Investment Policy

in India
By Nikunj Parmar
BBA-FM(SEM-3)
91900449010
 Introduction

 For a developing country like India the total capital requirement

cannot be met with internal sources alone, so foreign investment
becomes an important part in supplying capital.
 Some ways a discussed here,
 FII
. .
 Investment in the financial
assets such as stock, bonds etc
of the company located in
another company. FII investor
not involved in the day to day
management of the company
 FDI
. .
 Investing directly in another
country . e.g. a company
dased in USA invests in India
either by setting up wholly
owned subsidiary or getting
into a JV with a company
based in India.
 Routes of FDI

 Basically, there are two routes for FDI in India

 Automatic - There is the Automatic Route, where no approval or

authority is required by the private foreign investor. He can invest in
any company it wishes with no need for government approval.

 Government -  the Government Route. In this route, there is no

investment without the prior approval of the Government of India.
 Allocation of FDI
 Foreign Direct Investment in India does not have a uniform rate. Some
industries allow 100% FDI, i.e. the entire funds of the business can be from
foreign direct investment. The percentages vary from 26% to 49% to 51%.
There are a few industries where FDI is strictly prohibited under any route.
These industries are
 Atomic Energy Generation
 Any Gambling or Betting businesses
 Lotteries (online, private, government, etc)
 Investment in Chit Funds
 Cigars, Cigarettes, or any related tobacco industry
 Changes in FDI
 People’s Bank of china (PBoC) raised its stake in india’s largest non – banking
mortgage provider HDFC.
 FDI policy was revised to curb opportunistic takeover or acquisitions of Indian
companies in the aftermath of the novel coronavirus outbreak and the economic
crisis.
 Amended FDI Rule: A non-resident entity can invest in india subject to the
FDI Policy except in those sectors/activities which are prohibited However an
entity of a country which sheares a land border with India or where the
beneficial owner of investment into India is situated in or is a citizen of any
such country can invest only under the government roure.