Sectors in india
AUTOMOBILE
World's Largest Tractor
Investment in Automobile Industry in India India became the fourth largest auto market in 2018
Read moreCHEMICALS
Sixth Largest Producer of Chemicals in The
FDI in Chemical Industry in India The chemical industry in India is an indispensable part of the
Read moreCONSTRUCTION
Second Largest FDI Recipient in
Investment in Construction Industry The construction industry makes up for a major part of
Read moreMEDIA
Fifth Largest Media and Entertainment Market in
FDI In Media Sectors The Indian Media and Entertainment industry is a rapidly advancing sector and
Read morePETROLEUM AND NATURAL GAS
Largest Exporter of Petroleum Products in
FDI In Petroleum & Natural Gas The petroleum and natural gas sector is among the eight core
Read moreCAPITAL GOODS
Capital Goods Contribute 10% to The Overall
FDI In Capital Goods Sectors The capital goods manufacturing sector facilitates engagement across
Read moreCIVIL AVIATION
Ninth largest civil Aviation Market in the
FDI In Civil & Aviation The civil aviation industry in India has emerged as one of the fastest
Read moreELECTRONIC SYSTEMS
Fastest Growing Smart Phone Market in Asia
FDI In Electronic Systems Sectors The fast-growing electronics market in India is backed by rapid
Read moreFOOD PROCESSING
World's Largest Producer of
Investment in Food Industries The food sector in India has successfully established its presence.
Read moreRAILWAY
4Th Largest Railway System in The
FDI In Railway Sectors The Indian Railways is among the world’s 4th largest rail networks,
Read moreRENEWABLE ENERGY
Asia’s Largest Market for off-grid
How to Get Investment for Solar Energy in India The Indian renewable energy sector is the 4th most
Read moreRETAIL AND E-COMMERCE
India Ranked No. 1 in Global Retail Development
FDI in E-Commerce Sectors The Indian retail industry has emerged as one of the most dynamic and
Read moreROADS AND HIGHWAYS
World’s Second Largest Road
FDI In Roads & Highways Sectors The transport infrastructure sector is the fastest expanding
Read moreTELECOMMUNICATIONS
The World’s Second Largest Mobile
FDI In Telecommunications Sectors India is currently the world’s 2nd largest
Read moreTOURISM AND HOSPITALITY
India has the Seventh Largest Tourism Economy in
FDI In Tourism & Hospitality Sectors The Indian tourism and hospitality industry has emerged
Read moreAUTO COMPONENTS
Rapidly Growing Indian Auto Market to Touch USD
A stable government framework has led to the development of the Indian auto-components industry.
Read moreBIOTECHNOLOGY
India is The Third Largest Biotech Destination in
FDI In Biotechnology Sectors The biotechnology sector in the country has played a significant role
Read moreGEMS AND JEWELLERY
India is The Largest Diamond Processing Centre in
FDI in Indian Diamond Industry The Gems and Jewellery sector plays a significant role in the
Read moreIT AND BPM
India is The World’s Largest BPM
FDI in IT Sector in India India has emerged as the world’s largest BPM destination with the
Read moreLEATHER
India is the Second Largest Producer of Footwear
FDI In Leather Sectors The Leather industry in India accounts for around 12.9% of the
Read moreMETALS & MINING
Fourth Largest Iron ORE Producer in the
FDI In Mining Sectors One of the core sectors in India, the mining sector provides basic raw
Read morePHARMACEUTICALS
The Country is Largest Vaccine Producer in The
FDI in Pharmaceuticals in India India enjoys an important position in the global pharmaceuticals
Read morePORTS AND SHIPPING
16th Largest Maritime Country in The
According to the Ministry of Shipping, around 95% of India's trading by volume and 70% by value is
Read moreTEXTILES AND GARMENTS
Largest Producer of Cotton & Jute in The
FDI In Textiles & Garments India’s textiles sector is one of the oldest industries in
Read moreTHERMAL POWER
3rd Largest Coal Producer in The
FDI In Thermal Power Sectors With a production of 1108 TW, India is the world’s 3rd largest
Read moreHEALTHCARE
India is The World's Second Largest Exporter of
FDI In Wellness Sectors Healthcare has become one of India’s largest sectors - both in terms
Read moreBFSI
One of the fastest growing FinTech markets in the
One of the fastest growing FinTech markets in the world, India ranks the highest in the FinTech
Read moreAGRICULTURE
A significant sector in the Indian economy, the
A significant sector in the Indian economy, the agriculture sector employs over 50% of the
Read moreEDUCATION
Education is the backbone of a progressive
Education is the backbone of a progressive society. India holds a significant place in the global
Read moreLatest Updates
Soft Loan
Ease of doing business with FDI in India
About FDI India
FDI has a huge share and a key motivator of growth in the Indian economy. India opened up to foreign direct investments in the year 1991 and since then the foreign investments have been pouring in the country immensely.
