted for e-commerce.. if the companies are listed in other parts of the world. Knowledge Based Industries Pharmaceuticals . 4.available. Internet connectivity is provided through several networks. 250 billion in the next three to four years.
Chemicals and biotechnology Investment Policy As referred t in section on Investment Policy Opportunities Chemicals The chemical industry in India is well established and has recorded a . technology base and range of production. Innovative scientific manpower Strength National Laboratories Increasing balance of trade in Pharma sector.Investment Policy Automatic approval for up to 74% foreign equity in the case of bulk drugs. Opportunities India pharmaceutical industry has shown tremendous progress in terms of infrastructure development. Low cost of production Low R&D Costs. India derives its technological strengths in pharmaceuticals on the following bases: Self reliance displayed by the production of 70% of bulk drugs and almost the entire requirement of formulations within the country. their intermediates and formulations (except those produced by the use of recombinant DNA technology).
paints. The chemical and allied industries have been amongst the faster growing segments of the Indian industry. 900 billion in 1996-97. pesticides. soda ash. phenol. mathanol and azo dyes. and specialty chemicals. the department has promoted and accelerated the pace of development of biotechnology in the country.steady growth in the overal Indian industrial scenario. concerted efforts for over a decade in R&D in the identified areas of modern biology and biotechnology have paid rich dividends. In India. The Indian chemical industry had a turnover of around Rs. which is considered the barometer of growth in the chemical industry. Biotechnology The setting up of a separate Department of Biotechnology (DBT) under the Ministry of Science and Technology in 1986 gave a new impetus to the development of modern biology and biotechnology in India. the per capita consumption is only about 5kg per annum in India as compared to 40kg in industrially develoed countries. In more than a decade of its existence. in sulphuric acid. A strong base of indigenous . Currently. dyestuffs. The per capita consumption of chemicals in India is well below the prevailing world level. The proven technologies at the laboratory level have been scaled up and demonstrated in field. acetic acid. Necessary guidelines for transgenic plants. carbon black. technology transfer to industries and close interaction with them have given a new direction to biotechnology research. Some of the prominent individual chemical industries are caustic soda. there is tremendous scope for growth in chemical sector. recombinant vaccines and drugs have also been evolved. The chemical industry is highly heterogeneous encompassing many sector like organic and inorganic chemicals. The chemicals industry also accounted for over 10% of total Indian exports during 1997-98. For instance. Patenting of innovations.
withlow capital Requirements.790 800 650 67 2.capabilities has been created. Global trends show that all large pharmaceutical players are putting their money in healthcare for long term benefits. Tremendous potential in agri business in an agrarion economy like India. It is expected that nearly half the drugs in the next decade would be biotech Products.110 830 3. Status and Scope Sector Turnover Estimated Estimated (1997) Turnover Turnover for 2000 for 2005 (million (million) USD) 650 480 556 1. Number of small firms is high. Potential therefore for transgenic seeds. bio-fertilizers etc.300 1. and Pharma industry with increased Potential for strategic alliances.240 Healthcare Products Agriculture Industrial Products Total . research intensive industry. knowledge based.100 1. Opportunities Biotechnology industry serves as a research arm to Agritech.
Opportunities Investment worth an estimated US$34 billion needed. toll roads.3 billion. Of this figure. the requirement of private sector investment is US$8. highways. for the development of National and Stte Highways. motels. vehicular tunnels. Select project opportunities include : . Infrastructure Sector Roads Investment Policy FDI upto 100% under automatic route is permitted in projects for construction and maintenance of roads. Highway related en route activities like restaurants. and rest/parking areas as may be decided by the implementing agency. ports and harbours. vehicular bridges. Opportunities exists in : Highway construction Four-Laning of over 35.000 km of National Highways. till 2005-06.(including other) The field of biotechnology both for new innovations and application would form a mojor research and commercial endeavour for socio economic development in this decade.
Automatic approval for foreign equity upto 100% in construction and maintenance of ports and harbours. such as operation and maintenance of piers. 15 billion. The Government has announced guidelines for private/foreign participation that permit formation of joint venture between major . loading and discharging of vehicles. the Indian Government recently announced a series of measures to promote foreign investment in the port sector as listed below: No approval required for foreign equity up to 51% in projects providing supporting services to water transport. However. 1963.Chennai-Nellor (US$ 350 million) Bangalore-Chennai (US$ 305 million) Surat-Manor (US$ 180 million) Jaipur-Ajmer (US$ 147 million) Ports Investment Policy The principal legislations governing Indian ports are The Indian Ports Act. 1908. if the total foreign equity investment exceeds Rs. Evaluation of bids will be based on the maximum licence period will not exceed 30 years and at the end of the BOT period all assets will revert to the port in accordance with the conditions of the agreement. the proposal will be referred to the FIPB. and the Major Ports Trust Act. Open tenders are to be invited for private sector participation on a Build-Operate-Transfer (BOT) basis.
ports and foreign ports. a major port trust and a company or a consortium of companies where . fostering strategic alliances with minor ports to create on optimal port infrastructure and enhancing private sector confidence in the funding of ports. and between major ports and companies. a company or a consortium of companies. and development of new port . The guidelines permit the formation of a joint venture between : a major port and foreign ports for the purposes of constructing new port facilities within existing ports. The measures are aimed at attracting new technology. improving productivity of existing ports. selected through a BOT bidding under the guidelines of private sector participation alliances with a major port trust for improving the viability of the scheme and/or to enhance the confidence of the private sector. between major ports and minor ports. Opportunities The areas identified for privatisation or investment by the private sector include: Leasing out of existing port assets . A company or a consortium of companies is selected under the scheme of innovative/unsolicited proposals Oil PSUs/a joint venture company of oil PSUs are/is selected for oil related port facility as a port based industry.
1994. Civil Aviation Investment Policy The momopoly of public sector air carriers ended with the repenling of Air Corporarion Act. container freight stations.Creating of additional assets : Construction or operation of container terminals Construction or operation of break-bulk. Dry docking and ship repair frailties Leasing of equipment and floating craft from the private sector Pilotages Captive facilities for port based industries. Automatic approval for foreign equity participation in Airport infrastructure upto100 percent Foreign equity upto 40 per eent. Equity from foreign airlines not allowed in domestic air-transport services either or indirectly. investment by Non Resident Indians upto 100 per cent permitted In domestic air-transport services. Storage facilities and tank farms Cranage and handling equipment Setting up captive power plants. multipurpose and specialised cargo berths Warehousing. 1953 on March1. Foreign Financial Institutions allowed to hold equity in the domestic .
new international terminal and a second runway for Delhi airport. Chennai cargo complex. New airport near Kochi (US$ 85.7 million). Government to consider private sector participation construction and operation new airports on a BOT basis. Projects for development of new airports at Bangalore and Mumbai with private sector participation are under consideration Other private sector aided airports planned. Important private sector aided projects. Amritsar airport upgration. runway extension and international block for Jaipur airport Private Sector-Where? Restructuring & privatization through long term lease Green-field airports Construction of terminal/facilities Ground handling ---------About Us/ India's Investment Climate/Highlights of India's Economic Policies/ Highlights of Union Budget/FAQ by Non-Resident Indians/ Some Useful Contact Addresses/IIC Home . Minimum fleet size for a scheduled operator raised from the existing 3 aircrafts to 5 Management contract with a foreign airline is not permitted Opportunities Construction of world class international airports in five cities.air-transport sector provided they do not have foreign airlines as their shareholders Foreign Investors allowed to have representation (upto 33 per cent of total) on Board of Directors of the domestic airline company. Ahmedabad airport. permitting upto100% foreign equity investment announced.
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