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Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside of the domestic territory of the investor. FDIs require a business relationship between a parent company and its foreign subsidiary FDI stocks now constituting 28% of the global G.D.P


FDI permitted in almost all activities Up-to 100% FDI allowed in manufacturing Most FDI allowed on the automatic route- only to inform the Central Bank within 30 days of remittances Liberal policy for foreign technology collaboration Policy supported by a legal framework National treatment to investment Investments, profits and dividends fully repatriable Ceilings and routes for investment being constantly reviewed and liberalized. Indian FDI policy regime assessed independently to be liberal and progressive.

FDI Policy - Salient features

Industrial sector Manufacturing- permitted up to 100% on the automatic route in all manufacturing activities except for cigarettes ; defence related items; and items reserved for SSI sector. Mining Sector -100% is permitted on the automatic route exploration and mining of diamonds, precious stones, gold, silver and minerals. 100% in coal and lignite mining for captive consumption by power projects, and iron and steel, cement production and other activities permitted under the Coal Mines (Nationalisation) Act, 1973. Electricity Sector- 100% is permitted on the automatic route in generation, transmission, distribution of electricity and also power trading subject to the provisions of the Electricity Act, 2003.

FDI Policy - Salient features


sector100% is permitted on the automatic route in roads and highways, ports and Greenfield Airport projects. FDI up to 100% is permitted in existing airport project but the same requires prior approval for FDI beyond 74%. Services sector Many of the activities under the Services sector attract caps on foreign equity and are subject to sectoral regulations.

Services Sector 26 % in Print media: Publishing newspaper and periodicals dealing with news and current affairs; and in Insurance 49 %in Broadcasting; Air transport services and Stock Exchanges 100 % in single brand product retailing 74% in Telecommunication services; ISP with gateways, radio-paging, end-to-end bandwidth; Establishment and operation of satellites; and Private sector banks

AGRICULTURE- FDI is not allowed in agriculture and plantation activities except tea plantation. In the tea sector FDI is allowed up to 100% with prior Government approval. FDI is allowed in certain activities up to 100% on the automatic route. These are Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pisiculture, and Cultivation of Vegetables, Mushrooms under controlled conditions and services related to agro and allied sectors.

REAL ESTATE FDI is not permitted in Real Estate business i.e. buying and selling of properties. 100% on the automatic route in Construction development projects subject to prescribed conditions including inter-alia-minimum capitalization, minimum area requirements, and lock-in of original investments. These conditions are not applicable to NRIs, SEZs, and Hotel & Tourism sectors.


The proposals for FDI in India get their approval through following routes : 1. Automatic Route- (R.B.I & GOVT. OF INDIA) 2. Government Route (F.I.P.B)


Economic development of the country Transfer of technology Development of human capital resources Opening export window Creation of jobs

DISADVANTAGES OF FDI Company may lose ownership Country secrets may be disclosed Policies adapted may not be appreciated
Difference in language and culture

Retail Trade (except Single Brand Retailing) Gambling Betting & lottery; Atomic energy Agriculture Housing & Real Estate

QUOTES :We came to India for costs, stayed for quality and are now investing for innovation. Dan Scheinman, SVP and GM, Cisco Systems Inc.

India is a developing country, but it is developed Country as far as its intellectual infrastructure is concerned. We get the highest intellectual capital per dollar here.. Jack Welch, Former Chairman, GE India has evolved into one of the worlds leading technology centers. Craig Barrett, ex-CEO, Intel Corp. By 2032 India will be among the top 3 largest economies in the world. BRIC report, Goldman Sachs

India has taken its place in the world economy. You already have them in cars & autos, in electronics and systems. Jamie Dimon, Chairman and CEO JP Morgan

The Indian market has been growing very fast in recent years and we have found that some Taiwanese businesses are highly complementary to Indian corporations. Christina Liu, Minister, Council for Economic Planning and Development (CEPD)