The government of India has been making regulations in the foreign policies in order to make the FDI process liberal and more streamlined in-order to attract more foreign investments in various sectors of India. Prime Minister Narendra Modi does not leave any stone unturned in order to promote India in various global platforms and also bring major reforms in the business environment of India.
The factors that attract foreign investors to India are the low wage rate, skilled human resources, an abundance of natural resources, and liberal policies. India has gradually made its place in the international market and as a key investment destination that provides promising returns. The position of India has also improved in the global club of Ease of Doing Business and tops the Greenfield FDI ranking.
FDI India Entry Routes
The government of India has established two routes through which foreign investors can make investments into the Indian economy. The routes for FDI are the automatic route and the government route. A thorough understanding of the two routes is required in terms of foreign investments as the government has divided the various sectors amongst them.
Government Route : As the name suggests, the route for foreign investments that has government involvement is known as the government route. To make foreign investments in the sectors that come under the government route, the foreign investors are required to first take approvals from the government as without approvals the foreign entities would not be able to make the investments in India. The foreign investors have to submit a proposal to the respective administrative ministry department who is responsible for granting permissions and then the investments can be made.
Automatic Route : The sectors that come under the automatic route of FDI do not require any approvals from the government. The foreign investors can make the investments without taking any approvals from the government through the automatic route but the revised policies must be checked before making the investments to avoid any confusion.
Market Size
One of the major factors that make India an attractive destination for foreign direct investments is the market size as India has a huge customer base that the foreign investors want to make the best use of. The buying capacity of the consumers is huge and India provides a good market for foreign goods.
Due to the high return on investments, foreign investors want to invest in Indian companies and also launch their products. The government of India plays its role rightfully in enhancing the number of foreign investments coming into the country by making time to time reforms in the FDI policy that increase the ease of doing business in the country.
According to the World Bank data, India is currently in the 63 rd position in the Ease of Doing Business Rankings and this is a very positive thing for the country and for its aim of attracting a high volume of foreign investments into the country.
It is due to the government reforms being made in the business environment of India that the country has not reached the top 100 countries to be featured on the Ease of Doing Business Rankings but has attained the 63 rd position also.
According to the Department of Promotion of Industry and Internal Trade, the FDI equity inflow in India is at the US $469.99 billion during April 2000 and March 2020, which clearly indicates that the hard work of the government of India has paid off by improving the ease of doing business in India and also making relaxations in the FDI norms.
The FDI equity inflow in India is at the US $ 49.97 billion in 2019-20. The highest FDI equity inflow has been attracted by the service sector of US$ 7.85 billion.
In 2019-20, India received the maximum FDI equity inflow from Singapore of US $14.67 billion, Mauritius of the US $8.24 billion, Netherlands of US 6.50 billion, USA of US $ 4.22 billion and Japan (the US $3.22 billion).
Investments and Developments
India has gained its position in being one of the top 10 countries that have received the highest foreign direct investments in the world. According to the recent UN report, India had attracted $49 billion inflows in 2019. There is a 16% increase in foreign investments that reflects a good position of FDI India.
The following are the recent developments that have taken place in foreign direct investments in India.
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Between April 23 and July 16, 2020, Jio Platforms Ltd. sold 25.24 per cent stake worth Rs 1.52 trillion (US$ 21.57 billion) to various global investors from separate deals involving Facebook, Silver Lake, Vista, General Atlantic, Mubadala, Abu Dhabi Investment Authority (ADIA), TPG Capital, L. Catterton, Public Investment Fund (PIF), Intel Capital, Qualcomm Ventures and Google. This is the largest continuous fundraise by any company in the world.
