“FDI IN INDIA “
“WHAT IS FDI “
At first, we trying to define the meaning Foreign investment refers to an investment in a foreign country by a local company or an Individual. In a simple sentence, we can say that the flowing of capital from one country to another. In the current trends of *Globalisation* where every multinational firm wants to make an investment in the varieties of a country to earn huge amount of the profits.
Foreign investment is largely worked as a stimulator of economic growth of an economy.
TYPES OF FDI
(i) Direct – It is a long-term investment. Foreign Direct investment means the manual investment and purchase made by a company in a Foreign Country like – inauguration of new plants, buildings, factories purchasing of new machinery, equipment in the other country.
(ii) Indirect investment- When companies or any financial institutions purchase Share or position of a company on a foreign stock exchange Market.
FOREIGN DIRECT INVESTMENT IN INDIA
As we know India is a second largest populated country in the world after China, as well as India, is a mixed economy (labour and capital intensive), due to its uniqueness its attract a large number of a foreign investor to make a huge amount of profit in India.
FDI in India can be done by two ways:-
(a) Automatic Route – Permission by Government or Reserve Bank of India is not required.
(b) Government Route- Permission of Government is necessary.
Whereas, There are three main institutions that handle the FDI related issues in India.
(i) Foreign Investment Promotion Board (FIPB).
(ii) Foreign Investment Implementation Authority (FIIA).
(iii) Secretariat for Industrial Assistance (SIA).
Restricted Sector of FDI in India
(i) Gambling and Betting activities.(e.g-casinos).
(ii)A business of chit fund, Nidhi company.
(iii)Prohibition on the making of cigars, cigarettes or any Tobacco substitute.
(iv)Agriculture activities(except Floriculture, horticulture, Fisheries, Livestock(animal husbandry), Development of seeds, cultivation of vegetables & mushrooms, and allied activities.
(v) Activities reserved for the Public sector -Atomic energy, Railways, National security services.
(vi) Real estate business(except development of the town, housing, built of infrastructure and construction department projects) or construction of farmhouses.
(vi) Trading in transferable development projects.
Recently Indian governmenthas modified FDI limits in India ,
(a) Defence sector – 49%FDI —-FIPB ROUTE
(b) Telecom sector – 100% FDI –Automatic upto 49% government route beyond 49% and upto 100%
(c)Tea plantation – 100%- Automatic upto 49% government route beyond 49% and upto 100%
(d) Courier services – 100% -automatic route.
(e) Single brand products retail trading – 100% FDI –Automatic upto 49% government route beyond 49% and upto 100%
(f) Insurance sector – 49% FDI –FIPB ROUTE.
(g) Petroleum and natural gas – 49% FDI -Automatic route.
(h) Power exchange – 49%FDI -Automatic Route
(i) Railway -100%FDI – 100%automatic, FDI beyond 49% in sensitive areas for security reasons.
(j) Pharma sector – 49% FDI –100% FIPB route except medical equipments.
(k) Satellite and its associated activities – 74% FDI – FIPB route only.
(l) Broadcasting- 26% FDI+FII- FIPB route
( Private –74% FDI +FII – FIPB route)
( Public – 20% FDI+FII – FIPB route.)
Report: Navneet Sinha