Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B.

Their companies get opportunities for exploring new global markets. FDI is also quite beneficial for countries that make investments in other countries. 5.1. The inf low of FDI aids in the transfer of technology and knowledge from one country to another. the people of Asian countries like India had vast knowledge related to IT sector which was later used by many other non Asian countries of the world. 7.Improves productivity. . Benefits to businesses. 6. Benefits to the government. With the increased f low of FDI the income generated through taxation increases thus. Thus. The inf low of foreign direct investment helps in the economic growth of a country. Foreign direct investment helps in increasing the sources of government income. 2. thereby generating higher incomes and profits.56. FDI inf low results in an increase in the number of employment opportunities for people living in that country. Benefits for the investors. FDI plays an important role in enhancing the overall productivity in the host countries. 4. bringing higher revenues to the government. 3 . These facilities are extremely beneficial for small and medium-sized businesses that otherwise face many problems in getting loans.Helps in economic growth. FDI helps in the transfer of knowledge across the world. New industrial units are set up affording employment to people from the top level to the working groups like factory workers. For instance. Aids in transfer of technology and knowledge. Brings employment opportunities. Business entities get easy loans at low rates of interest.

As per the data. . the sectors which attracted higher inflows were services. construction activities and computer software and hardware.A recent UNCTAD(United Nations Conference on Trade and Development) survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010-2012. the US and the UK were among the leading sources of FDI. telecommunication. Mauritius. Singapore.

The automatic route under which companies receiving foreign direct Investment need to inform the Reserve Bank of India within 30 days of receipt of funds and issuance of shares to the foreign investor. y 2. .FDI can enter India through two channels y 1. prior approval is needed from the Foreign Investment Promotion Board (FIPB). For sectors that are not covered under the automatic route.

Foreign Direct Investment Policy allows for investment only in case of the following form of investments: y Through financial alliance y Through joint schemes and technical alliance y Through capital markets.In India. via Euro issues y Through private placements or preferential allotments .

gold. chrome.y Arms and ammunition y Atomic Energy y Coal and lignite y Rail Transport y Mining of metals like iron. manganese. zinc . copper. diamonds. gypsum. sulfur.

Bridges and Ports Sick Industrial Units Industries Requiring Compulsory Licensing Industries Reserved for Small Scale Sector .y y y y y y y y y y y y y 34 High Priority Industry Groups Export Trading Companies Hotels and Tourism-related Projects Hospitals. Diagnostic Centers Shipping Deep Sea Fishing Oil Exploration Power Housing and Real Estate Development Highways.

Business Processing Outsourcing .For the Insurance sector FDI allowed is 26 per cent through the automatic route on condition of getting license from Insurance Regulatory and Development Authority (IRDA). Insurance Sector .For the production of drugs and y y y y pharmaceutical a FDI of 100 per cent is allowed.49 per cent FDI is permitted for this sector .y Drugs & Pharmaceuticals .FDI of 100 per cent is permitted provided such investments satisfy certain prerequisites.FDI of 49 per cent is allowed in the Banking sector through the automatic route provided the investment adheres to guidelines issued by RBI. Private Banking . Telecommunication .

165 393 654 1374 2141 2770 3682 3083 2439 2463 4065 2705 2188 3219 5540 12492 24575 27330 25834 14025 .YEAR FDI (US $ IN MILLION) including advance 1991-1992 (Aug.) 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010March-Nov.-Mar.

4353 2596 919 2554 2844 2862 1437 1208 407 272 362 574 1093 999 834 984 533 960 529 271 .Sectors Service sector computer software & hardware Telecommunications housing & real estate construction activities power Automobile Industry Metallurgical Industries petroleum & natural gas Chemicals 2008-09 6138 1677 2558 2801 2028 985 1152 961 412 749 (US $ in million) 2009-2010 2010-11 (till Nov).

A.A.2008-09 Mauritius Singapore U.E 11229 3454 1802 864 883 405 1287 629 467 257 2009-10 10376 2379 1943 657 899 1183 1627 626 303 629 2010-11(Till Nov.) 5158 1367 926 385 802 917 598 104 340 278 .K.S. U. Netherlands Japan Cyprus Germany France U.

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