Foreign investments are one of the biggest factors for shaping up the development of India and there are several measures that are being taken up by the government to ensure that FDI continues to come in the country.
India has benefitted a lot through FDI not only through the investments from foreign countries but it has also developed the technology, software, and knowledge in various sectors.
There are many businesses that are still wanting to avail of the benefits of FDI in India and for them, FDI India is the best place to answer all their queries as it is the pioneer in this field and provides proper consultation for this.
India opened its economy in 1991 and since then various reforms have been taken place in order to uplift the foreign investments and also to make the business environment of the country better than it was before.
The consumer market of India acts as the perfect market for foreign investors and they want to tap this market for their goods. The various companies and startups are in search of foreign investors that would be interested in investing in their company’s capital.
The Indian startup economy received a major boost from foreign investors due to FDI in India.
India has come a long way in its FDI journey as now India is a part of the top countries of Top 100-club on Ease of Doing Business and also has the Number 1 rank in greenfield FDI ranking.
Availing FDI in India
There are two routes through which companies can get FDI in India and that is the automatic route and the government route.
- In the Automatic Route, the individuals or companies will not be requiring any approval from the government.
- In the government route, the individuals or companies will require approval from the government for investments.
How to Avail FDI through Government Route
- For investments through the government route, an application has to be submitted through the foreign investment facilitation portal that is a single-window clearance made by the government of India for foreign investors.
- After the application being received, it is then forwarded to the ministry for which the approval is required. Then the decision on the approval/rejection of the application is done through the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce.
- The DPIIT will be then issuing the SOP that will be required for the further processing in the existing FDI policy.
Sectors in Automatic Route
The sectors that come in the 100% Automatic Route are Agriculture & Animal Husbandry, Air-Transport Services (non-scheduled and other services under civil aviation sector), Airports (Greenfield + Brownfield), Asset Reconstruction Companies, Auto-components, Automobiles, Biotechnology (Greenfield), Broadcast Content Services (Up-linking & down-linking of TV channels, Broadcasting Carriage Services, Capital Goods, Cash & Carry Wholesale Trading (including sourcing from MSEs), Chemicals, Coal & Lignite, Construction Development, Construction of Hospitals, Credit Information Companies, Duty Free Shops, E-commerce Activities, Electronic Systems, Food Processing, Gems & Jewellery, Healthcare, Industrial Parks, IT & BPM, Leather, Manufacturing, Mining & Exploration of metals & non-metal ores, Other Financial Services, Services under Civil Aviation Services such as Maintenance & Repair Organizations, Petroleum & Natural gas, Pharmaceuticals, Plantation sector, Ports & Shipping, Railway Infrastructure, Renewable Energy, Roads & Highways, Single Brand Retail Trading, Textiles & Garments, Thermal Power, Tourism & Hospitality and White Label ATM Operations.
The following are the sectors that are under 100% Automatic Route is:
- Infrastructure Company in the Securities Market: 49%
- Insurance: up to 49%
- Medical Devices: up to 100%
- Pension: 49%
- Petroleum Refining (By PSUs): 49%
- Power Exchanges: 49%
Sectors in Government Route
The following are the sectors that are under the 100% government route are:
- Banking & Public sector: 20%
- Broadcasting Content Services: 49%
- Core Investment Company: 100%
- Food Products Retail Trading: 100%
- Mining & Minerals separations of titanium bearing minerals and ores: 100%
- Multi-Brand Retail Trading: 51%
- Print Media (publications/ printing of scientific and technical magazines/ specialty journals/ periodicals and facsimile edition of foreign newspapers): 100%
- Print Media (publishing of newspaper, periodicals and Indian editions of foreign magazines dealing with news & current affairs): 26%
- Satellite (Establishment and operations): 100%
Prohibitions in FDI
The following are the sectors in which FDI is prohibited:
- Atomic Energy Generation
- Any Gambling or Betting businesses
- Lotteries (online, private, government, etc)
- Investment in Chit Funds
- Nidhi Company
- Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc)
- Housing and Real Estate (except townships, commercial projects, etc)
- Trading in TDR’s
- Cigars, Cigarettes, or any related tobacco industry
To avail the benefits of FDI in India it is very important that the companies follow the policies laid down by the government.