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In May 2020, Philips, Dutch health tech and consumer electronics company, announced its plan to invest Rs 250-300 crore (US$ 35.47-42.56 million) to boost its manufacturing and R&D facilities in India.
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In January 2020, Amazon India announced an investment of US$ 1 billion for digitising small and medium businesses and creating one million jobs by 2025.
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In January 2020, Mastercard announced its plans to invest up to US$ 1 billion in India over the next five years to double its research and development effort in the Indian market.
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In October 2019, French oil and gas giant, Total S.A., acquired 37.4 per cent stake in Adani Gas Ltd for Rs 5,662 crore (US$ 810 million), making it the largest FDI in India’s city gas distribution (CGD) sector.
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In August 2019, Reliance Industries (RIL) announced one of India's biggest FDI deals with Saudi Aramco to buy a 20 per cent stake in Reliance's oil-to-chemicals (OTC) business at an enterprise value of US$ 75 billion.
The following are the government developments concerning FDI in India. In May 2020, Government increased FDI in Defence manufacturing under the automatic route from 49 per cent to 74 per cent.
In April 2020, the Government amended existing consolidated FDI policy for restricting opportunistic takeovers or acquisition of Indian companies from neighbouring nations.
In March 2020, Government permitted non-resident Indians (NRIs) to acquire up to 100 per cent stake in Air India.
Initiatives by the Government
The following are the recent measures that have been taken by the government of India in terms of foreign direct investment. According to the survey done by the Emerging Market Private Equity Associatio (EMPEA), India will be the most attractive emerging market for global partners (GP) investment.
The main aim of government initiatives taken for FDI in India is to bring ease of doing business and for the promotion of foreign investments in various sectors of the economy. In recent months, the government has given the allowance of 100% FDI in various sectors and is in talks for giving 100% FDI in more sectors.
The Indian government aims to achieve the goal of US $100 billion worth of FDI in just two years. India has been attracting major foreign investments even when the world economy is not in good condition due to COVID 19 pandemic.
The following are the recent government initiatives taken for foreign direct investments in India.
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In May 2020, the Government increased FDI in defence manufacturing under the automatic route from 49 per cent to 74 per cent.
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In April 2020, the Government amended existing consolidated FDI policy for restricting opportunistic takeovers or acquisition of Indian companies from neighbouring nations.
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In March 2020, Government permitted non-resident Indians (NRIs) to acquire up to 100 per cent stake in Air India.
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In December 2019, the Government permitted 26 per cent FDI in digital sectors.
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In August 2019, Government permitted 100 per cent FDI under the automatic route in coal mining for open sale (as well as in developing allied infrastructure like washeries).
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In Union Budget 2019-20, the Government of India proposed opening FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders.
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100 per cent FDI is permitted in insurance intermediaries.
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As of February 2019, the Government of India has been working on a road map to achieve its goal of US$ 100 billion worth of FDI inflow.
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In February 2019, the Government of India released the Draft National E-Commerce Policy to encourage FDI in the marketplace model of E-commerce. Further, it stated that the FDI policy for the E-commerce sector was developed to ensure a level playing field for all participants.
Types and Methods of FDI
Types of FDI
To further understand the nuances of FDI in India, let us have a look at the types of foreign direct investments.
1. Horizontal FDI
- In this type of FDI the parent company initiatives the same business model in another country.
- The goods and services that are manufactured abroad are mostly similar to the products/services that are manufactured in the home country of the company.
- The term horizontal is given to this type of FDI because the similar operations of a company are carried out in another country
2. Vertical FDI
- This type of FDI is known as the export platform foreign direct investment in which the exports are sent back to the home market.
- The main contributor to this type of FDI is the increase of the trade blocks that have low internal trade barriers but have higher external barriers.
3. Platform FDI
- In the case of platform FDI, a business gets expanded to another country but the aim of this expansion is to take the output from the foreign country and export it to the third country.
Methods of FDI
Foreign investors have the opportunity of expanding their business into other countries through the means of foreign direct investment. The following are the various methods of foreign direct investment:
- Mergers and acquisitions
- Joint Ventures with foreign companies
- Starting subsidiary in an abroad country of the domestic company
- Getting voting stocks in a foreign company