Finance

Investment Opportunities in India

Foreign Investment - Policies and Procedures

-› The Common Minimum Programme of the government states that "FDI will continue to be encouraged and actively sought particularly in areas of infrastructure, high technology and exports where local assets and employment are created on a significant scale. The country needs and can easily absorb at least two to three times the present level of FDI inflows". Foreign investment can be done in all sectors except four sectors: retail trade, housing and real estate, agriculture and lottery and gambling. In most of the sectors foreign investors can go through the Automatic Route without need for any approvals. The investor has to merely keep the Reserve Bank of India informed of the flow of funds and issue of shares. In some sectors ( examples: courier services, gas pipelines and trading ), prior approval is needed.


-› There are maximum limits on foreign investment in some sectors. Examples: telecommunications (49%), insurance (26%), banking (74%), mining (74%) aviation (40%),defence equipments(26%), cable network(49%),trading (51%),print media(26%) and small-scale industries (24%). FDI in excess of 24% is permitted in small-scale industry at 50% export obligation.


-› Prior approval of the government is needed for those cases, which need industrial license ( examples: alcoholic beverages, cigarettes,defence equipments, gunpowder and hazardous chemicals. ) and those involving investment beyond the maximum limits. Such cases are cleared by the Foreign Investment Promotion Board in a transparent, efficient, time-bound and predictable manner. The FIPB meets once a week.


-› The Department of Industrial Policy and Promotion is the nodal agency for information and assistance to foreign investors. Their website www.dipp.nic.in has comprehensive information for foreign investors and gives weekly update on proposals for foreign investment under consideration. It also gives information on projects available for foreign investors and contains online applications for clearances.


-› The Various state governments in India offer competitive incentives and attractions to foreign investors.


-› Intellectual Property Rights Laws of India are well on track with the rest of the world. With the third amendment to the already substantially revised Patents Act by end 2004, India would be TRIPS-Compliant before the deadline of 1st January, 2005.


-› Capital account convertibility for foreign investors.