Sub-subject: Foreign direct investment (FDI) in India. Syllabus:
Sample of the Sub-subject: Foreign Direct Investment (FDI) in India:
Sub-Subject Description (FDI in India):
India has become a global resource for various manufacturing and services industry.
The sole and huge geography of India gifted with different topography, has made of India one of the most attractive foreign direct investment destinations in the World.
With the biggest area of arable land, India is one of the biggest food producers in the World. India is the largest manufacturer of milk, sugar-cane, and tea as well as the second biggest manufacturer of rice, fruit, and vegetables.
The pool of technical human resources base of India with an increasing disposable revenue and its burgeoning market have all combined to enable India to emerge as a viable partner to the global industry. India is the preferred hotspot for organisations keen to outsource their R and D activities, software development work, customer contact centres or Information Technology enabled business processes.
Top sectors attracting the highest Foreign direct investment inflows into India are electrical equipment, services sector (financial and non-financial), telecommunications, transport industry, fuels, chemicals, construction activities, drugs and pharmaceuticals, food processing, cement, and gypsum products. Huge investment potential exists in the upcoming Knowledge Process Outsourcing sector and the real estate industry.
Thus, India is one of the few markets in the World, which offers high forecasts for growth and earning potential in practically all fields of business, especially in tourism, information technology, and agricultural sector.
New Delhi, Mumbai, Bangalore, Gujarat, Andhra Pradesh, and Chennai are the main destination for foreign direct investment (FDI) inflows. Maharashtra and the National Capital Region accounted for more 50% of foreign direct investment (FDI) inflows into India.
India is in the global arena for augmented Foreign direct investment termed foreign Institutional Investment and FDI. While its size and growth potential make India attractive as a market, the most compelling reason for investors to be in India is that it provides a high Return on Investment. India is a free market democracy with a legal and regulatory framework that rewards free enterprise, entrepreneurship, and risk taking.
Foreign direct investment (FDI) is welcome in nearly all the areas, excluding those of strategic concern (for instance, defence and atomic energy) and usually 100% Foreign direct investment under automatic route is permitted. In such a changed investment climate, India is offering attractive business opportunities in virtually every sector of the economy.
Indian Government has recently passed a Special Economic Zones Bill.
All Intellectual Property Rights laws are TRIPS (Trade-Related Aspects of Intellectual Property Rights) compliant with a completely functional Intellectual Property Appellate Tribunal. To promote flow of investment into India, the Government of India has set up several investment facilitation agencies, which include:
- Foreign Direct Investment Promotion Board
Foreign direct investment (FDI) Procedures.
Foreign corporate and individual investment in India, termed as Foreign direct investment when it relates to control or ownership of a company in India, takes one of two routes:
A- Automatic Route or Automatic Approval:
B- FIPB Approval - the Foreign Investment Promotion Board approves investment proposals:
FIPB guarantees a single-window approval for the investment and acts as a screening agency (for sensitive/negative list sectors). FIPB approvals (or rejections) are usually received in thirty days. Some foreign investors use the FIPB application route where there may be the absence of stated policy or lack of policy clarity.
Sectors, where Foreign direct investment (FDI) is not allowed, are limited to Railways, Atomic Energy and Atomic Minerals, Postal Service, Gambling and Betting, Lottery, and basic Agriculture or plantations.