Reach us at
India is one of the fastest growing economies in the world. It ranks among the top 10 attractive destinations for inbound investments. The country offers an extensive marketplace for products and services of diverse sectors. Moreover, the regulatory environment for foreign investment has been considerably eased to make it more investor-friendly. Government is making constant efforts to increase the scope of foreign direct investment by opening new sectors for investment, increase the sectoral limit of already existing sectors and simplifing other provisions of the FDI policy. Therefore, FDI in India is considered to be very lucrative and secure. These are few of the major reasons for attracting huge Foreign Direct Investments (FDI) in various sectors in India.
At present, the most desirable and enticing economic sectors of India to foreign companies are information technology, retail, catering and hospitality, education, infrastructure, real estate and construction, insurance, mining and minerals, power and energy, telecommunication, aviation, and many others.
What is FDI?
Foreign Direct Investment (FDI) is an investment made by anindividual or a company , of one country in business of another country. (Can it be rephrased).The company investing or acquiring interest in the foreign company has to own 10% or more of foreign company’s shares to be called as FDI. (need to confirm with the law and give us a reference).
What are the entry routes for investment into India?
The Foreign Direct Investment in Indian business sectors can easily be made in two ways, i.e. either through the Automatic route or through the Governmental route.
What are the areas in which foreign investment is prohibited?
The present policy prohibits foreign investment in the following sectors:
What are the forms in which a foreign company can conduct business in India?
A foreign company planning to set up business operations in India has the following options:
Incorporating a Company in India: A foreign company can incorporate a private or public, limited company in India It can be a joint venture or a wholly owned company. However, the foreign company has to comply with certain rules and regulations in this regard.
Limited Liability Partnerships: A foreign company can set up business operations in India by way of forming a limited liability partnership. It is allowed under Government route for sectors which have 100% FDI approval. It is also allowed under automatic route without imposing any restrictions.(specify the source)
Sole Proprietorship/Partnership Firm: It is possible for a foreign company to set up a sole proprietorship or partnership firm in India by getting prior approval from Reserve Bank of India. (specify the source)
Extension of Foreign Entity: A foreign company can opt to register a branch office, project office or liaison office in India. Setting up these offices requires RBI or Government approval. These offices can undertake only those activities that are specified by the RBI.
Are the investments and profits earned in India repatriable?
Yes, all the foreign investments in India are generally allowed to be repatriated, after payment of taxes due without any restriction and without any approval from RBI. However, there are exceptional cases where it is not allowed. Such cases are:
Who can be an investor?
The following can be an investor under FDI:
What are the instruments for receiving foreign investment in an Indian company?
There are several ways by which an Indian Company can receive foreign investment. These ways are: