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Steps Taken by Government to Boost FDI in Recent Times

    4 May , 2020         Fdiindia

Steps Taken by Government to Boost FDI in Recent Times

Foreign direct investment is when an investor living in one country invests in a business based in another country. Under FDI, the foreign investor (individual or business) owns 10 per cent of the company where the investment is being made. If the investor owns less than 10 per cent, the International Monetary Fund (IMF) defines it as part of his or her stock portfolio.

This 10 per cent stake in the business is a safe figure as it gives the investor enough control to develop a lasting interest in the firm through controlling ownership and yet it is not enough for the investor to solely control important decisions. Having a controlling ownership is what differentiates a foreign direct investment from foreign portfolio investment.

Today, India is one of the most attractive destinations for foreign direct investments. As per data released by the Department for Promotion of Industry and Internal Trade (DPIIT), FDI in India stood at US$ 456.79 billion during April 2000 to December 2019.

For the fiscal year 2019-20 , data indicated that the country’s service sector attracted the highest FDI equity inflow of US$ 6.52 billion, followed by computer software and hardware – US$ 6.34 billion, telecommunications sector - US$ 4.29 billion and trading – US$ 3.52 billion.

Some recent steps taken by the government to boost economy are outlined below:

In the month of March 2020, the government of India allowed non-resident Indians (NRIs) to acquire up to 100 per cent stake in Air India.

Last year in December, the government allowed 26 per cent foreign direct investment in digital sectors.

Last year in August, the 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).

Apart from this, 100 per cent foreign direct investment was also permitted for insurance intermediaries.

During 2019-20, India received the maximum FDI equity inflows from Singapore (US$ 11.65 billion), followed by Mauritius (US$ 7.45 billion), Netherlands (US$ 3.53 billion), Japan (US$ 2.80 billion) and USA (US$ 2.79 billion).