FOREIGN

DIRECT
INVESTMEN
T IN INDIA

Author:
AFB 131M LUNGU TATIANA

Content

General overview
Country Name: Republic of India
Area: 3,287,000 sq km
Population: the second-most populous country with over 1.2 billion
people
Capital City: New Delhi (pop 10.1 million)
People: 72% Indo-Aryan, 25% Dravidian and 3% Mongoloid.
Languages: Hindi and English, plus 15 other languages and more
than 700 dialects.
Religion: 82% Hindu, 11% Muslim, 2% Buddhist, 2 % Christian, 2%
Sikh, and 1% Jain
Government: Constitutional democracy
Currency: Indian rupee (Rs) 1 USD = Rs 46 ( keep changing )
Time
Zone: Five-and-a-half
GDP (PPP)
2014 estimatehours ahead of GMT/UTC
Country
91 trillion (3rd)
- Total Code:
$5.425
- Per capita $4,307 (133rd)

Foreign Investment - Legal Regime

Sources of Law and Policy
Foreign Exchange Management Act, 1999 (FEMA)
and related regulations
Press notes issued by the Ministry of Commerce
and Industry
Securities & Exchange Board of India Act, 1992 and
related regulations
Companies Act, 1956
Sector-specific laws and rules

In context to India,
Globalization implies opening up of the economy to
Foreign Direct Investment by providing facilities to
foreign companies to invest in different fields of
economic activity

Benefits of Foreign Direct

Investment
FDI ensures a huge amount of domestic capital, production level, and
employment opportunities which is a major step towards the economic
growth of the country
FDI has been a booming factor that has bolstered the economic life of
India

FDI policy in India

FDI is not allowed in the sectors of arms and ammunitions,
atomic energy, railway system, extraction of coal and lignite
and mining industry
In infra-structure development, FDI is allowed up to 100%
equity participation, with the capping amount as Rs.1500
crores
In finance sector, FDI is allowed up to 40%
In telecom industry, FDI is allowed up to 49%

Foreign Investment - Legal Regime

Key Regulatory Players
Foreign Investment Promotion Board
(FIPB)
Reserve Bank of India (RBI)
Securities & Exchange Board of India
(SEBI)
Stock Exchanges (Largest: National
Stock Exchange (NSE), Bombay Stock
Exchange (BSE))
Sector-specific regulators (e.g.,
insurance, telecom, transportation)

Recent Deals
Mumbai and Delhi airports Public/Private Partnership (PPP)
with 26% government participation
Vodafone $11.1 billion purchase of a 67% stake in Hutchison
Essar (fourth largest mobile phone company in India)
Airbus announced $1 billion investment in an engineering
facility and pilot training school
Cisco investing $1.1 billion in various initiatives
(manufacturing facility, VC investments, broadband and
digital media), and planning to move 20% of top executives
to India

Future Prospects
Projections for future growth
Continued annual GDP growth of 8%
GDP of US $11 trillion by 2011, US $27 trillion by
2050 (making India the third-largest economy in
the world)
Trend of increasing liberalization of foreign
investment

Source: UNCTAD, World Investment Report 2014; http://unctad.org/wir or

http://unctad.org/fdistatistics.

FDI in India by World Investment

Report 2014
FDI overwiew,selected years

Table.1. SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

Source: http://dipp.nic.in/English/Publications/FDI_Statistics/2014/india_FDI_June2014.pdf

SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOWS

Power; 6%

Services Sector; 27%

Hotel & tourism; 5%

Chemicals; 6%

Metallurgical industries; 6%

Automobile industry; 6%

Drugs & pharmaceuticals; 8%

Construction; 17%
Computer software & hardware; 9%
Telecommunications; 11%